Withdrawals and Tenders
Chapters in this video
- 0:00 Free credit balances and the quarterly notification
- 1:08 Withdrawing securities: fully paid and unhypothecated
- 2:10 The cash vs. margined cheese wheel trap
- 2:40 Tender offers and who actually decides
- 4:06 Short tendering and the net long rule
- 4:52 Carla's 700 long, 300 short worked example
- 6:04 Rapid-fire exam recap
What this video covers
- Why free credit balances must be available on customer request, and the quarterly free credit balance notification firms are required to send
- The two strict criteria for withdrawing securities: fully paid for, and not subject to lien or hypothecation
- What hypothecation actually means, and why margined shares stay pledged until the debit balance is satisfied
- How tender offers must be handled: prompt notification to the customer, with the customer (not the firm or rep) making the tender decision
- Why a firm tendering shares without authorization is a violation, even when the deal is clearly in the customer's best interest
- What short tendering is, and why the Securities and Exchange Commission (SEC) prohibits it
- How to calculate a customer's net long position (long minus short in the same security, across all accounts) as the legal tendering limit
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