Additional day trading restrictions in effect?

Discussion in 'Trading' started by intradaybill, Apr 29, 2008.

  1. I received the following email from my broker. Has anyone else received anything similar? Are these new restrictions applied to day trading?


    Penson Financial Services ("Penson"), our clearing firm, has been
    required by FINRA to make changes to its calculation of Day Trading Buying Power ("DTBP") to conform to FINRA's Conduct Rule 2520.

    The Day Trade Buying Power (“DTBP”) calculation

    As a result of the above, in a change from prior practice, Penson has implemented controls to ensure that proceeds from closing an overnight position will no longer be applied to the DTBP figure for that date.
    For example, if an account begins the day long 100 XYZ shares valued at $10,000 and $0 excess margin; the account will be allowed to liquidate the XYZ and use the proceeds to open another overnight position. However, if those proceeds are used to buy $10,000 of ABC on that same day and the account holder sells the ABC shares on the same day, a day trade call will be issued in the amount of $2,500 ($10,000*.25).

    Consequences of receiving a day trading call

    Once a day trading call is incurred, an account is limited to 1X
    aggregate Day Trading Buying Power until the call is met. The call needs to be met within 5 days. Failure to meet the call during the 5 day payment period will trigger 1X aggregate buying power for 90 days. Any subsequent day trades are calculated on a 1X aggregate basis and a call is due within one day or the account will be restricted for 90 days and may only close positions during that period.

    It doesn't make any sense to me. Any thoughts?