Date:    02/15/2000  7:45 PM

Subject: Day Trading Margin Rules

(I have also attached my comments.  It was written in Microsoft Word '97)
     
Subject:  Margin calls for Day Traders
     
My name is David Lipman.  I am a professional day trader at Cornerstone 
Securities.  
     
The new regulations that are being considered in regards to margin calls do 
not seem to address the issues at hand.
     
The SEC would like to limit the risk of day traders, yet they are proposing 
to increase margins from two-to-one, to four-to-one.  This encourages day 
traders to take on more risk intra-day than before.
     
A margin call is to ensure that the customer could have purchased stock up to 
a certain value.  If a trader goes over his buying power by one dollar, he 
must then come up with 50% of his initiating transactions for the day.  I 
trade an account with roughly $500,000 of cash.  I will trade up to 
$10,000,000 of stock in a day, sometimes more.  If I exceed my buying power 
by one dollar, now I have to cover a margin call of $4,500,000, which is 
ridiculous, considering my maximum exposure at any on time is usually less 
than $850,000.  The rule makes no sense.
     
What is the purpose of requiring money to be in the account prior to trading? 
 If I bought a stock for a long-term hold, I would have three days to fund my 
account.  Now all of the sudden, if I wish to sell the stock on the same day, 
I have to fund the account the same day.  The playing field is supposed to be 
level, not tilted against day traders by necessitating the additional expense 
of wiring money back and forth to meet margin calls daily.
     
When liquidating an overnight position, the proceeds should be available 
immediately.  Currently, if I held $500,000 of stock overnight, and sold it 
the next day for $505,000, the $505,000 of stock that I sold is open for the 
whole day, thus reducing my buying power by $505,000.  Also, my buying power 
coming into the day was reduced because I held $500,000 of stock overnight. 
This rule is absurd.  You are saying that I may have to put money into my 
account in order to liquidate the position.  Does this make any sense?
     
The playing field is supposed to be level, thus fair.  By requiring money to 
be in the account for two days when a security is purchased and sold, and 
only in the account for one day if the position is purchased on day one and 
sold on day two is definitely not fair.  This rule is encouraging day traders 
to take on additional risks by holding stocks overnight. 
     
Again, the SEC wishes to reduce the risk assumed by day traders, with which I 
agree.  The current proposed changes seem to indicate that the SEC wishes to 
banish day trading, rather than limit the risks involved with day trading.
     
Thank you for accepting my comments on the issue of margin calls.
     
Sincerely,
     
David W. Lipman
1501 S. York St.
Denver, CO, 80210
(303) 733-3724