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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: - who wrote (11151)	12/26/2000 12:08:55 PM
From: exdaytrader76	Respond to of 18137

Yep, Zilch pretty much sums it up. Usually it's the mercy of Penson or Southwest, depending upon who the DT firm clears through. It really stinks, but you are right - take it or leave it for the customer.

To: - who wrote (11151)	1/9/2001 2:30:03 AM
From: Dan Duchardt	Respond to of 18137

Steve, Schwab actually does follow the rules... it's just that the Direct Access firms have been targeted by NASD for the discriminatory "Pattern day trading" margin rules to be applied. I'm not so sure it is the case that D/A firms are being "singled out". Rather, I think this is a case of a voluntary election of a firm to afford it's clients the advantage of being able to use "maintenance excess" intraday at 2:1 margin. While there may be no official designation (I think LPS5 argued this to be the case) I do think MamaBear was on the right track when she asked: How about this one...some brokers are designated as 'daytrading' firms and others are 'investment' firms and they're treated differently? I have heard of this distinction before as the explanation for why most regular online firms like DATEK do things differently than the typical D/A firm. They simply do not allow their clients to use "daytrading buying power" (DTBP) and are therefore not subject to anything other than the rules of Reg T. And that brings us to other comments made in this context Message 15081485 I can't claim to be an expert on what the Fed intended, but I have read Reg T probably 50 times and have always come to the same conclusion. Based on that reading and what I know about what brokers/clearing firms do in practice I conclude that there is no prohibition against immediately crediting an account for a liquidated position. Even a cash account can be traded many times a day as long as you never spend money that is not already in the account, and some online firms will let you do this. All that Reg T says is that if you spend money you don't already have in the account, you have to get it there within the settlement period, and that money cannot come from the proceeds of liquidating the position you opened w/o having sufficient funds already in place to open. If it's already there, you can spend it. In a margin account, you can spend your own money plus the margin extended by the broker. It is only when you get into the realm of extending DTBP that you run into the situation of having to treat a sale of an overnight position as a short for the DTBP calculation as mandated by NASD/NYSE for daytrading. For daytraders that don't carry any overnights, this isn't an issue. Agreed. I think you can add to that: "For traders (or perhaps we should say investors) who are prohibited by their broker from ever using maintenance excess to increase buying power beyond the normal limits otherwise imposed by Reg T this isn't an issue." Of course, it's just an amateurs opinion, Dan