Is the Toronto Stock Exchange (TSX) becoming a haven for U.S. and Canadian day traders? A comment on the tipster.ca bloggave pause for thought: I momentum trade stocks on the TSX, mostly to avoid the day trade rules of the US, it went.
I asked the blogger for more details. He said U.S. law requires a minimum of $25,000 in the brokerage account to day trade. If you have more than this minimum, fine: you can day trade on U.S. exchanges in a margin account. If you have less, they allow 4 day trades before they shut your trading down only allowing you to exit positions. Trading can resume after a certain period of time. Documents on the Internetconfirm the restrictions.
The changes were passed back in 2001, so maybe some of you out there already knew this. But I did not (or had forgotten it). One thing you may not know, though, is that some brokers apparently enforce the rule rigorously while others do not, according to tipster.ca.
One wonders if the greater presence of smaller day traders has imparted more noise to the prices of stocks listed on the TSX as opposed to U.S. exchanges. Could this be a publishable research paper for some academic to write up?