generally provides its traders with direct access to market centers using high-speed computer linkages. The high-speed computer connections supply, among other things, access to Nasdaq Level II and ECNs -- services that are generally not available to most on-line customers. 5 While day-trading firms are not required to identify themselves as such, in February 2000 the Staff identified 133 firms that appeared to meet the above characteristics of a day-trading firm. C. Characteristics of a Day Trader In May 1999, Chairman Levitt defined a day trader as "an individual, not registered as a broker-dealer or as a registered representative, who trades stock at a firm that allow[s] the individual real time' access to the major stock exchanges and the Nasdaq market." 6 The NASD also recently defined a day trader as "an individual who conducts intra-day trading in a focused and consistent manner, with the primary goal of earning a living through the profits derived from this trading strategy." 7 Day traders generally attempt to derive a profit by executing many intra-day trades to take advantage of small price movements in stocks (e.g., 1/8 or 1/16 of a point per trade). The principal characteristic that distinguishes day traders from other market participants is their mind-set. Day traders generally acknowledge that they are not investors, due to the short time they hold positions. Many day traders hold stocks for seconds or hours, seldom overnight, closing out positions for small profits. A. Organizational Structures Day-trading firms are typically organized in one of