Read your own link. For those stocks already listed, the
requirement for continued listing as an OTC marginable
stock is $2, not $5. Read it carefully. You were
confusing the first paragraph which pertains to the initial
requirement to get on the list in the first place. Once on the OTC marginable stock listing with the exchange, the requirement reduces to $2. You can find brokers that lower their requirement to $2. Pershing, through whom Yamner clears their trades, is not one of them, much to my chagrin.
"2) The minimum average bid price of such stocks, as determined by the Board, is at least $2 per share;"
But as to the a requirement that the stock be marginable in
order to be shorted, that is nonsense. The amount of equity that is set aside in one's account to cover the
liability of the short position is greater with non-
marginable stocks, of course. It is equal to the cash
value of the position. Take this as an example:
Posi # Shares Value L/SS Price Margin
ERTS 100 $6,080 SS 60.80 $2,189
HC 200 $3,598 SS 17.99 $1,295
ALGX 2,000 $6,000 SS 3.00 $10,000
IMCL 200 $4,926 SS 24.63 $1,773
MLTC 2,500 $5,600 L 2.24 $5,600
MEDC 300 $4,215 SS 14.05 $1,500
WEBX 200 $520 SS 2.60 $1,000
MBAY 2,000 $6,800 SS 3.40 $10,000
INVN 100 $4,020 SS 40.20 $1,447
CLHB 500 $5,820 SS 11.64 $2,500
QPUDU 1,000 $2,800 SS 2.80 $10,000
CQEDM 500 $1,000 SS 2.00 $10,000
AKSY 1,000 $8,780 SS 8.78 $5,000
Each of these positions is either short (SS) or long (L). They are each "secured" positions no matter whether they are marginable or not. The "margin" column shows how much money is set aside to support that particular position. As you can see by studying this example, the low priced stocks like MBAY and ALGX have large requirements relative to the actual value of the position. This is driven by the $5 minimum that Pershing uses. A $2 minimum would provide for only 2/5ths of that amount set aside.
It is important to understand the exact margin requirement for every position in your accounts. By doing this, one can manage risk/reward and maximize return for a given set of portfolio opportunities.
-Sword |
