The SEC’s new plan might be a significant gain for day traders

Have you ever traded penny stocks with a small account only to be frustrated when it came time to make another trade? Many people who invest in small-cap stocks are concerned by the Pattern Day Trade regulation.

To purchase and sell penny stocks or higher-priced stocks within a single day and more than three times during a rolling 5-day period, traders must have at least $25,000 in their trading account. In many circumstances (depending on your broker), you may avoid this by using a cash account.You can make as many day trades (buying and selling in the same trading session) as you like.However, you can only use the amount of settled funds in your account.

You must be mindful of settlement time-frames if you trade penny stocks.Your money will usually be settled two business days following the trade date (T+2).That implies you’ll have to wait a few days after selling out of your transaction before you may trade with those funds again. The “benefit” is that you are “forced” to refrain from over-trading.

On the other hand, you won’t be able to profit from market volatility as rapidly as you’d want.
If you’ve ever day traded with a smaller account, you’re all too familiar with this problem. However,
the US Securities and Exchange Commission (SEC) may be attempting to assist ordinary traders.

The Securities and Exchange Commission (SEC) submitted a document explaining a
potential adjustment to this settlement regulation earlier this month.

The SEC agreed to recommend rule changes to lessen risks in clearing and settling securities.
Shortening the normal settlement cycle for “most broker-dealer transitions” in securities is one technique to do this.The shorter settlement involves switching from a T+2 (two business day) to a T+1 (one business day) settlement time. The changes, according to the Commission, are intended to reduce “credit, market, and liquidity” risks in transactions.

This might be a huge gain for day traders, particularly those with smaller accounts who don’t qualify as “day traders.” Trading options is one of the few strategies to accomplish a T+1 settlement.
However, options have a higher volatility and numerous other elements, such as time decay, that work against them. With a planned T+1 settlement for securities deals, investors wishing to get into the market might do so considerably more quickly.

The SEC’s document explains what this means for “self-directed” or retail traders. Recent events, in particular, motivated these decisions, according to the white paper:

“Accelerating Time to Settlement” and “Settlement Optimization.”59 Among other things, the DTCC-owned clearing agencies have been exploring steps to modify their settlement process to be more efficient, such as by introducing new algorithms to position more transactions for settlement during the “night cycle” process (which currently begins in the evening of T+1) to reduce the need for activity on the day of settlement. Portions of these two initiatives have been submitted to the Commission and approved as proposed rule changes.”

In addition, the SEC’s document discussed: “More recently, periods of the increased market volatility—first in March 2020 following the outbreak of the COVID-19 pandemic, and again in January 2021 following heightened interest in certain “meme” stocks—highlighted the significance of the settlement cycle to the calculation of financial exposures and exposed potential risks to the stability of the U.S. securities market.”

The DTCC’s February 2021 document discussed how speeding up settlement beyond T+2 may “provide considerable benefits” to market players, which sparked this debate.
The DTCC predicted that a T+1 settlement strategy would be implemented in the second half of 2023, and that this form of settlement cycle would reduce the volatility of individual margin needs by “up to” 41%.

When it comes to penny stock investing, everyday patterns change swiftly. As a result, a shorter time to clear might provide market players with opportunities to be more systematic in their approach. The DTCC, the Securities Industry and Financial Markets Association, and an Industry Steering Committee released a T+1 Report late last year describing the proposed transition to a T+1 standard by 2024’s second quarter. Furthermore, an Industry Working Group looked at the possibility of a T+0 settlement. While this may be at the bottom of the priority list, it is still being discussed. Is it possible that traders will have a 0 settlement timescale for deals in the future?

Summary

  • The Securities and Exchange Commission (SEC) is considering rules that would reduce the usual settlement cycle for most broker-dealer transactions from two to one business day following the trade date (T+1).
  • In order to protect investors, minimize risk, and improve operational efficiency, the SEC proposes additional standards for broker-dealers, investment advisors, and certain clearing agencies to execute institutional trades.
  • Compliance with a T+1 standard settlement cycle would be needed by March 31, 2024 if the bill is passed. The SEC is also considering whether a same-day standard settlement cycle (i.e., settlement no later than the end of the trading date, or T+0) should be required.
Miro Zecevic-Mina Mar Group-MMG

How SEC regulates stock market?

Securities and Exchange Commission (SEC) is independent U.S federal agency that regulates the stock market. It was created in 1934 by Congress to help restore investor confidence after the 1929 stock market crash. The Securities Exchange Act of 1934 was created by Securities and Exchange Commission. It govern securities transaction on the secondary market relying on Securities Act of 1933 which increased transparency in financial  statements and  established  laws against fraudulent activities. In essence SEC provides transparency by ensuring accurate and consistent information about companies that allows investors to make informed and sound decisions. Without transparency stock market would be vulnerable to market speculation and creation of asset bubbles. 


Securities and Exchange Commission has five commissioners and five different divisions:
Division of corporate finance – review corporate filing requirements ensuring that investors have complete and accurate information on company’s financial health that will help them make the best decision.
Division of investment management – regulates investment companies, variable insurance products and federally registered investment advisers. It also oversees The Securities Investor Protection Corporation (SIPC) that insures investment accounts in case that brokerage firm goes bankrupt.
Division of Enforcement – enforces SEC regulations by investigating and prosecuting violations of securities laws and regulations.
Division of Trading and Market – establishes and maintains standards that regulate the stock market. It oversees securities firms and exchanges as well as industry’s self regulatory organizations.
Division of Economic and Risk Analysis – economic data and risk analysis to other division in order to integrate them in the core mission of SEC. This division predicts how proposed rules would affect market.


United States stock market is one of the most regulated markets in the world with high level of transparency which attracts many business to the United States. SEC’s monitoring of exchanges and all organizations connected with selling of securities has a big role in creating such highly regulated market. It is fairly easy to take your company public in the U.S which helps companies grow larger at a faster rate. By conducting research in financial literacy SEC found out that average investor doesn’t poses enough knowledge about the way market and economy function. That is the reason why SEC is so protective of ordinary, non-accredited investors through its regulations. It makes safe for average investor to buy stocks, bonds or mutual funds by regulating sale of those securities and providing investors with information that will help them make investing decisions.

Roll-ups and Acquisitions

Mina Mar Group has created a roll-up fund and subsequent processes designed for companies that wish to grow via acquisition. If you have a company with an acquisition strategy, please contact us right away so we may begin discussions to determine if you are a fit for our program. If so, Mina Mar Group will take care of all of the costs, including raising capital. Please read the information below for our program highlights:

1. SEC and Other Filings: Mina Mar Group will handle all necessary document requests and filings including completely developing and submitting all SEC documents such as S-1 registration statements, Edgar forms and filings, FINRA (such as form 211) submissions and more.

2. Legal Compliance: Mina Mar Group maintains a staff of in -house attorneys and paralegals that ensure the entire process remains compliant with all governmental agencies.

3. Public Shells: Mina Mar Group has an inventory of legal and verified public shells which are made available to our clients for reverse mergers in order to provide a publicly traded vehicle in order to raise capital.

4. Distribution and Fundraising: Mina Mar Group works with top investor relations firms who are charged with effectively raising capital for our projects. Mina Mar Group manages these firms through the process to ensure the maximum capital is raised.

5. Institutional Investors: We have very strong relationships with some of the largest institutional investment funds in the US. We can assist with raising capital for debt or equity.

6. Broker Dealers: Our team of licensed professionals can provide our clients with a turnkey broker/dealer, registered with FINRA and at least two clearing houses. We can re-structure books of business and assist with financing.

7. Proven Process: MMG’s partners have successfully raised capital for more than 160 different companies. Our proprietary 32 step plan ensures that our clients invest a minimal amount of time in order to complete the entire IPO process. We enable our clients to remain focused on building their existing business while the IPO process is underway.

investorrelations.mmg@gmail.com

minamargroup.com

egencia-business-travel-banner-solutions

IPO — Mina Mar Group

IPO

MMG’s unique strategy ensures that our clients invest a minimal amount of time in order to complete the entire IPO process. We enable our clients to remain focused on building their existing business while the IPO process is underway.

Mina Mar Group team will help guide you through the IPO registration process and help you address the critical steps that are needed throughout the IPO — and beyond.

Private Equity

Many of our clients who wish to go public also need private equity financing along way.

Even though our IPO process only takes between four and six months, companies need operating capital in order to continue building their businesses while waiting for the various IPO processes such as the SEC, FINRA, market makers and more.

MMG can help raise private equity via a private placement memorandum (PPM) while our clients are in the IPO process. We will work with your investors to help bring in capital to fuel your business. Our team of analysts will write private placement memorandums and help you structure your company in order to raise between $1 million and $5 million via private equity.

Our clients tell us that this two-step process of raising private capital and then raising capital and public markets is a viable alternative to traditional venture and angel rounds of financing. We find that it is easier to help our clients raise private equity with an eminent IPO versus traditional angel or venture financing where liquidity may be 3 to 5 years away. If you’re interested in discussing how we can help you raise private capital while you are in the process of going public, please contact us right away.

minamargroup.com

investorrelations.mmg@gmail.com

IMG9591421