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.

Buy Orders
Sufficient funds or buying power must be in your account at the time of the trade.

Sell Order
Certificates must be held by Marsco at the time of the sell order.

Margin Accounts
We suggest that all margin-eligible accounts be opened as margin accounts, which can provide sufficient buying power on the 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 Disclosure Statement.

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
Option Accounts require a separate supplemental application. Option trading may not be suitable for all investors. Please review the Characteristics and Risk of Standardized Options.

Special Restrictions
We do not accept Rule 144 or Restricted Stock.

Additional Disclosures
Please review the Risk of Online Trading Disclosure, Extended Hours Trading Risk Disclosure and Day Trading Risk Disclosure Statement.

DAY TRADING REQUIREMENTS

Summary

The term “pattern day trader” includes any margin customer that day trades (buys then sells or sells short then buys the same 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 equity 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 equity level. The rules permit a pattern day trader to trade up to four times the maintenance margin excess in the account at the close of 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. 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 buying 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 trades do 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 basis).

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 options contracts require that you pay for the option in full, that is at 100%. As such, there is no leverage used to purchase the options. Nonetheless, if you engage in numerous options transactions during the day, you are still subject to intra-day risk. You may not be able to realize the profit on the transaction that you had hoped for and may indeed incur substantial loss due to a pattern of day-trading options. Again, the day trading margin 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 margin call immediately after 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 close 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 a security, without selling it later that same day, would not be 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. If you sell short and then buy to cover on 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 options.

What is a pattern day trader?
You will be considered a pattern day trader if you trade 4 or more times in 5 business days and your day-trading activities are greater than 6 percent of your total trading activity for that same five-day period.

Would I still be considered a pattern day trader if I engage in four or more day trades in one week, then refrain from day trading the next week?
In general, once your account has been coded as a pattern day trader, the firm will continue to regard you as a pattern day trader even if you do not day trade for a five day period. This is because the firm will have a “reasonable belief” that you are a pattern day trader based on your prior trading activities. However, we understand that you may change your trading strategy. If you have decided to reduce or cease your day trading activities you may contact us to 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 and securities?
You can meet the $25,000 minimum equity requirement with a combination of cash and eligible securities.

Source: NASD Investor Education Day Trading Requirements