Why dont brokers have bank CDs as marginable? Seems silly. What am I missing?

[David Donner]

Bank CDs seem pretty safe, especially when $250k and under per institution.
Why dont brokers allow them to be used as margin?
There has to be a reason but I cant think of one.

 

[newwurldmn]

Maybe it’s because they can repo them out

 

[BKR88]

Bank CDs seem pretty safe, especially when $250k and under per institution.
Why dont brokers allow them to be used as margin?
There has to be a reason but I cant think of one.

The money belongs to the BANK to use not the broker.
If you buy treasuries from your broker they can sell the treasuries to cover a loss in your account.
If you buy a CD the BANK is using the money so the broker can't sell the CD to cover a loss in your broker account.

 

[zdreg]

Margin on CDs is not an allowable asset by the Federal Reserve under reg. T

 

[Real Money]

T-bills higher yield and good collateral.

 

[mervyn]

liquidity really, banks can’t repo cd with the fed.