I have a Masters in Accounting, so if I can't understand how MB does its statement accounting I must be an idiot. Anyway here is my issue. I called to find out about there margin interest policy. I posed this hypothetical example. An investor has 10k in equity. He buys 15k worth of stock. He will owe interest on the 5k over and above his equity. Easy. Well if the same 10k account were to have 10k in longs and 5k in shorts would the trader owe interest on 5k in this situation. I am told yes by MB. However, this is not what my statement reflects. This is also not what other online brokers have told me. I called MB and spoke to about 3 different people on this and they have to talk to Penson Fin. to get the exact formula. Isn't this something fairly easy they should be able to reconcile??? Also on their platform when you have a short position it shows a negative cash balance. Very confusing.
The start of your post reminds me of this commercial: "<i>A recent FedEx television advertisement features a young man on his first day. His boss tells him "we're just in a bit of a jam. All this has to get out today." "Yeah, ah ... I don't do shipping," he replies. "Oh no, no, it's very easy," she answers. "We use Fedex.com. Anybody can do it." "You don't understand, I have an MBA." "Oh, you have an MBA?" "Yeah ..." "In that case, I'll have to show you how to do it." The voice over nails it with: "Fedex.com makes shipping so fast and easy ... even an MBA can do it."</i> Different brokers do it different ways. Technically you're shorting shares so you get a credit, but you may not be able to use that credit to offset your margin loans, since the shorting of the shares requires it's own margin.....I guess wait to see how Penson answers.... SSB
The answer the way I understand it is yes. Regardless of long or short, you should pay margin interest on any amount of stock you are holding in excess of your equity. It should be based on total market value held. Ex. You have $10k in equity (your money). You hold $10k long and $5k short (Total $15k). You should be paying interest on $5k.