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Account characteristics
Due to the application of all transaction accounts were introduced by Scottrade (Hong Kong) Limited to Scottrade, Inc. Therefore customers should also at the same time comply with the securities laws of the United States, which includes the following:
Notice to Cash Account
Unsettled funds can be used to purchase securities as long as the new purchase is not sold prior to settlement date* of the funding sale.If the new purchase is sold before the settlement date of the funding sale, this is considered a violation of Reg T or commonly known as “Free-riding”, in which the new purchase is sold without being paid for, thus a violation occurs.
Regulation T
Federal Reserve Regulation T (Reg T) governs how transactions are paid for. It states that sales proceeds in cash accounts will not be available to pay for purchases until the settlement date of the sell.
Due to above regulation, day trading in cash account can be limited to available to settled funds only.
Customers can avoid Regulation T violation under following scenarios:
* Settlements of stock trades occur 3 business days after the trade date (T+3). Settled funds generally include newly deposited funds and proceeds from a sale of security that occurred 3 business days ago.
More information can be found at the following sites:
Unsettled funds can be used to purchase securities as long as the new purchase is not sold prior to settlement date* of the funding sale.If the new purchase is sold before the settlement date of the funding sale, this is considered a violation of Reg T or commonly known as “Free-riding”, in which the new purchase is sold without being paid for, thus a violation occurs.
Regulation T
Federal Reserve Regulation T (Reg T) governs how transactions are paid for. It states that sales proceeds in cash accounts will not be available to pay for purchases until the settlement date of the sell.
Due to above regulation, day trading in cash account can be limited to available to settled funds only.
Customers can avoid Regulation T violation under following scenarios:
- Clients wishing to sell securities prior to the settlement date* of the funding sale can avoid the violation by depositing additional funds to pay for the sold shares which are purchased with unsettled funds.
- Use settled funds to purchase stocks and they can be sold at any time.
- After selling a stock, the unsettled proceeds are available for purchase. However, if you use unsettled proceeds to made new purchases, you must wait until the proceeds settle before selling the newly purchased stock, otherwise it will incur a violation.
* Settlements of stock trades occur 3 business days after the trade date (T+3). Settled funds generally include newly deposited funds and proceeds from a sale of security that occurred 3 business days ago.
More information can be found at the following sites:
A:
Using settled fund to buy shares, then selling the
same stock.
same stock.
| Initial amount in the account | |
| Market value of the shares in the account （ABC Stock) |
$10,000 |
| CASH | $0 |
| Account Total | $10,000 |
| Monday | |
| Sold $10,000 worth of ABC Shares |
| Thursday | |
| Bought $10,000 worth of XYZ Shares，and Sold it in the same day |
Caption：Under T+3 mechanism, a stock that is sold on Monday will be settled on Thursday. Once it is settled (cash) on Thursday, then customers can once again trade as normal.
B:
Using unsettled fund to buy, and then wait until
(T+3) to sell.
(T+3) to sell.
| Initial amount in the account | |
| Market value of the shares in the account （ABC Stock) |
$10,000 |
| CASH | $0 |
| Account Total | $10,000 |
| Monday | |
| Sold $10,000 worth of ABC Shares，then bought $10,000 worth of XYZ Shares |
| Thursday | |
| Sold $10,000 worth of XYZ Shares |
Caption：The sell on Monday is settled on Thursday. Therefore, customer can use the unsettled fund to purchase (XYZ stock) at anytime, but cannot sell the new stocks (XYZ stock) until fund is settled on Thursday.
C:
Using unsettled fund to buy, but sold the same shares before it’s settled.
| Initial amount in the account | |
| Market value of the shares in the account （ABC Stock) |
$10,000 |
| CASH | $0 |
| Account Total | $10,000 |
| Monday | |
| Sold $10,000 worth of ABC Shares，then bought $10,000 worth of XYZ Shares |
| Tuesday | |
| Sold $10,000 worth of XYZ Shares |
Caption：When selling a stock before the settlement date, it is a violation of the Regulation T in the U.S.
For our illustration only, the above examples happened in a normal business week (No Holiday).
Trade authorization
Scottrade (Hong Kong) offers Individual and Joint (Up to three applicants) accounts to suit our customer needs. Customer can also appoint a third party to be their “Trade Authorized” person to manage the account.
Customers and the appointed third party must fill in the “Limited Trading Authorization” form and notarized by a qualified personnel. Qualified person includes the following:
Other relevant persons at above (except Scottrade (Hong Kong) Limited’s licensed representative) must provide documents of their professional certification.
Note: For more detail, please read the “Limited Trading Authorization” form and agreement.
Customers and the appointed third party must fill in the “Limited Trading Authorization” form and notarized by a qualified personnel. Qualified person includes the following:
- Scottrade (Hong Kong) Limited’s licensed representative
- An SFC licensed person
- Justice of the Peace
- Certified public accountant
- Lawyer
- Notary public
Other relevant persons at above (except Scottrade (Hong Kong) Limited’s licensed representative) must provide documents of their professional certification.
Note: For more detail, please read the “Limited Trading Authorization” form and agreement.
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