Penson

I know many retail firms charge that on long balances. We clear Penson and ML and base our rates on a premium over Fed Funds, so our rates are much lower. No, I can't post rates here. Wanting insurance to protect your money for those concerned will always have a cost. Only you can decide where to pay.

 

Forgive me if I'm being obtuse, but where does the 4-8% figure come from? Even if you pay margin interest on a position, at IB's site for instance it shows you'd pay about 2-2.5% at most.

 

that is why, I used the word exceptions. typical industry rates are 4-8%.

 

rmorse, are you sure about this?

See more discussion regarding IB's minimum on T-Bills here:

http://www.elitetrader.com/vb/showthread.php?threadid=225208

There seems to be confusion. Maybe IB can weigh in on this.

 

ml and penson are not in the same league.

you are also gambling that there won't be an upward spike in interest rates.

 

No I'm not sure. You should call IB and ask if your interested.

 

Really, B of A Merrill Lynch is not in the same league? What does that mean? They have different a business model than IB , but your telling me ML is not safe?

 

you are misreading and imputing. the sentence said penson and ml are not in the same league. the comparison is between penson and ml. IB was never mentioned.

 

"We are also Introducing Brokers to Interactive Brokers. Their risk premium is higher in many ways than Penson. If you require leverage, Penson offers more."

please give details. be specific as to ways risk premium is higher for IB

what additional leverage?

'Remember, the Introducing Broker relationship places us next in line for losses on our clients accounts, before Peson, if our client blow through their assets. So, we do care about risk."
how much capital do you have?

 

Penson and IB use the OCC TIMs calculation for Margin on CPM. However IB does not provide leverage on "small" cap stocks with market caps of under $250M. Also, they increase margin requirements for high concentrations (Too ouch margin afforded to similar positions.) and on what they consider illiquid securities. There is nothing wrong with any of this. Other Prime Brokers do the same thing including ML Pro.

As to our capital, I have no idea. I'm not a partner in the firm and never looked at our focus report. We have capital requirements to cover losses should one of our clients go negative. Victor Securities losing money from one client does not effect other clients. Our capital is separate and the client keeps his assets and securities at the Prime Broker.