Hi,
I just got an email from Datek on how they are handling the new rules. They are offering all margin accounts 4-1. I stil haven't opened an ib account. This makes the choice a little harder. Below is the email contents:
GaretJax
On September 28, 2001, new NASD/NYSE day trading margin requirements
will go into effect for all brokers. The new industry-wide day trading
rules outline specific requirements that all accounts that frequently
day trade must comply with.
While the new day trading rules offer increased leverage, they also
present the opportunity for greater losses. We ask that you take
the time to understand how the new day trading rules will affect
your account.
My account hasn't been tagged as a pattern day trader account. What
does this have to do with me?
Datek is giving all margin accounts access to the additional day
trading buying power as permitted by the new rule. Unless your
account's trading pattern matches that of the NASD/NYSE day trading
margin rule, you will not be required to meet day trading margin
restrictions. However, we still ask that all margin account holders be
educated on the new rules as they may affect your account. Should your
account be tagged as a pattern day trading account in the future,
Datek will notify you of the designation.
What are the new day trading margin requirements for pattern
day traders?
A "pattern day trader" is defined as an account that makes 4
round-trip day trades (buying and selling the same security in one
day) in any rolling 5 business day period. Pattern day traders will be
subject to a new set of day trading rules and requirements. Here's
what you need to know:
· Under the new rules, customers that have been identified as
pattern day traders must maintain $25,000 in marginable equity at
all times. Pattern day trader accounts that fall below the $25,000
NASD/NYSE minimum will be restricted to cash transactions only,
until the minimum equity amount is reached. Go to
http://www.datek.com/helpdesk/transfers.html to find out how to
transfer equity or http://www.datek.com/helpdesk/deposits.html
for information on depositing cash and securities to meet the new
$25,000 minimum.
· A day trading margin call will be generated as soon as an executed
day trade in a pattern day trader account exceeds the day trading
buying power. Customers will have 5 business days to fulfill a day
trading margin call. Only a deposit of cash or fully paid securities
can satisfy a day trading margin call.
· A day trading call must be met in 5 business days. If the day
trade margin call is not satisfied by the fifth business day, the new
NASD/NYSE rules require that the account be restricted to trading on a
cash available basis for 90 days or until the day trade call is met.
How am I given increased leverage under the new rules?
The new rules modify the day trading buying power calculations,
giving you access to 4 times the margin maintenance excess. This
is a two-fold increase in the possible leverage available under
current rules.
Example: A pattern day trader with a cash balance of $30,000 and no
positions in their account would have access to $120,000 day trading
buying power ($120,000 = (4*30,000)).
Day trading buying power is calculated based on the positions and cash
in an account at the end of the trading day. Generally, you can
calculate your day trading buying power using the following formula:
[75% of the Long Stock Value (LSV) - 130% of any Short Stock Value
(SSV) + Cash]*41
As an added benefit, we will display your day trading buying power in
real-time on your portfolio and trading pages as soon as the new rules
go into effect. This buying power figure is the amount available for
day trading. Day trading buying power does not change based on gains
and losses in your account that occur intra-day.
Be aware that all margin accounts will have access to the greater of
either their stock buying power or their day trading buying power. Our
systems will always allow an order to go through based on the higher
buying power amount. Since our systems have no way of determining
whether you will hold the position overnight or just for the day, it's
your responsibility to enter trades that remain within the buying
power for the type of trade you're making.
What can I do to meet a day trading margin call?
Should you need to meet a day trading margin call, the fastest way is
by wiring funds to your account or sending an overnight check. For
help with mailing addresses and wire instructions, go to
http://www.datek.com/helpdesk/deposits.html. Remember, day trading
calls can only be met by depositing cash or non-margined securities.
Is this industry-wide? Will all brokers have to comply with
these rules?
The new day trading rules are NASD/NYSE requirements that will have to
be followed by all brokers. We are ready for these changes and are
taking all the right steps to make sure you are ready as well. If your
account is tagged as a pattern day trading account according to the
new NASD/NYSE definition, you will receive notification from Datek. If
your account has already been tagged as a pattern day trader under the
current rule, the tag will remain in place for 90-days after your last
day-trade and you will be required to be in compliance with the new
rule as of September 28, 2001.
Fully understanding your risk tolerance and the new NASD/NYSE margin
requirements allows you to better manage your margin account. Please
review our Helpdesk at
http://www.datek.com/helpdesk/margin.html#daytrading for more
information on the new day trading rules. If you have questions about
the NASD's new margin requirement or need assistance with your
account, please email our customer support staff 24 hours a day, 7
days a week at support@datek.com, or call 1-877-94-DATEK
(1-877-943-2835) from 8 AM to midnight ET on weekdays, and from 9 AM
to 7 PM ET on weekends.
Sincerely,
Datek Online Financial Services LLC
I just got an email from Datek on how they are handling the new rules. They are offering all margin accounts 4-1. I stil haven't opened an ib account. This makes the choice a little harder. Below is the email contents:
GaretJax
On September 28, 2001, new NASD/NYSE day trading margin requirements
will go into effect for all brokers. The new industry-wide day trading
rules outline specific requirements that all accounts that frequently
day trade must comply with.
While the new day trading rules offer increased leverage, they also
present the opportunity for greater losses. We ask that you take
the time to understand how the new day trading rules will affect
your account.
My account hasn't been tagged as a pattern day trader account. What
does this have to do with me?
Datek is giving all margin accounts access to the additional day
trading buying power as permitted by the new rule. Unless your
account's trading pattern matches that of the NASD/NYSE day trading
margin rule, you will not be required to meet day trading margin
restrictions. However, we still ask that all margin account holders be
educated on the new rules as they may affect your account. Should your
account be tagged as a pattern day trading account in the future,
Datek will notify you of the designation.
What are the new day trading margin requirements for pattern
day traders?
A "pattern day trader" is defined as an account that makes 4
round-trip day trades (buying and selling the same security in one
day) in any rolling 5 business day period. Pattern day traders will be
subject to a new set of day trading rules and requirements. Here's
what you need to know:
· Under the new rules, customers that have been identified as
pattern day traders must maintain $25,000 in marginable equity at
all times. Pattern day trader accounts that fall below the $25,000
NASD/NYSE minimum will be restricted to cash transactions only,
until the minimum equity amount is reached. Go to
http://www.datek.com/helpdesk/transfers.html to find out how to
transfer equity or http://www.datek.com/helpdesk/deposits.html
for information on depositing cash and securities to meet the new
$25,000 minimum.
· A day trading margin call will be generated as soon as an executed
day trade in a pattern day trader account exceeds the day trading
buying power. Customers will have 5 business days to fulfill a day
trading margin call. Only a deposit of cash or fully paid securities
can satisfy a day trading margin call.
· A day trading call must be met in 5 business days. If the day
trade margin call is not satisfied by the fifth business day, the new
NASD/NYSE rules require that the account be restricted to trading on a
cash available basis for 90 days or until the day trade call is met.
How am I given increased leverage under the new rules?
The new rules modify the day trading buying power calculations,
giving you access to 4 times the margin maintenance excess. This
is a two-fold increase in the possible leverage available under
current rules.
Example: A pattern day trader with a cash balance of $30,000 and no
positions in their account would have access to $120,000 day trading
buying power ($120,000 = (4*30,000)).
Day trading buying power is calculated based on the positions and cash
in an account at the end of the trading day. Generally, you can
calculate your day trading buying power using the following formula:
[75% of the Long Stock Value (LSV) - 130% of any Short Stock Value
(SSV) + Cash]*41
As an added benefit, we will display your day trading buying power in
real-time on your portfolio and trading pages as soon as the new rules
go into effect. This buying power figure is the amount available for
day trading. Day trading buying power does not change based on gains
and losses in your account that occur intra-day.
Be aware that all margin accounts will have access to the greater of
either their stock buying power or their day trading buying power. Our
systems will always allow an order to go through based on the higher
buying power amount. Since our systems have no way of determining
whether you will hold the position overnight or just for the day, it's
your responsibility to enter trades that remain within the buying
power for the type of trade you're making.
What can I do to meet a day trading margin call?
Should you need to meet a day trading margin call, the fastest way is
by wiring funds to your account or sending an overnight check. For
help with mailing addresses and wire instructions, go to
http://www.datek.com/helpdesk/deposits.html. Remember, day trading
calls can only be met by depositing cash or non-margined securities.
Is this industry-wide? Will all brokers have to comply with
these rules?
The new day trading rules are NASD/NYSE requirements that will have to
be followed by all brokers. We are ready for these changes and are
taking all the right steps to make sure you are ready as well. If your
account is tagged as a pattern day trading account according to the
new NASD/NYSE definition, you will receive notification from Datek. If
your account has already been tagged as a pattern day trader under the
current rule, the tag will remain in place for 90-days after your last
day-trade and you will be required to be in compliance with the new
rule as of September 28, 2001.
Fully understanding your risk tolerance and the new NASD/NYSE margin
requirements allows you to better manage your margin account. Please
review our Helpdesk at
http://www.datek.com/helpdesk/margin.html#daytrading for more
information on the new day trading rules. If you have questions about
the NASD's new margin requirement or need assistance with your
account, please email our customer support staff 24 hours a day, 7
days a week at support@datek.com, or call 1-877-94-DATEK
(1-877-943-2835) from 8 AM to midnight ET on weekdays, and from 9 AM
to 7 PM ET on weekends.
Sincerely,
Datek Online Financial Services LLC