ViaDerma Inc (VDRM)

[nsomniyak]

Or, even simpler, he does not create a separate account and just mentally keeps separate portfolios. If he then goes under his margin requirement and does not provide new funds or sell securities to meet it, his broker will do that for him, starting "from the bottom of the portfolio". This means pink sheets first, then the rest of otc, etc.

When a broker does these forced sales, they don't wait for a good price, they just hit the bid, even if it is ridiculously low and there is a big spread. This is why you often see pink/otc stocks trade at a ridiculously low price right at the open, particularly on Mondays (especially the Mondays after monthly options expiration) and on the first trading day of the month. Many brokers will let the margin call slide until the end of the week or month, but then enforce it first thing in the new week or new month.

A consequence of this is that you can sometimes get a fill on a really stinky GTC stink bid right at the open on those days.