Deadline for New SEC Daytrading Margin Rule

Discussion in 'Trading' started by fast, Aug 24, 2001.

  1. fast


    I have read a lot of comments on these boards regarding the deadline for implementation of the new SEC daytrading margin rule. Would appreciate any help in clarifying the following:

    1. I read somewhere that the deadline is Sept. 28 for one stock exchange and August 27 for another. Is this correct? If so, can someone tell me the deadline for each major exchange (NYSE, AMEX, NASDAQ)?

    2. Is the SEC's implementation deadline the same as the that of the exchanges? For example, IF the deadline is August 27 for one of the exchanges, has this exchange set an earlier deadline than required by the SEC, or is each exchange allowed to set its own deadline, or what? (Someone pointed out that the rule already is in effect and that we are headed toward the final deadline for implementation -- that's why I am using the term "deadline.")

    2. I also read that some brokers are implementing the rule on August 27? Are these brokers setting a deadline that is earlier than required by the stock exchanges and/or the SEC?

    Thanks for any enlightening info.


    P.S. I was told that this is SEC Rule 2520. Does anyone know if this is the correct designation?

  2. Tony01


    Below is part of an email I received a few days ago. It should answer your questions.

    Remote Traders,

    The U.S. SEC recently approved NASD Rule 2520 (the "Rule").
    There is an equivalent New York Stock Exchange Rule as well which
    effective on August 27, 2001
    Because our clearing firm, Southwest Securities, is a New
    York stock Exchange firm, The Rule, as it applies to clients of Hold
    Brothers becomes effective on August 27, 2001, and significantly
    the method of calculating margin requirements in accounts which are
    to be engaged in "pattern day trading" (as the term is defined for
    of the Rule, a client engages in pattern day trading by making four or
    day trades-purchase and sale or sale and purchase of the same security
    the same day within an account within 5 business days; provided that
    day trades equaled more than six percent of the total trades in the
    during the period).
  3. Htrader

    Htrader Guest


    The august 27 deadline is for new york stocks and hte september 28 deadline is for nasdaq stocks. Many firms, such as interactive brokers, are choosing to enact the new rules by the first deadline for ALL stocks, which is within their right to do.
  4. Fohat


    The corect designation and deadlines are:

    for NYSE: Exchange Rule 431 - deadline Aug 27, 2001
    for Nasdaq: NASD rule 2520 - deadline Sept. 28, 2001

    Each broker may set an earlier deadline than required by exchanges, or its' own more restrictive margin rules.

  5. fast


    Thanks, Tony01, Htrader, Fohat!
  6. roger2



    Are you sure that IB will implement the rule for NASD at the end of Aug? Here is a post from a thread I started a few days ago on this same topic:

    I don't know which of you is correct, and it will become a moot point very soon anyway. But I am just curious, where did you get your information?
  7. Htrader

    Htrader Guest


    Hmm, I could have sworn that I saw a news release on the IB website that said it would all start on August 28. I believe there were some posts on this board to that effect as well.

    But I just looked again on the IB website and it clearly says that Nasdaq margin requirements will begin on September 28. I stand corrected.
  8. roger2



    I think the confusion is in differentiating between Nasdaq's required implementation date and IB's arbitrarily chosen implementation date.

    As noted in this thread, IB is at liberty to fully enforce the rule before the official requirements. And from a software perspective it would be easier for IB programmers to go ahead and enforce NYSE and Nasdaq at the same time.

    The statement I read at IB last week was vague but seemed to imply that the rule would be fully enforced (both NYSE & Nasdaq) on Aug 28. You may have read this version of IB's statement.

    I just went back to IB and the statement has been edited, but still does not explicitly state that NASD day trading will be allowed 'til Sept 28. But the new wording does seem to suggest that Merkur's information may be correct. I hope so!

    good trading