RRBDLAW.COM

INDEX PAGE ONLINE BIOGRAPHY EMAIL RRBDLAW.COM



NASD PROPOSES DAY TRADING REGULATIONS

On March 25, 1999 the National Association of Securities Dealers, Inc. (NASD) Board of Governors requested comment on proposed rules requiring day trading firms to undertake certain account opening procedures and to make certain risk disclosures.

The proposed rules require a firm that has recommended a day trading strategy to weigh essential investor information including financial situation, investment experience, and investment objectives before approving the account.

The proposed disclosure statement would advise customers to consider six points before engaging in day trading:

  1. Day trading can be extremely risky. Customers should be prepared to lose all of the funds that they use for day trading. They should not fund their day trading activities with retirement savings, student loans, second mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required for current income;
  2. Be cautious of claims of large profits from day trading. Customers need to be wary of advertisements or other statements that emphasize the potential for large profits in day trading. Day trading can also lead to large and immediate financial losses;
  3. Day trading requires knowledge of securities markets. Day trading requires in-depth knowledge of the securities markets and trading techniques and strategies. In attempting to profit through day trading, an investor must compete with professional, licensed traders employed by securities firms. An investor should have appropriate experience before engaging in day trading;
  4. Day trading requires knowledge of a firm's operations. An investor should be familiar with a securities firm's business practices, including the operation of the firm's order execution systems, procedures, and should confirm that a firm has adequate systems capacity to permit customers to engage in day trading activities;
  5. Day trading may result in large commissions. Day trading may require an investor to trade his or her account aggressively, and pay commissions on each trade. The total daily commissions that they pay on trades may add to losses or significantly reduce earnings;
  6. Day trading on margin or short selling may result in losses beyond the initial investment. When customers day trade with funds borrowed from the firm or someone else, they can lose more than the funds originally placed at risk. A decline in the value of the securities that are purchased may require additional funds be paid to the firm to avoid the forced sale of those securities or other securities in an investor's account. Short selling as part of a day trading strategy also may lead to extraordinary losses, because stock may have to be purchased at a very high price in order to cover a short position.
For more information contact :
Alden Adkins, NASD Regulation, General Counsel, (202) 728-8332

To submit your email comments on the proposal visit http://www.nasdr.com

Read Bill Singer's commentary on the NASD Day Trading proposals.

You Can Be Sued Even If The Allegedly Harassed Employee:
suffered no adverse job action, the employer did not know about the harassing conduct, and the employee did not report the conduct to the employer.




RRBDLAW.COM AND SECURITIES INDUSTRY COMMENTATOR™ © 2004 BILL SINGER

THIS WEBSITE MAY BE DEEMED AN ATTORNEY ADVERTISEMENT OR SOLICITATION IN SOME JURISDICTIONS. AS SUCH, PLEASE NOTE THAT THE HIRING OF AN ATTORNEY IS AN IMPORTANT DECISION THAT SHOULD NOT BE BASED SOLELY UPON ADVERTISEMENTS. MOREOVER, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. NEITHER THE TRANSMISSION NOR YOUR RECEIPT OF ANY CONTENT ON THIS WEBSITE WILL CREATE AN ATTORNEY-CLIENT RELATIONSHIP BETWEEN THE SENDER AND RECEIVER. WEBSITE SUBSCRIBERS AND ONLINE READERS SHOULD NOT TAKE, OR REFRAIN FROM TAKING, ANY ACTION BASED UPON CONTENT ON THIS WEBSITE. THE CONTENT PUBLISHED ON THIS WEBSITE REPRESENTS THE PERSONAL VIEWS OF THE AUTHOR AND NOT NECESSARILY THE VIEWS OF ANY LAW FIRM OR ORGANIZATION WITH WHICH HE MAY BE AFFILIATED. ALL CONTENT IS PROVIDED AS GENERAL INFORMATION ONLY AND MUST NOT BE RELIED UPON AS LEGAL ADVICE. CONTENT ON THIS WEBSITE MAY BE INCORRECT FOR YOUR JURISDICTION AND THE UNDERLYING RULES, REGULATIONS AND/OR DECISIONS MAY NO LONGER BE CONTROLLING OR PERSUASIVE AS A MATTER OF LAW OR INTERPRETATION.


Telephone: 917-520-2836
Fax at 720-559-2800
E-mail to bsinger@rrbdlaw.com

FOR DETAILS ABOUT MR. SINGER, PLEASE READ HIS
ONLINE BIOGRAPHY
PAGE TOP