Just got this email " As part of Vision Clearing's continuous risk management reviews and assessments, Vision has determined to amend their short sales policy. Effective immediately: 1. All accounts holding overnight short positions must have liquidating value of at least 10 times the notional value of each short position. For example, a customer is holding 2 short positions, one with a notional value of $50,000, and one with a notional value of $25,000. The customer must have liquidating value of at least $500,000. 2. As a general rule, Vision will no longer allow customers to hold overnight short positions in OTC securities (non-exchange listed securities).If you wish to hold an overnight short position in an OTC security, you must receive prior approval from Vision. At a minimum, the account must meet the liquidating value requirement set forth in item 1 above and the security must have 30 day average daily trading volume greater than 100,000 and must be priced greater than $5.00 per share. Vision, in its sole discretion, will determine to approve or disapprove any such request. 3. If a security is imminently pending a re-org, Vision will not allow overnight short positions in that security. If we find such situations, we will require you to close out the short position. "
If you do not believe in a company, don't short it. Just stay away from it, and long a company you believe in. It is quite simple.
I wonder how much these guys lost in account blowups. These new rules are effectively 1000%+ margin requirements on all short positions. Talk about squeezing your customers with your own rules...
It's worded in a roundabout way, but based on the example given it actually seems to mean that you can't short more than 10% of NAV in any single position. So as long as all your shorts are under 10%, it would be business as usual, not consuming more margin.
Yes, but run the numbers on what happens if your 10% short squeezes up 2x and is now a 20% short. The margin call will be more than the whole value of your account!
You should probably cover anyways if that happens. Do you think holding 20% shorts is a good idea in general? I guess it is a fairly aggressive policy, but I don't feel outraged by it or anything. I'm not with Vision, but if I were this would be a non event personally, as a rule I never short more than 5% of NAV in one name (1% in penny stocks). Something that was much worse was IB massively raising their equity margins across the board (https://www.elitetrader.com/et/thre...as-vix-falls-reaching-nonsense-levels.342972/) I took the majority of my business elsewhere after that. Good thing too, because 10 months later their margins are still elevated.
Well that depends why it went up and how much, but if you held GME short from $25 at a 1% position you’d hit 20% at $500 and it sure was worth holding on for that -90% crash since. But no, I wouldn’t have a 20% sized short, or anything close to that, without some nearly perfect hedge. However that’s not to say I might not have a larger % short at a Vision account since I might hold most of my assets elsewhere for margin or financing or execution or any of various other reasons. This just makes them less attractive for shorting, and that’s when they’re a broker that specializes in this sort of thing. And yes, the IB thing in Mar/Apr 2020 was really bad. Who do you like best these days?