The "only" problem with being proprietary trader seems to be lack of the insurance. What I meant in my first post at this thread was that firms like IB or Datek could get some financial institution to lend part of the money to the trader who can not meet the 25K requirement. The broker would guarantee to the bank that the trader will only be able to use his own money for trading. Example ( trader puts 10K into his account, bank provides 15K at 10% interest.) Those 15K just sit there in order to satisfy the SEC rule and trader can only trade with his 10K which would have 4:1 margin. His total money available for trading would be 40K instead of 100K if all of the startup money was his.
michaelday, i hear what you are saying.. it is however illegal to circumvent the law.. but there is no reason that you cannot borrow from a bank or credit cards to bring your account to the necessary level.. -qwik
Thought you guys should see this: Protrader put out a pretty definitive page describing the new rule, says it takes effect Aug. 27th. http://www.protrader.com/nl/07022001c.html -Jim
protrader is wrong as to the date in general, but it's likely they (and other firms) need to ensure compliance *before* the deadline (as I understand, the rule is already in effect, but has a six month grace period for compliance).
I doubt the the SEC had the intention of having most of the traders daytrading licensed. The Series 7 is intended for a stockbroker not a trader. It has little to do with what counts in making money as a trader. Most of the pro firms though are smart enough to know that they are a loophole now. rtharp http://communities.msn.com/rtharpsland
I agree. So for anyone with under $25k, whether or not such a person can remain a daytrader boils down to whether he can pass a series 7 exam, rather than whether he can actually trade well! The SEC are a joke.
rtharp, True. The Series 7 does nothing to prepare you for a trading career, or even a stock brokerage career for that matter. It's a test of your competence on the basic rules and compliance. I think the SEC figures that if you want to play with the big boys, then "Joe Daytrader" should have to abide by the same rules as everyone else. That being said, as a licensed trader "Series 7" you cannot sue your firm for losing your own money because you demonstrated and took an exam that showed you knew the risks associated with active trading. In addition as a "licensed member" you must go to arbitration, thus taking alllllll the legal haggling and bad rap out of the news and limelight because I believe most brokerage-arbitration have a non-disclosure attached too them. Just a thought.