Maybe we should go further back, then.
The accompanying dialogue uses the following symbolism:
Margin account, vegetable oil.
Cash account, motor oil.
Marginable stocks, french fries.
OTCBB stocks, onion rings.
(Together, deep fried food)
Message 12726369
"I think that shorting should be decoupled from the margin requirement anyway"
I believe that's just a house rule anyway. I don't think there are any exchange or SEC rules requiring a margin account for shorting.
Regards,
Barb
(Mama, in McDonalds: "I don't think there are any state or Federal rules demanding that deep fried foods should be prepared in vegetable oil as opposed to motor oil.")
Message 12726756
There sure is. It's called Regulation T, and specifies that short sales may not take place in cash accounts.
LPS5
(LPS5: "There sure is. A health department rule stating that deep fried foods CANNOT be fried in motor oil.")
Message 12727433
Hmm, can you tell me how the short sale of OTC-BB stocks are initiated if there's a regulation requiring marginability? I believe you're mistaken.
Regards,
Barb
("Hmmm, can you tell me how onion rings are fried if there's a regulation prohibiting preparing them with motor oil.")
Message 12727492
steve, is a margin account required to initiate a short sale under reg T or any other Federal or exchange rule? If so, how are the short sales of OTC BB stocks initiated? Am I mistaken in my impression that an OTC BB can't be carried in a margin account?
Regards,
Barb
("Steve, is vegetable oil required to prepare deep fried foods?...Am I mistaken in my impression that onion rings can't be prepared in vegetable oil?")
Message 12981120
Yes, margin account is utilized for shorting, regardless if the stock is marginable.
–Steve
("Yes, vegetable oil is used for deep fried foods.")
Let's put the important parts together, shall we?
Mother's opening assertion:
I don't think there are any exchange or SEC rules requiring a margin account for shorting.
My correction:
short sales may not take place in cash accounts
and, in my following message:
OTCBB stocks are in fact not approved for margin in the U.S. under Reg T. However...[w]hat I said previously was that a short sale can only be executed in a margin account, not a cash account. That is the case.
You then went to Steve asking:
Am I mistaken in my impression that an OTC BB can't be carried in a margin account?
To which he replied:
Yes, margin account is utilized for shorting, regardless if the stock is marginable.
Therefore: short selling must, by definition, take place exclusively in margin accounts, whether a security is marginable or not.
Funny that Steve was enough of an authority for you to run to, but when he affirmed my position, you suddenly required proof from Regulation T. Just click back and forth between these three links for the condensed version :)
Message 12726369
Message 12981390
Message 13008704
Have a wonderful evening :)
LPS5 |
