Re: [CANSLIM] New NASD trading restrictions?

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] New NASD trading restrictions?
Date: Tue, 18 Mar 2003 16:26:05 -0500

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I disagree, I have seen, so far, nothing suggesting that Ameritrade is doing
anything differently than any other brokerage house. That is, they are
obeying the rules of the Federal Reserve which require a purchase be fully
paid, regardless of what you might have done with it since buying it
(between trade and settlement date). The only question in my mind is why an
account would go under a 90 day restriction prior to any trades, and the
only logical answer is that either the notice Jerome received is a poorly
worded notice to all new clients sent before acct documents are received, or
he is ACATing in an acct from another firm that is already restricted
because he violated this Fed Reserve rule.

The rule is not new, the restriction procedures are not new. And Ameritrade
has no choice in the matter, unless the account has been incorrectly
restricted.

- ----- Original Message -----
From: <Spencer48@aol.com>
To: <canslim@lists.xmission.com>
Sent: Tuesday, March 18, 2003 4:16 PM
Subject: Re: [CANSLIM] New NASD trading restrictions?


Tom:

     I may be shooting from the hip on this, but it seems that Ameritrade is
trying to make money on the float.  For instance, X sells a stock in the
morning; Ameritrade get the money from the sale the same day (for example,
through a wire transfer); Ameritrade lets the money work for them until the
sale is settled 2-3 days later.

     This is sort of looks like:  A bank not allowing you the cash from a
valid check from across town, but rather waiting 10 days before letting you
use the increased amount in your account.

     Anyway, that's the way it appears to me.  I can understand a brokerage
house not allowing you to buy until your check clears (assuming it hasn't
done business with the client before), but not permitting the client to use
the proceeds of his sale when the sell is to NASDAQ (I believe that's what
the stock-clearing houses are for: To warranty that stocks sales trading in
their enviroment will be honored)....  That sounds kind of hinky to me, and
Ameritrade saying that it is a Fed. Rule sounds kind of duplicitous to me.

jans


In a message dated 3/16/2003 5:46:04 AM Eastern Standard Time,
stkguru@bellsouth.net writes:

<< Jerome, I am not aware of such a new rule, but I have heard this claim
before on occasion over the years. The rule is, you must have settled funds
on settlement day to pay for a purchase. How those funds get there is of no
concern. If sufficient funds are available on settlement day as a result of
a
sale, the sale was done the same day as the purchase, AND the settlement
cycle is the same for both the buy and the sale, then you are covered. >>

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