NYSE and NASD Propose Higher Level of Margin Requirements for
Day Trading
NEW YORK, Dec. 10 /PRNewswire/ -- The National Association of Securities
Dealers, Inc. Board of Governors and the New York Stock Exchange Board of
Directors have approved proposals to establish special margin requirements for
customers who day trade in an effort to address the risks associated with the
practice.
The proposals, to be submitted to the Securities and Exchange Commission
for approval, would amend NYSE Rule 431 and NASD Rule 2520, which govern
margin requirements.
Under the proposed rules, customers who engage in a pattern of day trading
would be subject to minimum equity requirements. The amendments would also
limit a day trader's buying power to an amount based on funds that must be in
the account prior to any day trading activities.
The proposals would also:
* Provide that a pattern day trader's account must maintain a minimum
equity of $25,000, at all times, as compared with a $2,000 requirement for
other margin accounts. If the account of a pattern day trader falls below the
required minimum equity, no further day trades will be permitted until the
requirement is maintained.
* Restrict pattern day traders from trading in excess of their day-trading
buying power. If the day-trading buying power is exceeded, the account will
be margined based on the total cost of all day-trade purchases for that day,
and the customer's day-trading buying power will be reduced until the
necessary margin is deposited.
* Restrict pattern day traders to day trading on a cash-available basis
only, if the special margin call is not met within five business days.
* Prohibit pattern day traders from utilizing account guarantees otherwise
permitted in margin accounts.
* Restrict withdrawal of money deposited to meet minimum equity and
maintenance margin requirements for two business days in order to provide
greater financial stability to such accounts.
SOURCE National Association of Securities Dealers, Inc.
-0- 12/10/1999
/CONTACT: Nancy A. Condon of NASD Regulation, 202-728-8379, or Richard C.
Adamonis of the New York Stock Exchange, 212-656-2140/
/Web site: nasd.com
CO: National Association of Securities Dealers, Inc.; New York Stock Exchange
ST: District of Columbia, New York
IN: FIN |
