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Below is response of WebSt to my compliance question regarding margin and
buyng power. WebSts' computer does not update buying power during the day
and apparently will let you put on a $100,000 trade in a $5000 account since
their computer does not reject trades for insufficient buying power. Another
broker I use has a computer that does update buying power during the day and
rejects trades for insufficient buying power.
Does anyone know if SEC Rule 431 is interpreted as WEB ST indicates below.
Web St interpretation is that even though you buy or sell at the open to
place yourself flat you cannot thereby increase your buying power for the
day. If you had only $10 buying power left the night before that is all you
have the entire next day, even in a $150,000 cash account that becomes flat
at the open? To me those funds are available for trading right after the
open. Anyone know the rule?
George
-----Original Message-----
From: John J. Putnam <jjp@xxxxxxxxxxxxxxxxxxxxxxx>
To: maposnak <maposnak@xxxxxxxxxxxxxxx>
Date: Monday, August 03, 1998 11:02 AM
>it is not the computer and i do not have control over other brokerage firms
>margins, day trading is covered under rule 431 of the new york stock
exchange
>and all brokerage firms are required to follow the rule or be subject to
fines,
>this rule says your day trade buying power is based upon the proir nights
close
>and is not effective by the days during the day.
>if another firm is not following this rule 431 than that is a area that is
>either not being addressed or overlooked.and you should bring it to the
>attention of the compliance person at that firm.
>thank you
>john putnam
>margin manager
>
>
>maposnak wrote:
>
>> John,
>> I am a new customer with Web St. I also have an account with another
online
>> broker. When I cover a short sale or sell a stock their computer picks it
up
>> immediately and increases my buying power right then. I can can carry a
>> position overnight then trade in an out all day if I want and their
computer
>> updates real time. Are you saying that Web Street's computer does not
have
>> the capacity to update on a trade by trade basis and only updates once a
day
>> and that therefore if I carry a trade overnight I can't trade in and out
>> like I do at the other firm? Is that what you are saying? Also I never
got a
>> margin call over there because their computer rejects any overtrade that
I
>> might make since it know my buying power real time. Are you saying that
with
>> Web St your computer will not reject a trade for say 1000 shares of SPY
in
>> a $6000 account?
>> Again I am a new customer who did not realize how your computer works.
Now
>> that I know I won't be trading in and out like I had hoped. If I carry a
>> short position over night I will loose the buying power for the next day
>> even though I cover at the open as I did on 24 July 98 and even though
you
>> had sufficient funds available but your computer lags behind by one day,
>> right?
>> I don't think there is a compliance problem here since there was
sufficient
>> funds on hand for the trade just a misunderstanding about the
capablities
>> of your computer which you have now cleared up.
>> George
>>
>> -----Original Message-----
>> From: John J. Putnam <jjp@xxxxxxxxxxxxxxxxxxxxxxx>
>> To: maposnak@xxxxxxxxxxxxxxx <maposnak@xxxxxxxxxxxxxxx>
>> Date: Friday, July 31, 1998 8:39 PM
>> Subject: 933-26084
>>
>> >i was asked to response to the question does a buy of short position
>> >increase buying power, no, buying power is not increased by that or the
>> >selling of the stock either, what you start the day with is what you
>> >have.
>> >thank you
>> >john putnam
>> >margin manager
>> >
>> >
>
>
>
>
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