debt clearance ? This Forum is Great !

TellMeWhy · 1 debt clearance ? This Forum is Great ! Tue Mar 22, 2011 8:05 am

TellMeWhy

Stock Trader

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Tell me what is debt clearance ?? what is happening when they do debt clearance ? Why they have to do that ? What is the connection with the stock market ?

I have no idea ! I think you guys are well educated on economics, so educate me :study:
Any explanation will be very important to me so, write down what ever u know.

thanks in advance :cheers:

Slstock · 2 Re: debt clearance ? This Forum is Great ! Tue Mar 22, 2011 8:39 am

Slstock

Director - Equity Analytics

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If you had an accounts with a SL stock broker before Dec 31st 2010, they used to give credit to customers to buy shares ( which the customers did not have to settle within T+3 days) without cash in hand. So many customers were in Debt to Brokers. SEC disallowed unauthorized Brokers to extend credit for more than T+3 days starting Jan 1st 2011. Out of the existing credit given to customers (given before Dec 31st) SEC said that 50 % had to be cleared by March 31st and the rest June 31st 2011. So the customers in debt to brokers either had to volunteerily sell their shares to settle ( clear) their debt or the broker had to force sell them to recover their debt.

Also for the shares bought after Jan 1st 2011 the customer had to settled them within T+5 days or else the broker are allowed to force sell them to recover debt as you know.

swan03 · 3 Re: debt clearance ? This Forum is Great ! Tue Mar 22, 2011 9:31 am

swan03

Vice President - Equity Analytics

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slstock wrote:
If you had an accounts with a SL stock broker before Dec 31st 2010, they used to give credit to customers to buy shares ( which the customers did not have to settle within T+3 days) without cash in hand. So many customers were in Debt to Brokers. SEC disallowed unauthorized Brokers to extend credit for more than T+3 days starting Jan 1st 2011. Out of the existing credit given to customers (given before Dec 31st) SEC said that 50 % had to be cleared by March 31st and the rest June 31st 2011. So the customers in debt to brokers either had to volunteerily sell their shares to settle ( clear) their debt or the broker had to force sell them to recover their debt.

Also for the shares bought after Jan 1st 2011 the customer had to settled them within T+5 days or else the broker are allowed to force sell them to recover debt as you know.

Well explained.