Where does it all come from?

B

Babak

This may be a really dumb question (but that has never stopped me before): When a professional firm such as Bright, Echo, etc. give 20X margin intra-day and 5X overnight, where does the credit/money come from? Thanks
 
The clearing firm. They set all the rules, the broker who uses them cannot be more expansive w/ the rules but can be more resrictive. Instinet clears for terranova-mb, penson for cyber, and mbt. When you margin you are using the clearing firms $. The clearing firms have revolving credit lines w/ banks.
 
Thanks for the replies. It reminds me of another question that I´ve always had, which is what do clearing firms do exactly?
 
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