The New York Stock Exchange has voted to boost the amount of money that day traders can borrow to buy stocks - despite worries by regulators that excessive borrowing has contributed to the steep financial losses of some investors who play that high-stakes trading game, according to sources.
The governing board of the NYSE voted to allow "qualified" day traders to borrow up to four times the amount in their accounts for intra-day trading, the sources said. Currently, the NYSE limits day traders' borrowing to twice their account equity.
Thus, a day trader with a $10,000 (€9,570) account could purchase $40,000 worth of stocks, up from the $20,000 allowed under current rules.
The NYSE refused to comment, though it is expected to officially unveil new rules governing margin - or borrowing - later this month.
The National Association of Securities Dealers, which runs the Nasdaq Stock Market, is also studying margin rules. An NASD spokeswoman declined to comment, though the NASD may follow the NYSE's lead, sources said.
The NYSE proposal still must go to the Securities and Exchange Commission for approval. If the SEC goes along, the new margin rules could boost the level of speculation among the estimated 5,000 day traders working out of specialised brokerage firms around the country.
