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I've read with some interest the recent discussion on the SEC and recent
changes to the margin system. I thought I should chime in with some
observations. Margin changes don't originate with the staff at the
SEC .... the SEC doesn't commonly initiate rule making. The securities
industry is made up of SRO's (self Regulatory Organizations) which
make the rules and the SEC governs them and approves or disapproves
their rules. Margin changes generally originate either among the
member firms or the Formal margin activity comes from the FED which established
the broad based margin requirements such as REG. -T, etc. The recent
changes originate from the member firms. REMEMBER margin is not a
method to protect investors .... MARGIN exists to protect the member
firm from being left with an unsecured debit and accordingly the system
coming under margin strain. The decision making process is not done
in secret .... a proposal(rule change is filed) .. published
for all of the world to review. Almost always it is the member firms
trying to lay the blame on the SEC .. when in fact it is almost always
the member firms that are looking to modify investor behavior. The
SEC is more reactive than proactive. The FED is more proactive than
reactive.
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