October 18, 2006
With respect to Portfolio Margin, I hope the SEC will grant approval to the Exchanges and also substantially lower the threshold of $5 million that was used in the Pilot Program. There is no reason why a customer with $5 million in equity should be treated significantly different than a customer with say $500,000.
I can understand the $25,000 threshold for "day traders" (reducing a trader's activity if equity is less than $25,000) but imposing substantially different margin requirements for a trader with $500 K vs one with $5 million would be unfair as it would not "protect" these accounts any better.
Please note that Portfolio Margin is currently the best way to protect accounts as it properly calculates the risk of a portfolio. Therefore, imposing any type of arbitrary rule on top of that, defeats the purpose of Portfolio Margin. That is, placing Reg-T/Day Trading "type" rules, rules that limit "X" times equity make no sense if they are applied on top of Portfolio Margin for ANY customer account.