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E-Brokers and Daytraders Are Vying to Stop New Margin Rules
By Caroline Humer, Senior Writer, 2/15/00 9:01 PM ET
It ain't over till the SEC says it's over.
With that in mind, online brokerages such as Charles Schwab (SCH:NYSE - news) and E*Trade (EGRP:Nasdaq - news) and daytrading firms are aligned in an 11th-hour attempt to quash a strict set of proposed margin rules.
The firms are part of a 15-member task force set up by the National Association of Securities Dealers board. It first met last week. The NASD originally went along with the New York Stock Exchange in submitting the proposed rules to the Securities and Exchange Commission in January, but it then formed the task force after some members voiced concerns. Rules for the NASD and NYSE are required to be similar so any revisions by the NASD task force would change what the Big Board drew up.
"The task force's charge is really to break this up and come up with something that allows for a nexus between greater equity and larger margin on an intraday basis," says James Lee, a vice chairman of the task force and president of Tradescape/Momentum Securities, a daytrading firm.
An NASD spokeswoman declined to comment on the task force, other than to confirm its existence. The NYSE declined to comment.
Steven Levine, chief of credit regulation and national credit officer at Southwest Securities (SWS:NYSE - news), a large clearing firm for daytraders, and chairman of the task force, says the NASD firms are getting into the game now because they aren't members of the NYSE and weren't included in the rule-making process.
According to the consultant, any substantive changes the NASD makes to the rules would have to go back to the NYSE for consideration because the margin rules need to be similar among exchanges to avoid confusion. From Levine's point of view, however, the NYSE missed the mark.
"The New York Stock Exchange showed a complete lack of fundamental understanding of the daytrading community and business," Levine says.
In a month or two, it'll be clear whether the SEC understands.
-- DeeEmBee (firstname.lastname@example.org), February 16, 2000
-- Possible Impact (email@example.com), February 16, 2000.
-- DeeEmBee (firstname.lastname@example.org), February 16, 2000.
Time to make some campaign contributions!
-- Wildweasel (email@example.com), February 17, 2000.