Interesting article:
Philly Exchange May Test Traders
.c The Associated Press
By BILL BERGSTROM
PHILADELPHIA (AP) -- Investors rushing to pursue get-rich-quick dreams at day-trading firms would face a tough test to prove they understand the risks under a proposal by The Philadelphia Stock Exchange.
The exchange is seeking federal approval to require off-floor traders to pass the same comprehensive National Association of Securities Dealers exam as professional securities dealers. It filed the proposal with the Securities and Exchange Commission on March 10.
''We are concerned that people do not have adequate training,'' exchange chairman Meyer ''Sandy'' Frucher said.
Electronic day-trading firms sell training courses and special software programs to ordinary investors who want to try the lightning-speed practice of day trading, exploiting small price movements in stocks to make a profit.
The dangers of day trading have regulators worried. A February survey showed more than 2,300 people are day trading at firms registered as Philadelphia exchange members, more than double the number six months earlier.
The NASD board of governors voted last week to consider a proposal to require day-trading firms to screen investors and warn them of the risks in writing.
Frucher said a lot of firms have been soliciting day traders, in part because regional exchanges such as the Philadelphia and Pacific stock exchanges and the Chicago Board Options Exchange do not required off-floor traders to pass the NASD securities exam.
''Currently we don't have any test requirements,'' Frucher said. ''The presumption if you are a trader through a member firm is that you are an investment professional, and that has not always been the case.''
According to the exchange's proposed rule change, most of those affected are members of ''limited liability companies'' that consider them to be professionals, ''not customers protected by the usual customer protection rules'' that require making sure a trade is not too risky for an investor's financial means.
The new rule, the proposal said, would ''protect investors and the public interest by requiring registered off-floor traders to demonstrate their qualifications to trade.''
Given the regulators' concern over day trading, Frucher said he expects the SEC to approve the testing proposal within 30 days.
AP-NY-03-28-99 1645EST
Copyright 1998 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without prior written authority of The Associated Press.
|
