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Strategies & Market Trends : The Final Frontier - Online Remote Trading
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To: Wayners who wrote (10124)5/4/2002 10:48:32 AM
From: Dan Duchardt   of 12617
 
Wayne,

I hear ya, but if indeed this is coming from the SROs there cannot be any interest profit motive. I can see the possibility of a broker trying to get free use of your money for three days, but not the NASD or NYSE.

There are things that argue against the idea that fear of a contra-party reneging is behind this. First, if that were true it would be true for all transactions, including those in margin accounts. A broker would be insane to permit daytrading if there was risk that trades would not settle. Second, fund settlement is done on a net basis (as I understand it from my reading on this). The one sure way to know you are not going to be left holding the bag with stock sold not being paid for is to buy more so that when net settlement payday rolls around you owe money to the system instead of expecting receipts from it.

Dan
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