the PDT rule needs to go

[bobcathy1]

Yes, I am thinking about that for sure. But I still need a chart service anyway and they are good. So I will just keep two accounts.

 

[CarlErikson]

Quote from CarlErikson:


Contact the SEC (and they will ignore you). Contact your representative and your senators - they will forward your concerns to the SEC (and they will again ignore you). So nothing will come of this but you will have done all you can do (short of rioting).

Hey, I actually got a reply back from the SEC. Here is the reply:

Senator ... forwarded your October 10th e-mail to us for a response to your questions regarding day trading rules, electronic orders for options, and public trading of certain exchange-traded funds on the Island Electronic Communications Network. We appreciate your interest regarding these subjects.

First, we note that the rules requiring you to have at least $25,000 in your account to day trade are not SEC rules, but instead are New York Stock Exchange ("NYSE") and National Association of Securities Dealers ("NASD") rules. The NYSE and the NASD proposed these rules to ensure that accounts had sufficient equity to protect against financial loss from day trading to firms and their customers, and the Commission approved these rules in February 2001 consistent with the federal securities laws.

In addition, like the day trading rules, the rules that do not permit the entry of orders that are created and communicated electronically without manual input are rules of several of the options exchanges, not the SEC. The exchanges stated that they adopted these rules because public customers are accorded certain advantages on their markets, such as priority in execution and, in many cases, automatic execution at the disseminated price. Because these exchanges depend on the liquidity provided by specialists and market makers, they determined that these market participants should be the only ones permitted to electronically generate quotations.

You also commented that you cannot day trade in a cash account. Day trading in a cash account is generally prohibited under Regulation T of the Board of Governors of the Federal Reserve System. In this regard, you may wish to direct your concerns to the Federal Reserve through their website at www.federalreserve.gov/feedback.cfm

Finally, you noted that you are unable to use the Island Electronics Communications Network to trade certain exchange-traded funds. The Island ECN has announced that it would no longer display its limit order book to its subscribers in four exchange-traded funds, including the QQQ, rather than include these orders in the public quote for these securities as required by SEC regulations. The Commission recently took action to facilitate public quoting by trading systems such as the Island ECN that trade at worse prices than other markets' quotes, and continues to review the intermarket trading rules that apply to markets in the public quote to determine if modifications are necessary in light of changing market conditions.

We hope that the above information is helpful and appreciate the benefit of your views.

...

So it seems like the SEC is saying that they don't have power over anything but then they say that they allowed all of these things to happen. How am I supposed to respond to this?

Carl

 

[richtrader]

I think it's pretty good that your senator forwarded your message along. I hope you voted for him/her last Tuesday!

 

[qdz]

First, we note that the rules requiring you to have at least $25,000 in your account to day trade are not SEC rules, but instead are New York Stock Exchange ("NYSE") and National Association of Securities Dealers ("NASD") rules. The NYSE and the NASD proposed these rules to ensure that accounts had sufficient equity to protect against financial loss from day trading to firms and their customers, and the Commission approved these rules in February 2001 consistent with the federal securities laws.

What about the cases sufficient equity is available for the trades engaged even when the account balance is lower than $25K? How about the cases insufficient equity for the trades engaged even when the account balance is greater than $25K?

Why only use number of day trades as standard for the purpose of sufficient equity?

These rules must go away like Pitt did.

 

[hii a_ooiioo_a]

It's great that the SEC apparently really did read your letter and gave you a very thorough response to it.

These organizations do take notice of volume of public objections. We need to let the NASD and NYSE and SEC know that we don't like the daytrading rules, and point out illogic of these rules to support our objections.

• restricting trading by the number of trades, regardless of how small those trades are, doesn't make sense
  
• these restrictions make trading riskier, by depriving traders of the freedom to limit their losses by closing a position if the trade goes against them
  
• applying these restrictions to non-marginable stock options, which are paid out of cash (and have one day settlement), doesn't make sense

Mostly I think they need to get a volume of negative feedback. Logic can be useful as a tool to protest with, but mostly what they will respond to is public pressure. They need to hear as much objection as possible, with or without the use of arguments based on logic.

It's great that you wrote to your senator. It's great that you're making the effort to keep writing.

 

[Gordon Gekko]

Quote from CarlErikson:
Hey, I actually got a reply back from the SEC. Here is the reply:

So it seems like the SEC is saying that they don't have power over anything but then they say that they allowed all of these things to happen. How am I supposed to respond to this?

exactly..

"...the rules requiring you to have at least $25,000 in your account to day trade are not SEC rules..."

"...the Commission approved these rules..."

p.s. good work.

 

[daniel_m]

First, we note that the rules requiring you to have at least $25,000 in your account to day trade are not SEC rules, but instead are New York Stock Exchange ("NYSE") and National Association of Securities Dealers ("NASD") rules. The NYSE and the NASD proposed these rules to ensure that accounts had sufficient equity to protect against financial loss from day trading to firms and their customers, and the Commission approved these rules in February 2001 consistent with the federal securities laws.

LOL.

what rubbish. what a complete bullshit response.

"daytrading is putting firms and their customers at risk. hmm, i think we'd better give them 4:1 margin then..."

 

[Gordon Gekko]

this shit infuriates me

 

[hii a_ooiioo_a]

That's another logical argument to make in our letters: if the intention of these restrictions is to limit financial risk, why did they accompany these restrictions with increased margin allowances?

These rules simply don't make any sense, except in viewing them as a deliberate attempt to increase risk while making the pretense of wanting to do the opposite.

If you have $25,000, they'll lend you $75,000 to lose, but if you have under $25,000 and you make three options trades total value (paid from cash) $60, you're prevented from making any more trades for the next 4 days, "because your trading patterns are too risky".

 

[daniel_m]

Quote from hii a_ooiioo_a:

That's another logical argument to make in our letters: if the intention of these restrictions is to limit financial risk, why did they accompany these restrictions with increased margin allowances?

i'm not sure if i'd be too quick to include that obvious illogic in my protests. you might end up gettting the worst of both worlds - pdt and 2:1 margin.