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To: MrGreenJeans who wrote (6207)	7/26/1998 2:02:00 PM
From: Alan Bell	Read Replies (1) \| Respond to of 42834

MrGreenJeans, It is interesting that you have ascribed a different rationale to the idea of increasing margin requirements. If I understand your comment, the effect of raising margin requirements would be to reduce the amount of money that could be moved from the credit market to the equity market through margin borrowing and therefore, there would be less money to fuel the market. My perspective was that raising the margin requirement would tend to inhibit the ability of highly speculative "investors" from trading as much. This would inhibit the creation of an artificial bubble by making the market relatively more controlled by the long term investor. Also, you suggest that option trading would not generally affect market level. If I understand the option process correctly, the option market maker will try to maintain (for himself) a market neutral position and will do so by buying the underlying security to hedge the option sold to an investor. So someone buying an option could push the market up just as if they had bought the security. -- Alan