To Whom It May Concern:

The proposed amendments concerning margin requirements for "day traders" seem unfair. The purpose of the amendments "to require that minimum levels of equity and margin be deposited and maintained in the account sufficient to support the risks associated with day trading activities" does not support the proposed changes.

I'm a day trader with Cornerstone Securities; I have an MBA in finance from the University of South Florida and believe I understand the risks and rewards of trading securities on the same day. The proposed changes unjustly and excessively penalize the day trader for exceeding their buying power. My interpretation of the change is as follows:

  • Assuming I have $50,000 in equity, I could make trades for $200,000 or less all day long and have no day trading call. However, if I make just one mistake and trade $202,000 on a trade, I would get a day trading call and be required to deposit 50% of all trades made that day less my equity. If I made trades totaling $10,000,0000 that day I could potentially have a day trading call of $4,950,000. I went over my buying power by $2,000 but would be required to deposit $4,950,000. Obviously, most day traders could not cover such a call and would be forced out of business. This is unfair and not right! A regular investor incurs no such penalty and incurs more risk by holding securities overnight.

    I believe existing margin rules are appropriate for day traders. I support the increase in buying power of 4:1 for day traders because I believe an experienced day trader incurs less unsystematic risk than an investor who holds securities overnight.

    I believe that the current rules may need adjustment because of the technological advances that have permitted entrepreneurial individuals like myself to compete more fairly in the securities markets. But I believe the changes to the rules should promote competition among all market participants.

    Sincerely,

    Steven R. Petrizzi