Lars I wonder if perhaps you are correct. Seems a bit far out, but could this be an attempt to remove some choppiness from the market making it easier for the big boys? I simply assumed it was another pathetic attempt at politicians protecting us from ourselves.
Dear Bro59, in the truth, I say that I don't need to protect me by myself. When we trade stocks we know perfectly which are the risks that we can meet on... If they want to protect the investors, they should say which is the real sense of that rule. A hug. Lars Ps.: I'm writing from Italy so I apologize for my english grammar errors...
I wonder how this new rule will affect traders from foreign countries. Suppose I have an account with an european broker who offers intradaytrading on european exchanges as well as on US markets. Suppose further, that many US stocks are listed also on foreign exchanges and can be traded intraday on these exchanges as well ( i.e. Frankfurt Stock exchange or London - you can trade almost all important listed and NASDAQ stocks ) Even with the new rule in place, I would probably have no problems to trade US stocks intraday with my european broker even,when my account would be lower than the 25K. Just because I trade the US markets from a foreign place or I trade the US stocks listed on foreign exchanges. Maybe not good for scalping , but good enough for intraday swingtrading for sure. Only problem could be the somewhat higher commissions you've to pay when trading US markets through foreign brokers. However, still better than watching a position diving deep into the red just because I have filled up my limit of 3 daily roundtrips within 5 days. Could imagine, that some US onlinebrokers might loose most of their overseas traders for that rule.
Actually I think daytraders didn't loose as much money as long term investors that bought things out of hype in this market and definitely not people that were going short thanx to margin. Rule not to trade tech and .com stocks would be more apporpriate to protect traders / investors. I think this has nothing to do with protection, just some kind of monopoly that won out and refusing to share a great stock market with many people. Bob
If this rule effects you the question is: what are you going to do about it? Belly-ache on this board? I see this thread as a forum to generate ideas that can expose the flaws, and refute the grounds on which this rule was developed. Unfortunately conspiracy theories don't cut much mustard in the well monied halls of influence. And, neither can a few lone voices in the wind. But A GRASS ROOTS MOVEMENT, well orchestrated and well targeted, can. Zboy has suggested a letter campaign to your local politicos -- maybe that will have an impact. My experience is that all it will get you is a computer generated form letter based on an optical scan for key words, or a form response by any one of a number of aides. (don't believe me? send the same letter 5 times to your senator and see what you get!) But, a letter to the senator is certainly better that just jaw boning the board! What i think is called for is something a bit more focused. Even then, i doubt it will have much of an impact. Hell, 250 of the top scientists in the world wrote a declaration to confirm ozone depletion and what did it get them? Reagan told the world to wear a hat and use sunscreen! But it doesn't mean we can't try. I think we need to appeal, not only to the politicos, but to our broker's self interest. Now THEY carry a bigger stick! If the idea appeals to you -- let's hear your response and ideas. If the idea is full of holes -- then critique it and let me plug the holes. I'm doing this alone, but with your input i know WE can have a much greater impact. regards/greg
gh2, writing letters to the brokers is a waste of time as they already wrote comment letters and appealed to the regulators. The SEC already had an open period for comments to be sent but the public never seem to care or know about these things until it is too late. In the end, I wouldn't be too surprised if a class action suit was filed by groups such as yourselves.
Dear Privateer, You're right! From the european point of view the rule doesn't affect the private traders who operate in US stocks by continental brokers. As you know some of your famous on-line brokers (as Datek or E-trade), allow to foreigners to open an account with them. When you decide to do it you are affect by US Rules as the residents (the only difference are the fiscal rules: you pay the taxes of capital gain directly in your country). I know people that have an account with Datek from Italy. They are thinking to close 'cause they've less than $25K and they did daytrading as we know. So, I'm perfectly agree with you when you say "Could imagine, that some US on-line brokers might loose most of their overseas traders for that rule". I'm a little scared for how the erupean on-line brokers can react. Infact, in the most of finance's cases when new US rules are created, in Europe the politicians think to apply the same rule "translated" to affect our trading actions. In this way they can remain "balanced" with the rest of the world... A hug. Lars
Hi Lars, actually, I'm from europe and traded the US markets since beginn of 1999 exclusively via US brokers ( Datek & IB ). But US trading has been only part of my trading activity and I always maintained 2 accounts with European ( german ) brokers as well. Nowadays, you have also well equipped brokers here in Germany who offer access to almost all exchanges in the world. Comdirect offers you trading at 42 stockexchanges worldwide + mutual funds. Plus, you can trade of course all national and international stocks listed on german exchanges ( in total about 12000 or so ) Or look at Fimatex, a subsidiary of europes 2nd. largest bank Societe Generale and the leading online-broker in France with branches in Germany, Spain and UK, who offers a kind of direct access trading for bonds, futures, options, stocks listed on german exychanges - US exchanges will be introduced in the coming days - all from one account. Only drawbacks : if you want to go short a stock, you need to use options. Shorting is not allowed for the private trader / investor in Germany. Commissions : In Germany, comissions are calculated based on the value of a lot, rather then the number of shares. The few flatrate brokers we had in Germany went belly up recently ( eqonline, systracom ). Margin : Margin is restricted to 50% of the value of your account holdings in stocks. i.e. Fimatex is charging 0.19% of the value per trade or a minimum of 8,00 - 9,00 EURO / trade. Well, if you swingtrade in lots of 100 - 200 shares of a 40 - 50 EURO ( USD ) stock, or larger lots of lower priced stocks for that matter, it's not much more expensive than i.e. Datek with 9.99 USD (= 11.50 EURO ) trade. With Fimatex, you have your buyingpower updated in Realtime ( like with IB or Datek )when you trade intraday. You can execute trades via a tradingstation ( GTS ) on an electronic system ( XETRA ) or directly with the floortraders at the various exchanges or . You can trade also a variety of stocks directly ( outside of exchanges ) with leading market-makers ( 8:00 to 23:00 ) + Citibank ( CATS ) Arbitrage trading in the same stock between several regional exchanges / MM's can add a new dimension for swing-traders. Further alternatives could be to have an account with the european branches of some US EDAT brokers ( UK ) and the daytrading centers located in Frankfurt, Duesseldorf, Berlin, Hamburg and some other cities. regards
Lars : reply part 2 as for concerns, that europe's regulators might impose similar rules for daytraders in the near future : I think not for following reasons : 1. We have no institution in Europe comparable to the SEC ! 2. Trading stocks on margin is not very wide-spread in Europe. Only a few european brokers will give you leverage in the area of 50% of the value of your stock-holdings, but only if these holdings are in excess of at least 10K EURO. as with US cash-accounts, shorting of stocks is not possible for private traders, even with margin accounts. 3. Most daytraders in Europe trade futures, rather than stocks due to the restrictions regarding shorting of stocks and margin. 4. The daytrading phenomenon in europe has neither the size nor the impact on exchanges as compared to the US. 5. Only a handful of brokers are really equipped for intraday-trading as you know it from the US. The number of daytraders using these brokers on a regular basis is fairly low ( that's why some of these brokers went bancrupt already recently )compared to the US. 6. European markets lack the kind of liquidity you know from the US markets. Even the largest volume stocks in Europe have daily turnovers far below the average volume 2nd. tier stocks trading on NYSE or NASDAQ. The total market cap of the all 300+ stocks listed on the Neuer Markt ( Germanies mini-nasdaq ) is lower than the market cap of a single, larger DAX component stock ( but they are still grossly overvalued ;-)) ). This situation lead to the fact, that many german, so called daytraders, were infact gamblers who cheated the most illiquid stocks on the Neuer Markt in order to profit from huge price swings in overnight holdings. A bit comparable to trading pink-sheet / penny stocks in the US. 7.Exchanges need liquidity and therefore have no interest in imposing rules preventing traders and investors to trade stocks. So, I don't see any reason, at least for now, why daytrading in Europe could be restricted in a way like in the US. Although, there have been some discussions about restrictions in the past, they all died after the big market slump in 2000 and 2001. Most of the gamler have lost considerable amounts of money and are probably out of the market already. Today, even politicians think about how to make the stockmarkets more attractive to private investors.
Def, I am curious why IB decided to compound the problem with their "solution". The SEC's rule was an annoyance for swing traders. IB's solution to the problem is the real problem, though. If they can program the system to detect when I've made 3 trades in the last 5 days, why can't it detect when I've made 3 INTRA day trades in the last 5? IB's solution limits my opportunities far beyond the SEC ruling. Wet