duff, I couldn't agree with you more. It's really quite clear except to a few (one?) Man, this topic has been driven so far into the ground we should be striken' oil! Fohat, Your semantical arguments don't feed the bulldog. The correct interpretation of the regs don't allow this. Relax, sit back and think about it before you post another rant. Bucky Lee
Thank you AAAintheBeltway, for giving an example of a big broker that provides daytrading in cash accounts. Bucky Lee, Your empty declarations, not backed up by any regulation and arguments, have legally no value. With unsupported blank statements, No arguments, funny remarks and rude suggestions your posts don't contribute constructively to any elitetrader discussion. They're appropriate for a newspaper comic section. Either support your declarations, or at least don't disturb serious topic threads with outrageous claims and nasty remarks. dufferdon, In your example, you're entitled to receive $90k in proceeds. When? 3 days later, at settlement you recieve $90k. You also need to deposit a total of $90k. When? 3 days latter, at T+3 settlement,you need to pay $90k At settlement, you recive $90k whith which you pay the $90k due. You pay for each purchase, before selling it. Hence, there's no free-riding. How do I pay? Each individual purchase (of $10k) is paid by the settled cash proceeds of the previously sold security. Which is in detail supported and explained by the Federal reserve http://www.federalreserve.gov/boarddocs/legalint/MarginRequirements/1999/19990218/ and in my previous posts. All costs are covered, all transactions go through and are in accordance with the law.(Reg.T) This clarifies your questions. Fohat
"You also need to deposit a total of $90k. When? 3 days latter, at T+3 settlement,you need to pay $90k" The regulation says "promptly," not 3 days. No matter what semantic arguments you use, daytrading in a cash account is contrary to the intent of the regulation and that is my final word on the subject.
Fohat, I reiterate Datek's reply for your edification and because you didn't get it the first time around: "Daytrading requires margin. Daytrading in a cash account is governed by the free riding clause of Regulation T. No NASD member firm shall permit a customer (other than a broker/dealer or a "designated account") to make a practice, directly or indirectly, of effecting transactions in a cash account where the cost of securities purchased is met by the sale of the same securities. The provisions of Section 220.8(c) of Regulation T of the Board of Governors of the Federal Reserve System dictate the prohibitions and exceptions against customers' free-riding. If this procedure is not followed, the transaction is a violation of the free riding rule and Datek reserves the right to freeze your account for up to 90 days." Fohat, please read and assimilate. Bucky Lee
Bucke_Lee, your post consists of a patronizing remark and cut&paste repost only . There are no conclusions or any arguments from you as usual, just a patronizing remark. This brokers' choice was discussed before, it reffers to Reg.T, which allows daytrading. dufferdon, Paying by settlement day (up to 3 days later ) is promptly according to the Federal Reserve. Federal reserve: "If a customer were to sell a fully paid security on the same day that he or she purchased a different security of equal value, the transaction would be permissible under section 220.8(a)(1)(ii), because full cash payment for the new security would be received "promptly" (in this case, by settlement date)." http://www.federalreserve.gov/boarddocs/legalint/MarginRequirements/1999/19990218/ Fohat