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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Rande Is who wrote (24264)	4/18/2000 3:58:00 PM
From: carepedeum2000	Respond to of 57584

just sold my svnx at 52, couldnt stand to hold it overnight, this is just too good to be true, cant imagine this move continuing past a morning gap up

To: Rande Is who wrote (24264)	4/18/2000 3:58:00 PM
From: JLS	Read Replies (1) \| Respond to of 57584

LU reports tomorrow. SVNX now screaming. Holding onto the second stringers...NTRO, ADAP, ENGA, SVNX, those that haven't moved yet, added some genome.

To: Rande Is who wrote (24264)	4/18/2000 10:29:00 PM
From: Gary Wisdom	Respond to of 57584

Rande, WSJ article today on margin calls April 18, 2000 -------------------------------------------------------------------------------- Some Brokerages Tighten Standards on Margin Calls By RUTH SIMON Staff Reporter of THE WALL STREET JOURNAL Pay up. Now! In the wake of Friday's record sell-off, some brokerage houses are giving investors less time to meet margin calls. FMR Corp.'s Fidelity Investments is allowing some of its customers just 24 hours to meet margin calls. Normally customers have as many as three business days to come up with additional cash or securities, or sell stocks. Articles about the recent stock-market turmoil that appear in The Wall Street Journal Tuesday. "We put the procedures in place to minimize the risk to the firm," said Tracey Curvey, executive vice president of Fidelity Online Brokerage, of Boston. The new Fidelity policy, which took effect Friday, applies to Fidelity Online Brokerage customers and to customers of the more than 200 brokerage firms that clear their trades through Fidelity. Southwest Securities Inc., Dallas, has tightened its policies; the change applies to its own customers and to those of the more than 200 firms for which it clears trades. Also imposing stricter standards is DLJdirect Inc., a unit of Donaldson, Lufkin & Jenrette Inc., of New York. The move to tighten payment standards comes at a time when customers have been borrowing record amounts to finance stock purchases. Investors who borrow heavily can wind up with steep losses in a falling market. Brokerage firms can wind up on the hook if customers who borrowed money to buy stocks don't have enough money to pay off their loans. "Given how fast the market is moving, a firm doesn't want to leave itself exposed to anyone," said Frank Fernandez, chief economist of the Securities Industry Association trade group. Investors generally can borrow as much as 50% of the value of their stocks. Once the purchase is completed, an investor's equity -- the current value of the stocks less the amount of the loan -- must be equal to at least 25% of the current market value of the shares, though some brokerage houses set stricter standards. If falling stock prices reduce equity below the minimum, an investor may receive a margin call demanding that he or she put up more cash or securities, or sell some securities. Fidelity said its new standards apply to less than 5% of the people who have received margin calls. The people affected fall into two groups: Those who have margin calls of at least $10,000 are given 24 hours if their accounts have fallen below the 25% lending requirement, which is set by stock exchanges; those who have a margin call of $75,000 or more also will be given 24 hours if they meet the 25% requirement but have fallen below Fidelity's own, tighter lending standards. "It's pretty standard for us to make changes to the margin requirements in times of volatility like we've experienced in the last couple of weeks," Ms. Curvey said. The changes are "part of an ongoing process over the last couple of months" to tighten margin controls, she said. Steven Levine, national credit officer for Southwest Securities, said his firm activated tighter payment standards after the stock market closed Friday. Customers who fall below the 25% lending standard have 24 hours to meet their margin call, instead of anywhere from 48 to 72 hours. "Friday was the worst day in history," Mr. Levine said. DLJdirect's new policy gives its customers two business days instead of three to meet their margin calls, company spokeswoman Linda Finnerty said. Other firms are sticking with existing policies. "We haven't made any wholesale changes," said Chris Dodds, chief financial officer for Charles Schwab Corp., of San Francisco. Mr. Dodds said margin calls stemming from Friday's market plunge were running "three to five times what we normally see." He added: "It was a busy weekend for a margin group." At Datek Online Holdings Corp., spokesman Mike Dunn said he didn't know if the number of margin calls was a record, "but it was close." He said his firm hasn't made any changes in its margin policies. Many investors are choosing to come up with additional cash to meet their margin calls rather than selling stock at depressed prices. Other investors are throwing in the towel. "We continue to get more sell-outs or liquidations than we did in the past," the SIA's Mr. Fernandez said. Mr. Fernandez added that he was "stunned by how well the system is working. We've heard a lot of people experiencing shock about Friday's events, but nobody's expressing panic."