NYSE new rule for cash accounts

[IIC]

Re: Did I ever get a reply???

Not Yet; will resend query on Monday...

THX...I am going out of the country tomorrow for a week cruise to MX on vacation but I will check in periodically...I am strongly considering Brown & Co. now...IIC

[NJ_angler]

Did I ever get a reply???

Not Yet; will resend query on Monday...

[NJ_angler]

SIGH - trying to bump it up to 'compliance' department...

SIGH - trying to bump it up to 'compliance' department, but the email exchange thus far:

Sorry to be such a pain in the butt, but I don't think you answered my
original question. See below for further clarification of my question.

On Thu, 22 Jan 2004 11:13:00 -0600, you wrote:

>Dear Investor,>
>Thank you for your email. Currently with Scottrade you may use unsettled funds to buy a new stock but you must hold on to the new stock until the stock you sell settles. For example:
>
>You sell Microsoft today with a settlement day of 1/27/2004.
>You then use the proceeds to purchase Dell.
What gave you the impression that I didn't understand the
restrictions? I don't need an explanation of the policy.
>You could not sell the newly acquired Dell until the Microsoft trade settled. If you sold prior to the settlement date you would then be free riding, which violates Federal Reserve Board Regulation T.
My question was, and still is, why Scottrade has chosen this
particular interpretation of Federal Reserve Board Regulation T. Other
brokerages seem to interpret it differently; some freezing the funds
for the duration while others seemingly DO NOT have any restriction at
all with regard to the use of the funds.

As an IRA account holder, which precludes use of margin, I find your
interpretation has hampered my ability to profit from very short-term
price fluctuations in stocks. If other brokerages (Brown?) can
interpret Federal Reserve Board Regulation T in such a way that the
use of funds is unrestricted, why can't Scottrade?.
>Please let us know if you have any other questions.
Please answer my original question in more detail

[moemaynard]

You tell 'em NJ!!! I think the whole thing is shite! It's a royal pain..

[NJ_angler]

Finally, sort of an answer regarding Scottrade and Reg T...

I never got a reply back from Scottrade customer service when I pressed for the whys and wherefors of their Regulation T policies, so I called my local branch manager:

I basically asked him why Scottrade interprets Regulation T as it does and why other brokers can interpret it differently (Ameritrade more restrictive and Brown less restrictive). He said that Scottrade was audited by NASD and "reached a compromise" to allow restricted use of funds. He mentioned that Ameritrade was one of the first discount brokerages to be "audited" and their "compromise" resulted in a much more restricted use of funds. He did not know whether Brown had been "audited" as yet.

Note that the "audit" was from NASD, not SEC or any other fed or state agency. When I asked what "ills" the regualtion was supposed to "cure" he hinted that because full service brokers held the vast majority of seats on the NASD board, discount brokerages had very little say-so in how Regulation T could be interpreted. I may be wrong, but I felt his reply to mean that discount brokers would take even more business from full service brokers if the funds remained unrestricted.

I also asked whether the fact that Brown has their own clearing house might be the cause for the different interpretation and he assured me that wasn't the case as Scottrade does also. Finally, he hinted that it is probably just a matter of time before Brown gets "audited" and everyone falls into line as ruled by NASD.

So there you have it; not quite a complete exercise in futility, but pretty damn close. Will I be transfering my IRA to Brown? I'll probably stick with Scottrade for a while longer.

[IIC]

THX NJ...IIC