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Non-Tech : MB TRADING
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To: wily who wrote (3073)1/5/1999 12:06:00 AM
From: Sword  Read Replies (2) of 7382
 
I don't understand your question. The statement you italized answers it, I think. This is an SEC rule. That is why "some firms insist that you can only substitute with a different stock..."

I think the rationale is that they don't want you to get around the 50% margin requirement by playing games with your long positions in a daytrading account. Remember the total amount of stock I can trade $30,000 if I start with $10,000 in cash: $20,000 in the overnight and $10,000 in daytrading stock. If you sell an overnight, let the SEC know that it was not a daytrade or short term position trade by not buying it back right away. I think that is their thinking. They don't want to be messed around with. Otherwise, you would have the ability to daytrade with 33% margin. That's a no-no unless the firm puts up the difference.

-Sword
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