Tom,
A broker-dealer's margin lending rules may only be (a) the same or (b)stricter than Federal Reserve, SEC, and SRO (NYSE or NASD, depending on your firm) rules.
Basically, don't forget that "daytrading an account," and A "daytrading (coded) account" are different. One could daytrade any type of account (retail account, cash account, etc) but an account that is coded as a daytrading account - at least through a firm that I am familiar with - has distinctly different INTRADAY calculation methods, whereas their overnight calculations are the same as others.
If you fail to meet a margin call, your account can be frozen. Accounts can also be restricted or have buy-ins/sell-outs initiated for debit balances, etc. In theory what you say is possible - and again, depending upon the firm - I've seen smaller firms that permit someone to trade their butt off, go wildly in excess of their buying power, and then facilitate the journaling in of funds cover the margin call overnight.
Even though this is technically within the letter of the rules, large, established firms don't permit - let alone encourage - this on a regular, let alone daily, basis. It is certainly against the "spirit" of margin rules (fiduciary duty of a brokerage firm, and all); people shouldn't be encouraged - or aided - to trade in sizes and volumes that expose them to losses they can't afford.
So, all the answers you were given are basically correct, depending upon how exactly the firm intends to enforce them.
LPS5 |
