Rule 2520 Proposed changes:
d76,
I was hoping that rule change had gone away, but apparently not. I finally got off my butt and wrote a letter. I urge the entire thread to write, and also, if anyone has any updated information regarding the proposed changes to rule 2520, please post.
Thanks,
Alex
Rule Link:
sec.gov
Link for responding to rules:
sec.gov
Copy of Letter:
9/2/2000
Mr. Jonathan G. Katz, Secretary
U.S. Securities & Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609
Re: Release No. 34-42418, File No. SR-NASD-00-03 and No. 34-42343,
File No. SR-NYSE-99-47; Margin Requirements for Day-trading Customers; Amendments to NASD Rule 2520 and NYSE Rule 431
Dear Mr. Katz,
I writing this letter in objection to the proposed changes to NASD Rule 2520 and NYSE Rule 431 in regards to the minimum requirement of a $25,000 margin deposit for "Pattern" day traders.
I am not currently a day trader but I plan to start trading in a few months. I have been saving money in mutual funds for the last three years in order to open a day trading account at a direct access brokerage. In addition, I have been paper trading with direct access software for the last six months and have spent between three and four hours a day for the last year studying the NASDAQ and NYSE markets. I am also in the process of writing a business plan (to be updated quarterly) which will detail my methods and approach for trading the equity markets.
I am well aware of the risks inherent in day trading (and any kind of investing) but I have prepared myself for success and am determined to succeed. I am convinced that once learned, day trading with direct access software is one of the SAFEST ways to trade or invest money in the markets while maximizing your chance for a profitable return. While I believe potential investors/traders should be warned of the risks of trading and investing, I do not believe they should be penalized or denied access to the markets for not having an arbitrarily determined amount of capital with which to proceed.
Many successful businesses in this country have been started with less than $25,000. Also, many well capitalized new businesses have failed. You may be aware of a recent study done by clearing firms that found that only 5% of investing and trading accounts are consistently profitable. It was also learned in this study the profitable accounts were all found to be actively traded.
The public should be forewarned, but should not be denied access to opportunity or entrepreneurship because of limited start up capital. The smarter, well informed investors/traders will always be able to make more of opportunity—but as in business, the majority will fail. The only difference is that in short term trading the majority will fail faster than in longer term investing. But they will fail either way.
Please do not deny those of us with limited capital the great American opportunity to actively trade the U.S. equity markets.
Sincerely,
Alex Luce |
