(September 26 – 17:00 ET) – The Investment Dealers Association is preparing rules to deal with day traders.
The IDA is developing draft rules that would create certain proficiency requirements for day traders themselves, and rules that will regulate day trading strategies providers. Until now this hasn’t been much of an issue in Canada, with just a couple of day trading shops around, trading only in U.S. stocks.
But last week the Ontario Securities Commission granted a suitability exemption to a new Toronto-based day trading firm, Quest Capital Group Ltd., paving the way for day trading of Canadian stocks for the first time. Quest Capital is a registered securities dealer that plans to provide electronic day trading services, offering access to the TSE, CDNX, NYSE, AMEX and Nasdaq. The firm is not yet a member of the IDA, but all securities dealers will have to apply to join the IDA by January 31, 2001.
In its decision the OSC set some minimum standards for Quest including suitability, client proficiency, risk disclosure, know-your-client information and new account procedures. Customers of Quest will be required to provide a minimum initial deposit of US$15,000 to open an account. A customer will not be permitted to trade if his or her account is below US$10,000. The software used by Quest customers will not permit over-margined trades or improper short sales. Quest will not provide any advice or recommendations to its clients on specific investments, but it will provide all clearing and back office administrative functions for its day trading customers.
-IE Staff