Penson

Quote from zdreg:

the whole idea is flawed. with exceptions, you would be paying 4 to 8% interest on your long stock positions.
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I know many retail firms charge that on long balances. We clear Penson and ML and base our rates on a premium over Fed Funds, so our rates are much lower. No, I can't post rates here. Wanting insurance to protect your money for those concerned will always have a cost. Only you can decide where to pay.
 
Quote from zdreg:

the whole idea is flawed. with exceptions, you would be paying 4 to 8% interest on your long stock positions.
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Forgive me if I'm being obtuse, but where does the 4-8% figure come from? Even if you pay margin interest on a position, at IB's site for instance it shows you'd pay about 2-2.5% at most.
 
Quote from zboy2854A:

Forgive me if I'm being obtuse, but where does the 4-8% figure come from? Even if you pay margin interest on a position, at IB's site for instance it shows you'd pay about 2-2.5% at most.
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that is why, I used the word exceptions. typical industry rates are 4-8%.
 
Quote from rmorse:

That min. apears to be for T-bill transfers to meet a margin call. If you have an account there of $250k, I'm sure you can buy a T-bill for $250k. If you're a long side trader, you'll have to pay margin interest on all your trades.
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rmorse, are you sure about this?

See more discussion regarding IB's minimum on T-Bills here:

http://www.elitetrader.com/vb/showthread.php?threadid=225208

There seems to be confusion. Maybe IB can weigh in on this.
 
Quote from rmorse:

I know many retail firms charge that on long balances. We clear Penson and ML and base our rates on a premium over Fed Funds, so our rates are much lower. No, I can't post rates here. Wanting insurance to protect your money for those concerned will always have a cost. Only you can decide where to pay.
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ml and penson are not in the same league.

you are also gambling that there won't be an upward spike in interest rates.
 
Quote from zdreg:

ml and penson are not in the same league.

you are also gambling that there won't be an upward spike in interest rates.
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Really, B of A Merrill Lynch is not in the same league? What does that mean? They have different a business model than IB , but your telling me ML is not safe?
 
Quote from rmorse:

Really, B of A Merrill Lynch is not in the same league? What does that mean? They have different a business model than IB , but your telling me ML is not safe?
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you are misreading and imputing. the sentence said penson and ml are not in the same league. the comparison is between penson and ml. IB was never mentioned.
 
Quote from rmorse:

We were not discussing rates. This discussion was about why use Penson? You can receive competitive rates at many firms for appropriate volume. Rates are only one factor. We are also Introducing Brokers to Interactive Brokers. Their risk premium is higher in many ways than Penson. If you require leverage, Penson offers more.

Some will comment here that more leverage is more dangerous. Sometime yes, sometime no. The fact is that if your business requires it, Penson offer more. Remember, the Introducing Broker relationship places us next in line for losses on our clients accounts, before Peson, if our client blow through their assets. So, we do care about risk.

Bob
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"We are also Introducing Brokers to Interactive Brokers. Their risk premium is higher in many ways than Penson. If you require leverage, Penson offers more."

please give details. be specific as to ways risk premium is higher for IB

what additional leverage?

'Remember, the Introducing Broker relationship places us next in line for losses on our clients accounts, before Peson, if our client blow through their assets. So, we do care about risk."
how much capital do you have?
 
Quote from zdreg:

"We are also Introducing Brokers to Interactive Brokers. Their risk premium is higher in many ways than Penson. If you require leverage, Penson offers more."

please give details. be specific as to ways risk premium is higher for IB

what additional leverage?

'Remember, the Introducing Broker relationship places us next in line for losses on our clients accounts, before Peson, if our client blow through their assets. So, we do care about risk."

how much capital do you have?
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Penson and IB use the OCC TIMs calculation for Margin on CPM. However IB does not provide leverage on "small" cap stocks with market caps of under $250M. Also, they increase margin requirements for high concentrations (Too ouch margin afforded to similar positions.) and on what they consider illiquid securities. There is nothing wrong with any of this. Other Prime Brokers do the same thing including ML Pro.

As to our capital, I have no idea. I'm not a partner in the firm and never looked at our focus report. We have capital requirements to cover losses should one of our clients go negative. Victor Securities losing money from one client does not effect other clients. Our capital is separate and the client keeps his assets and securities at the Prime Broker.
 
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