I just got this email from IB

Discussion in 'Interactive Brokers' started by deadreader, Sep 12, 2002.

  1. def

    def Sponsor

    first, the queen wouldn't say WTF. She's the queen. maybe bloody something or other.

    second, probably was taken directly from the SEC directive word for word.

    third, derekas may be on to something. i'm speculating though as I just rec'd the notice like the rest of you.

    from what I read... your ability to place a trade will depend on the equity value of your account from the previous days close as opposed to the current day. i.e. say you start with 20K and buy some stock that makes 4K. You then sell. You would now think you have 4K to play with - sounds like you won't have that 4K till T+3.
     
    #11     Sep 13, 2002
  2. I'm sure there are more directives coming straight out of their directive churning machine.

    The next thing you know, they'll be telling you when you can trade and what days you can be short and long.

    Mondays, Wednesdays and Fridays will be LONG days
    Tuesdays and Thursdays will be SHORT days

    There is just no end to their bullshit laws.
     
    #12     Sep 13, 2002
  3. NKNY

    NKNY

    You know, I don't want to get into it but this topic... really gets me going...

    Here we are, swimming in capitalism, free markets, trade agreements... blah blah blah .....And you got these SEC prick...
    big brother types telling you you cant daytrade more then three times a week if your a little guy. The concept just pisses me off.

    Democracy ? Sounds more like socialism to me....

    Nick


     
    #13     Sep 13, 2002
  4. imo, either make a rule that applies to everyone, or don't make it at all. does anyone have a link to anything that states exactly why the sec has made these rules?
     
    #14     Sep 13, 2002
  5. alanm

    alanm

    The way I read it, they're capping your buying power based on the previous night's equity, not letting you make use of today's trading profits today. This reinstates a restriction that existed before the PDT rule change.

    For example:

    I have $50K cash as of last night's statement. I make $20K in my first trade today. Even though my account now says $70K cash, I'm limited to positions that I can take for $50K (i.e. $200K for 4:1 margin).

    def: I think you mean T+1 - it doesn't mention that it's based on settled transactions. That is, you have today's trading profits reflected in your statement tonight, and available tomorrow.
     
    #15     Sep 13, 2002
  6. Better be T+1. Imagine the mess T+3 would create. In Ib's letter
    they do state "Prior night's Equity with Margin Value >= Account's Total Initial Margin Requirement". And I copied and pasted this right out of their email. So there... It has to be T+1. :p
     
    #16     Sep 13, 2002
  7. Well, if all this amounts to is you can't use fresh PROFITS the next day, then its no big deal. Let's hope so.

    I never make any profit anyhow.
     
    #17     Sep 13, 2002
  8. I haven't figured it out either - but there is no doubt that in some way they're net beneficial to the brokerage/banking lobby and to the government.
     
    #18     Sep 13, 2002
  9. echo

    echo

    If you could use the days profits to purchase more stock, wouldn't you essentially be using interest free (and increased) margin? Since the brokerage firm won't actually get the cash for your profits for three days, you would be borrowing money based on money you will get in the future. Capping this doesn't seem unreasonable. Then again, maybe I am misreading this whole topic.
     
    #19     Sep 13, 2002
  10. mskl

    mskl

    I know it sounds like T+1 but that doesn't make much sense.

    For example - what if you had $50,000 cash as of last night and you LOST $20,000 trading today - there is no way you should still be able to trade with the previous nights Equity with Loan Value ($50,000)
     
    #20     Sep 13, 2002