Do Banks Grant 100:1+ Leverage for HNW Clients?

[achilles28]

Quote from 2cents:

as long as you dont attempt to use high leverage against the bank's quotes on a gapping pair on news, and your acct doesn't register 50% (negative) P&L swings at short notice, they wont mind... just fyi, even if they provide you with Currenex access, Currenex is monitoring your activity (their SniperPolice TM thing)... hope its clear

If I understand you correctly, banks will let a traders margin fall below the agreed amount granted for opening trades. But lower margin only applies under the conditions circumscribed above and on existing accounts - not for opening new trades. Opening trades, from what i understand, must use the original leverage agreed to. In this case, around 33 - 50:1

As an aside, i'm still unclear on whether banks trade against clients.

On the face of it, it appears they do - evidenced by their refusal to offer high leverage. Am I wrong? Or is this something we can't know for sure, but only deduce by their reluctance to offer higher leverage?

 

[OddTrader]

Quote from marketsurfer:

its done all the time. if you have a viable strategy and risk control, your leverage can be virtually unlimited.

Any further illustration for the "unlimited" approach, considering forex can be occasionally highly volatile? Your feedeback would be appreciated.

 

[achilles28]

Quote from riskarb:

I imagine it depends on how much you bring to the table, and how much you leave AT the table.

I get you now. The more you have and the higher the spread, the more 'flexible' banks become to granting higher leverage.

 

[2cents]

correct i was only talking about 'initiation' margin...

banks dont trade against you in particular, they trade, thats all, and your bank quotes the market same as Citi, Deutsche etc. when they dont like a trade they try to lay it off on the market, otherwise it just sits on their prop books until its offset to whatever extent by an opposing trade...

 

[achilles28]

Quote from riskarb:

Any established client of a large wirehouse will receive 100:1.

By wirehouse, do you mean retail broker?

Whats interesting; its ultimately banks that provide leverage to the retail brokers, correct?

But from posts shared on this thread, these same leverage providers are reluctant to provide that same gearing to HNW clients.

What I see is banks willing to provide leverage to losers and withhold it from winners. Looks like they make a shiny penny too then, perhaps?

I could be wrong. I have no direct knowledge of the inner workings of banks. Just speculating. My job

 

[marketsurfer]

Quote from OddTrader:

Any further illustration for the "unlimited" approach, considering forex can be occasionally highly volatile? Your feedeback would be appreciated.

hey odd,

you need to have a proven strategy and a risk program acceptable to the source. hope this makes sense to you.

best,

surfer

 

[achilles28]

Quote from 2cents:

correct i was only talking about 'initiation' margin...

banks dont trade against you in particular, they trade, thats all, and your bank quotes the market same as Citi, Deutsche etc. when they dont like a trade they try to lay it off on the market, otherwise it just sits on their prop books until its offset to whatever extent by an opposing trade...

Interesting. So why does aggressive trading negativily effect their p/l if risk is laid off in the market:

Quote from 2cents:

aggressive trading does the bank's P&L no good...

I don't understand?

Thanks for responding, btw

 

[OddTrader]

Quote from marketsurfer:

you need to have a proven strategy and a risk program acceptable to the source.

That's been implied.

With an effective "unlimited" leverage approach, why OPM is required for managers?

 

[OddTrader]

Probably a bank would easily reach its limitation of offerring leverage due to its own overall leverage against its total clients' deposits is basically regulated in general.

 

[2cents]

Quote from achilles28:

Interesting. So why does aggressive trading negativily effect their p/l if risk is laid off in the market:

I don't understand?

Thanks for responding, btw

because when the market is gapping they cant...

btw the guys who provide max leverage to punters are the brokers. even them dont necessarily get high leverage from the banks (UBS would only offer 20:1 for instance, initially) unless they have proven risk management practices in place...

gotta go...