The large majority of customer accounts opened are margin accounts, and quite frankly, understanding the many details of margin rules as set forth by the U.S. Securities & Exchange Commission (SEC) can be a daunting task. For most customer day traders, the points outlined below are most applicable.
In a typical direct access trading account, day traders buy and sell stocks frequently throughout the day, in many cases, the same security is rapidly bought and sold throughout the day. What might seem straightforward as it relates to how margin rules are applied can often involve additional factors, which must be applied on a case by case, security and trade specific basis.
Accordingly, we encourage traders and their managers to contact the Assent Margin Department for further consultations and review. The Assent Margin Department can be contacted at (201) 356 – 1415, or via assentmargindepartment@sungard.com.
- Direct access trading can be risky and is not appropriate for people without adequate capital and net worth. To open a day trading account, a minimum of $30,000 is required and a minimum liquid net worth of @ $100,000 is recommended.
- To maintain your account as a day trading account, thereby entitling you to take advantage of the increased leverage ratios, you must maintain an equity level of at least $25,000. If your account should fall below this minimum amount your account is AUTOMATICALLY restricted until the equity level is brought to adequate levels. In most cases, to bring an account back up to the minimum $25,000 required, additional funds would have to be deposited into your trading account.
- To continue your ability to electronically trade stocks through the front-end trading systems, you must meet a DAY TRADING CALL on the day that you are notified. Day trade calls which are not satisfied will mean that you cannot access the ANVIL direct access trading systems and instead may only phone in liquidating transactions only to the Assent Order Desk.
- Although there are exceptions, generally speaking, when buying a stock, you must have 50 % of the cost of the purchase available in your SMA account. Certain low priced stocks or stocks that are not considered “liquid” are not eligible to be purchased on margin, therefore 100 % of the purchase price is required.
- A separate approval process is required for traders who wish to trade options. Options trading can carry substantial risk levels and can tie up monies in your account that are required to satisfy margin rules.
