On the issue of selling an overnite hold like AMZN and increasing the subsequent day's buying power, it appears thats why they raised the mulitiple of margin excess equity from 2 to 4. They do say that holding a position overnite and selling it the next day and then day trading that stock on the subsequent day, that the first round trip is not considered a day trade anymore.
For example, lets say I buy $100,000 AMZN half with equity and half on margin and hold it overnite and it has not changed in value. Equity of 50,000 and credit of 50,000. The maintenance requirement under rule 2520 is that my equity must remain above 1/4 x $100,000 = $25,000. I still have $50,000 in equity so my excess maintenance margin is $50,000 - $25,000 = $25,000. Under the old rules, my daytrading buying power the next day used to be 2 x $25,000 = $50,000. However, if I sold AMZN the next morning break even and wanted to buy it back later in the day for a daytrade I would only be allowed to buy back $50,000 of it instead of the full $100,000 position I had without getting a day trading call. That was never fair in my opinion. I should be able to buy back the whole position again because we know the money from the $100,000 sale will be there in T+3 days. Under the new rules I would be able to buy back the whole $100,000 position and sell it again later that day without getting a day trading margin call. However, if you do buy back the whole position and it ends up not being a daytrade but a position trade, then you have to meet the Reg T. initial margin requirements on the position at the end of the day. Reg. T is going to require I had at least $50,000 in equity to buy it back. I do so Reg. T isn't a problem. I think this example shows why they propose changing the multiple from 2x to 4x. Do you agree? |
