Pattern Day Trading Accounts:  The NASD has enacted special regulations governing Pattern Day trading Accounts. Here is the definition of a Pattern Day Trader: Any customer who Day Trades* four or more times in five business days, and such activity is more than six percent of that customer's total trading activity for the five-day period, is a Pattern Day Trader, and the clearing firm must designate the account as a Pattern Day Trading Account. If the Day Trades do not account for more than six percent of total trading activity in that period, the clearing firm will not be required to designate the account as PDT. If the customer opens a standard margin investment account, and later qualifies as a day trader at some point, the account will be immediately re-classified as a PDT account, and therefore be subject to the Pattern Day Trading Account requirements. *A Day Trade is defined as: The purchase and sale, or the sale and purchase of the same security on the same day in a single account. Buying Power: PDT accounts will have Intraday Buying Power equal to four times the maintenance margin excess. Keep in mind that Buying Power is established at the beginning of the trading day and it does NOT change intra-day. Overnight Buying Power, however, is 2 to 1. New Minimum Equity Requirement for all PDT accounts: $25,000. In addition to this requirement for all new PDT accounts, this is also the minimum equity requirement for all PDT accounts. In other words, your PDT account must never dip below $25,000 equity. PDT Maintenance Calls: In Pattern Daytrading Accounts, If the PDT account equity dips below $25,000, a Maintenance Call is generated to bring the account equity back to $25,000. Maintenance Calls are due in three business days. If call is not met by the specified due date, the account becomes restricted to liquidating-only trades until the call is met. Standard Maintenance Calls: If a PDT account has equity over $25,000, a call Maintenance Call will be generated if the account's equity drops below the minimum house requirement. The NYSE/NASD require that customers maintain a minimum amount of equity in their margin account. If the equity should drop below that minimum, a Maintenance Call will be issued requiring the customer to bring the equity back up to the required amount. As a rule of thumb, the requirement for long stock positions is 25% of the current market value, and for short stock position, the requirement is 30% of the short market value of the security. Keep in mind that these requirements are only rules of thumb; the clearinghouse has the right to impose higher maintenance requirements for specific stocks. In order to bring equity back to the required levels, you may liquidate positions or send in funds. Maintenance Calls are due in three business days. If call is not met by the specified due date, the account becomes restricted liquidating-only trades until the call is met. TIP: For long positions, to determine the value that the market price could decline to and still be at minimum maintenance level, multiply the debit balance by 4/3. To determine the value that the short market price could increase to and still be at minimum maintenance level, multiply the credit balance times 10/3. You can find this information in your margin reports. Trading Calls: When a PDT account with equity greater than $25,000 exceeds Buying Power when opening a position, a Trading Call is generated. The amount of the call will equal 25% of the amount exceeded. During the period between issuance of the call and the due date for the call, the account will be restricted to 2 to 1 Buying Power, subject to "Aggregated Sum" accounting. Margin Accounting: Once a call has been issued, your buying power will be subject to an alternate calculation. This calculation will be based on the aggregate sum of all opening trades beginning on the trading day after the day trading buying power is exceeded, until the earlier of when the call is met or 5 business days, on a daily basis. Note: This is a change from the old way of accounting. Here is an example of the new "aggregate sum" calculation: Here is an example of the new aggregate sum calculation: Today, Joe Trader's account has $15,000 maintenance excess (which is $30,000 buying power; remember, the account is restricted to 2 to 1). He does the following trades: Buy 300 ABCD @ 50 Total $15,000 Sell 300 ABCD @ 51 Total $15,300 Buy 200 WXYZ @ 20 Total $4000 Buy 300 HIJK @ 15 Total $4500 Sell 200 HIJK @ 14 Total $2800 The aggregate sum of the above trading activity would be $23,500. So, the account must have at least $11,750 in maintenance excess to execute the above trades ($23,500 divided by 2). He has $15,000 so he does not receive a call. Due Date for a Trading Call is: Five business days from the trade. Please note that you must send funds in to meet the trading call; you cannot liquidate positions to cover it. Funds must stay in the account for two business days. If the funds are received later, or removed earlier, then the call will be judged to have not been met. 2 Strikes: If the customer incurs another Day Trading call while " on restriction ", the account is immediately closed and limited to liquidating transactions only. Reg T Calls: There are no changes to the current policy. A "Reg T" Call is a request for funds to be deposited when a customer exceeds their Overnight Buying Power. The current Reg T requirement for both long purchases and short sales of stock is 50% of the total purchase price. Please note that funds must be sent in to meet the call. Reg T Calls Are due in Five business days. Funds must be received by the specified date. If funds are not received by the specified date, the account is restricted to liquidating only trades for 90 days. Please note that the firm must liquidate sufficient securities to meet the call.   Overnight Holds: Rules are amended, so that the sale of an overnight position is treated as a liquidation and the subsequent repurchase of the same security as the establishment of a new position not a day trade. But keep in mind, any other trades in the overnight position will be treated under the old rules as a new position - and not as a daytrade. However, if you then trade the stock again, this time the trade will be treated as a Day Trade, and may generate a call. The old adage "if you hold it overnight, do not trade it the next day" might be changed to "If you hold it overnight, do not trade it more than once the next day..." Cross Guarantees Prohibited: Under the new rules, customers are no longer permitted to cover calls through the use of cross guarantees (another account lends the funds to cover the call).