def - question re: IB implementation of SEC rule

Discussion in 'Trading' started by roger2, Aug 16, 2001.

  1. roger2



    I followed your link and copied the following from IB website:

    "IB Complies with SEC/NASD Day Trading Rules

    Starting August 28th, the NYSE will impose a $25,000 minimum equity requirement for "pattern day traders." Effective September 28, the NASD will impose the same requirement.
    The new rules define a pattern day trader as someone who has made four or more day trades within five business days in his or her account, provided that the number of day trades was more than 6% of the total trades in the account during the period.

    Consistent with the new margin rules, as of August 28th, if an IB customer's margin account falls under $25,000 and the customer has opened and closed positions on the same day three times within five days, the customer will not be allowed to open new positions until the $25,000 requirement is restored, or the five days have elapsed.

    Although the NYSE and NASD rules impose other "pattern day trader" account restrictions, our customers will not be affected by these restrictions because we believe our current margining system complies with these additional rules. "

    After reading this, I would appreciate clarification on one point. It is stated that NASD imposes the new rule Sept 28.
    But IB's statement seems to imply that the new rule will take effect at IB on August 28. Is this correct?

    Or can we still trade NASD stocks without restriction until Sept 28 as that is when the SEC rule actually takes effect for NASD?


  2. mjt


    Looks like your thread is about to be bumped off the front page, so I'll go ahead and try to answer. Def or someone can confirm.

    It looks to me like if you trade NYSE stocks, this rule is going to affect you beginning Aug 28, but if you trade Nasdaq it won't affect you until Sept 28.

    Can anyone confirm that this is the case?
  3. emk662


    Def: how about options? Can that rule apply to options trading?
  4. def

    def Sponsor

    i'm getting more confused after reading all the posts. (got to remember I'm based overseas and my responsibilities mostly point to trading the Asian marekets. I'm not involved on the internal ongoing discussions regarding the rules and thus am not completely on top of things). From what I read it sounds like all will be enforced on Aug 28.

    Options and Futures are not part of the rule. Trade them at will.
  5. Merkur


    I spoke with two different guys from the helpdesk in US and with one supporter from the helpdesk in Switzerland.

    All three told me, that IB will split the implementation of the new rule: Nyse Aug 28th, Nasdaq Sept. 28th.

  6. roger2



    thanks, hope you are right...

    an extra month may be enough to allow me to make the 25K limit and stay in the game
  7. Merkur


    Yes, the same for me. ;)

    Good luck.

  8. saico


    Hi Merkur,

    auf den Euro kann man sich eben verlassen, steigt gerade noch rechtzeitig. :)
    Dürfte einiges ausmachen!

  9. Merkur



    let's talk in english, it's an american board. ;)

    Yes, the euro is rising, but i haven't a multicurrency account at IB (with euro), I have a normal stock-margin account with dollars, so I am "losing" money (in Deutschmarks) at the moment. ;)