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To: Investor2 who wrote (2173)	11/20/1997 1:37:00 PM
From: Gary M. Reed	Read Replies (1) \| Respond to of 42834

I2, In other words, let's say you bought 1000 shares of XYZ. On the ticket that the broker writes, he specifies how the stock should be held--"Type 1" means that the stock should be held in a cash account. The customer would be required to pay for the entire trade, vis-a-vis using margin. If the stock is held as "type 1" stock, the brokerage firm is not allowed to loan the stock out. If the stock was bought "type 2", or margin, the stock can be loaned out--even if the stock is fully paid for. Lets say you buy a stock inside a margin account. The stock is fully paid for but it is marked "type 2" (or margin). Even though you have completely paid for the stock, it can be loaned out. Why would you do this? If you felt you might margin the stock in the future, or sometimes people do this to cover the new "T+3" requirements--lets say you buy another stock, you're going to mail a check into the firm to pay for it. To insure the trade settles properly if the mail system delays your check's arrival to the firm, often people will mark everything in their account "type 2" and then the new purchases are covered with the margined equity in their account until the payment for the new stock arrives. So, "having a stock under margin" means that the stock is held as a marginable stock in your account. Often, a company who has a large short position will request to their shareholders that they move all of their stock to Type 1, which creates a short squeeze, since those shares that are loaned out are called back in (since the contra-broker doesn't have the stock to lend anymore, since it is now being held in a cash account) and the shorts have to buy in their positions. Gary