I am confused about how to use proceeds of short sale in a IB account and after browsing here I am getting a lot of contradictory messages. The only thing where people agree is that you cannot withdraw them. Other than that, some people say that you can invest them while others say the opposite. When you decide to keep a balance, some people say that you could get some interest while others say that you won't. Can you guys help me understand this topic? TIA.
If you were my client, I would explain to you that the proceeds of a short sale are held as collateral for stock that you sold that you don’t own. It’s not your money to do with as you please. It’s a shame that you don’t feel like you can call your broker and ask these questions.
What do you believe was his answer? Can you please say it in plain English? Maybe substantiate it with IB content?
Why is all the cash held as collateral? When you buy shares using margin you don't need to post full collateral. Why can't the equities model be more like futures?
The stock you sold short was borrowed from a long client. It was not yours to sell. Your clearing firm can repo the proceeds to earn money but you can't do anything with those funds.
That would be nice but a future is not a security and nothing changes ownership when you buy or sell one. You post a bond to cover possible losses and at settlement either cash or a commodity then changes ownership.
I've a feeling that it's more regulatory related than anything, too bad single stock futures are so illiquid they are useless. Despite all it's flaws, crypto is actually a shining example of financial innovation. Just look at their perpetual futures.
Correct. If you are a large enough client the broker will share some of the interest earned on the repos with you.