• The amendments redefine the term "day trading" to treat the sale of an existing position held
from the previous day as a liquidation, and the subsequent repurchase of that position as the
establishment of a new position not subject to day trading margin requirements.
• Day trading margin requirements – For day trades in equity securities, the day trading margin
requirement shall be 25 percent of either: (1) the cost of all day trades made during the day;
or (2) the highest open position during the day. If a customer's day-trading margin
requirement is to be calculated based on the highest open position during the day, the
customer's member organization must maintain adequate "time and tick" records
documenting the sequence in which each day trade is completed. "Time and tick"
information provided by the customer is not acceptable.
• Day trading buying power will be calculated based on the customer's account position as of
the close of business on the previous day. The amendments limit day trading buying power
to four times the day trader's maintenance margin excess. See Rule 431 (f)(8)(B)(iii).
• Day trading margin calls – A pattern day trader exceeding his day trading buying power
results in a special maintenance deficiency. Member organizations are required to issue a
day-trading margin call to cover the amount of the deficiency. Pattern day traders have five
business days to deposit funds to meet this day trading margin call. The day trading account
is restricted to day trading buying power of two times maintenance margin excess based on
the customer's daily total trading commitment, ["time and tick" can not be used during this
period] beginning on the trading day after the day trading buying power is exceeded until the
earlier of when the call is met or five business days. If the day trading margin call is not met
by the fifth business day, the account must be further restricted to trading only on a cash
available basis for 90 days or until the call is met. See Rule 431 (f)(8)(B)(iv)(2) & (3).
• Pattern day traders will be prohibited from utilizing cross guarantees to meet day trading
margin calls or to meet minimum equity requirements. See Rule 431 (f)(8)(B)(iv)(4).
• Deposits of funds to meet minimum equity requirements or to meet day trading margin calls
must remain in the customer's account and cannot be withdrawn for two business days. See
Rule 431 (f)(8)(B)(5).
Inquiries regarding these amendments should be directed to Albert Lucks (212) 656-5782 or
Patrice Vellecca (212) 656-2784.