margin interest rates?

Discussion in 'Retail Brokers' started by xpsyuvz, Jun 3, 2005.

  1. xpsyuvz

    xpsyuvz

    I'm just curious what online brokerages are charging these days when you use margin (as oposed to 100% cash) to trade with? I.e. what is the interest that they charge?

    Is there very much of a difference between different brokerages or do they all charge about the same?
     
  2. 70 bp spread on short/long.......This is JBO structure.

    Broker Call + .35bp for debit.
    Broker Call - .35bp for credit.

    It is very nice to receive interest on the short stock:D

    Every Penny Helps bad the returns.
     
  3. xpsyuvz

    xpsyuvz

    TradeCobalt,

    Thanks for the reply, but I don't understand what you said.
    What is "JBO"?

    Also I don't remember what "bp" is. (I thought "basis points" were used to describe the bid/ask spread with bonds, but I don't know how it relates to interest on margined money that is borrowed.)


    For example this is what I am imagining with my question:
    If I open a trade and end up using/borrowing say $1000 in margin then the longer I keep that trade open the more I will be charged. If the interest is 4% annually then I will be charged $40 if I keep the trade open one year or $20 if I keep the trade open helf a year.

    At least this is how what I think is how it works -- but I'm a newbie, so maybe I'm confused somehow.


    Anyway, whatever you were talking about seems interesting, but could you explain it a little more?
     
  4. def

    def Sponsor

    your are correct that bp refers to basis points. 1 bp = 1/100 of a percent . In bonds when they say the bond traded up by X bps, it is the same as saying that the yield changed by X% (e.g. easier to say 10 bips as opposed to a tenth of a percent.)

    For the record at IB (interactive brokers), interest earned for USD = LIBOR - .25% and margin is LIBOR + 0.5%.

    LIBOR is currently around 3.05% (as a comparison, broker call is currently 4.75%)
     
  5. xpsyuvz

    xpsyuvz

    def,

    Hey, thanks for the response.
    I wasn't thinking about that traders also earned interest on their "cash" -- but now I think it's starting to make more sense.