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Technology Stocks : Zitel-ZITL What's Happening

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To: Daniel Chisholm who wrote (18037)	9/22/1999 10:35:00 AM
From: Mama Bear	Read Replies (2) of 18263

"If my account were at a US brokerage that required me to maintain (as I have heard) $5 of noninterest bearing cash " Daniel, the only non interest bearing portion of a short sale in my account is the actual proceeds of the sale. To use your numbers, short sell 1000 ZITL at 11 1/2, and I have to put up 5250 in security. But that security can be in the form of money market cash or any negotiable security. ZITL falls to 1 1/4, and 10250 is released from my type 5 (short) account into my type 1 (cash) account. Thus I have $1250 in my type 5 (non interest bearing) account, but it was generated from the initial sale. $10250 creates $20500 of buying power. Then $5000 of the buying power is subtracted to maintain the short position. The maintenance requirement is 5 per share, but the money is not segregated or required to be cash. Some folks with larger balances can even negotiate interest on the money that the short sale produces, called a short rebate. Regards, Barb

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