Discussion in 'Retail Brokers' started by deadreader, Sep 12, 2002.
You mean Hairy Harvey who doesn't give a Pitt about the small investor/trader?
here's an example which hopefully will clarify the change:
A customer desires to purchase XYZ stock $100. Equity with margin value (EMV) from prior night is $40, and current EMV is $100. Customer currently owns options with an initial margin requirement of $50. The customer would not be allowed to make this stock purchase as (25%*100) margin requirement for the stock plus the $50 margin requirement for the options is greater than the $40 EMV from the prior night. No liquidation would take place even though the option margin requirement of $50 is greater than last night's EMV of $40. In addition, if a customer wanted to add an option position with an initial margin requirement of $40, it would be allowed as $50 + $40 is less than the current $100 EMV and the above rules do not apply to opening options and futures transactions.
I am glad I don't have your job ...
Is all this convolution designed to protect someone or just make trading unpleasent?
Provide secure jobs and an accelerated career growth path for bureaucrats ...
The actual NYSE rules which were written about a year ago state that a customer's buying power is defined as follows:
"Day trading buying power is calculated based on the customers account position as of the close of business on the previous day. Day trading buying power is limited to four times the day trader's maintenance margin excess, which is the equity in a customer's account at the close of business on the previous day less any maintenance margin requirement as prescribed in the Exchange's rules."
IB, wanting to protect it's customers thought that using "real time" info was better. However, the NYSE has forced them to use the previous nights. The NYSE's method allows traders to use your previous night's buying power even if your current buying power is substantially lower putting the firm and customers at substantially more risk.
Therefore IB will now calculate your previous nights equity and current equity and will use the lower of the two to determine if you have enough capital to trade.
Obviously, no one at the NYSE is actually paid to think.
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