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To: steve goldman who wrote (4262)	5/21/1998 9:40:00 PM
From: Richard Estes	Respond to of 12617

I was really wanting to determine what the real rules are, verses house rules. My Broker allows margin down to $4, but as you say there are a number of stocks that can't be margined without regard to price. My broker does not allow a short on a stock under $4 because all shorts are done in a margin account. They have told me, it was fed rules not house rules. I thought the Federal reserve set the rates, now at 50%. I was looking for the avg. salary for the customer rep, who has pasted his tests, that answers the phone and takes the order. I have been told they are on salary with no commissions. Wondering how it differed from the guys who work their lists and are salesmen in a full service house. Sorry, I didn't make it clear. There are many things in the business that aren't clear, House rules/fed rules. Some more that seems to lack hard rules: Stops on Naz stocks, mine allows them. trading in the 32nd and 64th, you see the trades all the time, yet some brokers won't accept them. When questioned, they say that must be brokers trading between each other. If a stock is an overseas company traded on the naz ("F" suffix), some require a phone call rather than internet trade saying they are handled differently. --------------------------------------------------- I could go on and on. the bottom line is that like vegas, the house always wins, they make the rules.

To: steve goldman who wrote (4262)	5/22/1998 2:08:00 PM
From: Daniel Goncharoff	Respond to of 12617

Here is my understanding about some of these rules: All listed stocks are marginable, and I have not found any minimum price rule for them. If your firm has a rule, it may be a house rule only. 'OTC Margin stocks' must meet a host of requirements, one of which is an average price of $5 per share. The Federal Reserve Bank publishes a list of OTC Margin securities updated regularly. In doing this research, however, I discovered that the rule will change on Jan 1 so that all Nasdeq National Market System stocks will be automatically considered marginable. At this time, I would be surprised if YHOO or XCIT is not considered marginable. On the other hand, I doubt KTEL has made the list of marginable securities yet. The rule on shorting requires equity of 150% of the proceeds of the short as equity in the account. Hope this helps. Dan Goncharoff

To: steve goldman who wrote (4262)	5/22/1998 7:18:00 PM
From: Scott Overholser	Respond to of 12617

Margin rules What is the smallest price that can be margined by the fed's rules? I've been interested in this subject. I have recently plowed through some SEC regulations on the subject. It makes for very dry reading. Basically there is no line in the sand that defines marginability. There are many considerations. Here are a few: 1) For Nasdaq, there must be a minimum number of MMs making a market in the stock. 2) The company must have a minimum number of shares issued (can't remember the exact number) 3) Insiders must own a certain percentage. 4) The AVERAGE price over some recent time period must be $5 for some stocks, $2 for others (again, glossing over the exact details) 5) Average daily volume must be above some defined level. Your broker will probably make it easy on you by, well, drawing a line in the sand. Datek for example says "no margin for stocks under $5" - end of story. As far as margin requirements, the situation is just as muddy. I really don't understand this part. The exchanges, SEC, and individual brokers all have a hand in the requirements that eventually get passed on to the trader. Daytrading rules are different than overnight holds. A recent poster was kind enough to provide links to some very informative sites. Sift through the posts this week and find it. Some of the URLs were truncated but not badly. It was good enough for me to find the information.

To: steve goldman who wrote (4262)	5/22/1998 8:58:00 PM
From: Eric P	Respond to of 12617

I'm sure every active daytrader had at one time been watching a very active and fast moving stock and tried to SOES in or out and been unable to get the order filled. I've got a theory on how this happens and want to have others confirm it or enlighten me. Presumably, your SOES order is put in the queue with numerous other orders. The queued orders are then filled on a first come, first serve basis. With the marketmaker on the top of the bid/ask taking up to 20 seconds between fills. By the time it is your turn, the price has moved and you do not get an execution. Several questions: 1) If there are multiple marketmakers, each at the inside ask, do the SOES orders in the queue go to only the one marketmaker at the top of the ask? Or are the orders in queue alternated between each of the marketmakers at the inside ask? 2) I read in the Nasdaq website that SOES orders can be preferenced to a particular marketmaker. Has anyone tried this? Is there an advantage to preferencing your SOES order to the marketmaker at the BOTTOM of the inside bid/ask to bypass the queue? Any comments or experiences appreciated! -Eric