The following procedures improve service and promote the efficiency
required to provide
transactions at very low rates:
Initial Account Size
The minimum account size must start with $2,500 in cash or securities.
Sufficient funds or buying power must be in your account at the
time of the trade.
Certificates must be held by Marsco at the time of the sell
We suggest that all margin-eligible accounts be opened as
margin accounts, which can provide sufficient buying power
trade date. The margin account provides you with a line
of credit which
you can, but need not, use. The minimum equity requirement
for margin accounts is $2,000. Please review the Margin
Cash Only Accounts
All IRA and Custodian Accounts do not qualify for margin
treatment. Cash must be available in your account on
the trade date.
Option Accounts require a separate supplemental application.
Option trading may not be suitable for all investors.
Please review the
and Risk of Standardized Options.
We do not accept Rule 144 or Restricted Stock.
Please review the Risk
of Online Trading Disclosure,
Hours Trading Risk Disclosure and Day
Trading Risk Disclosure
DAY TRADING REQUIREMENTS
The term “pattern day trader” includes any margin
customer that day trades (buys then sells or sells short then buys
security on the same day) four or more times
in five business days, provided the number of day trades are more
then six percent of the
customer’s total trading activity for that
same five day period. Under the rules, a pattern
day trader must maintain minimum
of $25,000 on any day that the customer day trades.
The required minimum equity must be in the account
prior to any day-trading
activities. If the account falls below the $25,000
requirement, the pattern day
trader will not be permitted to day trade until
the account is restored to the $25,000 minimum
The rules permit a pattern day trader to trade
up to four times the maintenance margin excess
business of the previous day. If a pattern day
trader exceeds the day-trading
buying power limitation, the firm will issue
a day trading margin call to the pattern day
trader will then
have, at most, five business days to deposit
funds to meet this day-trading
margin call. Until the margin call is met, the
day-trading account will be restricted to day-trading
power of only two times
maintenance margin excess based on the customer’s
daily total trading commitment. If the day-trading
margin call is not met by
the fifth business day, the account will be further
restricted to trading only on a cash available
basis for 90 days or until the call
is met. In addition, the rules require that any
funds used to meet the day-trading minimum equity
requirement or to meet any day trading
margin calls remain in the pattern day trader’s
account for two business days following the close
of business on any day when
the deposit is required. The rule also prohibits
the use of cross-guarantees to meet any of the
day-trading margin requirements.
FREQUENTLY ASKED QUESTIONS
Does this rule apply to Cash Accounts?
Day trading in a cash account is generally
prohibited. Day trades can occur in a cash account only
to the extent the
not violate the free-riding prohibition of
the Federal Reserve Board’s
Regulation T. Proceeds from a sale of securities,
which have been previously purchased on that same day, are
not available to purchase
more securities that day. In general, failing
to pay for a security before you sell the security in a cash
account violates the free-riding
prohibition. If you free-ride, Marsco is required
to place a 90-day freeze on the account ( i.e. restricting
trading to a cash available
Does this rule apply only if I use leverage?
No, the rule applies to all day trades, whether
you use margin or not. For example, many
you pay for
the option in full, that is at 100%. As such,
there is no leverage used to purchase the
numerous options transactions during the
day, you are still subject to
intra-day risk. You may not be able to realize
on the transaction
that you had hoped for and may indeed incur
substantial loss due to a pattern of day-trading
Again, the day trading
rule is designed to require that funds be
in the account where trading and risk is occurring.
Can I withdraw funds that I use to meet the
minimum equity requirement or day trading
they are deposited?
No, any funds used to meet the day-trading
minimum equity requirement or to meet any
day-trading margin calls must
remain in your
account for two business days following the
of business on any
day when the deposit is required.
What is a day trade?
Day trading refers to buying then selling
or selling short then buying the same security
on the same
day. Just purchasing
selling it later that same day, would not
considered a day trade.
Does the rule affect short sales?
As with current margin rules, all short
sales must be done in a margin account.
the same day,
it is considered a day trade.
Does the rule apply to day trading options?
Yes. The day trading margin rule applies
to day trading in any security, including
What is a pattern day trader?
You will be considered a pattern day
trader if you trade 4 or more times
in 5 business
day-trading activities are greater
than 6 percent of your total trading
activity for that same five-day
Would I still be considered a pattern
day trader if I engage in four or
trades in one
day trading the
once your account has been coded
as a pattern day trader,
firm will continue
a pattern day
if you do not day trade for a five
day period. This is because the firm
have a “reasonable belief” that
you are a pattern day trader based
on your prior trading activities.
that you may change your trading
strategy. If you have decided to
reduce or cease your day trading
activities you may contact
discuss the appropriate coding of your account.
Does the $25,000 minimum equity requirement
have to be 100% cash—or
could it be a combination of cash
You can meet the $25,000 minimum
equity requirement with a combination
and eligible securities.
Source: NASD Investor Education Day