Not to barge in on this thread, I have created a fresh one to specifically debate box spreads at Schwab. https://www.elitetrader.com/et/thre...-borrow-from-a-box-spread-with-schwab.359127/
i did this with my broker. It saved on my margin expense. However, it sucked up a lot of credit (gross balance sheet the broker afforded me).
Credit is the main reason a lot of brokers don't like clients doing this (ignoring for a moment that it eats into profit margins for many retail brokers who mark up margin rates)
Got it. Yeah, the whole shorting market is very opaque and I think a big money maker for brokers. If nothing else they make a ton of risk free money lending their margin customer's stocks. I had heard, but can't remember the details, that some smart entrepreneurs set up a marketplace to add some transparency and reduce costs in the shorting market and they were bought out by a consortium of brokers who then shut it down. If the stock has options you can do a synthetic short and avoid all that, but I understand that often the stocks you want to short don't have options.
The absolutely largest profit driver for retail brokers (according to foot notes in their reporting) is margin lending, so your idea has a point for those brokers who charge 7 or 8% in the current rate climate. I was just adding that clients get usually taken for a ride with brokers who mark up their margin loans on many other fees and cost as well.
I think there have been a few attempts at creating transparency around locates. when E*TRADE bought brownco in 2005 it was literally for the margin account business.
Does rehypothecation of which country's shares depend on the currency being borrowed? i.e. 'GBP margin loan results in UK shares hypothecation' while 'USD loan results in US shares hypothecation'. I am trying to avoid Payment in Lieu of Dividends on my US shares by using cross currency funding. The only drawback with GBP loan is the rehypothecation in UK is not limited, like in the US the max of which is up to 1.4x. However, if I don't have UK stocks, I don't have to worry too much on such limitless UK rehypothecation?
0% margin rates for the first Euro50k/USD50k/GBP50k till Jun 30, 2022 at Swissquote https://en.swissquote.lu/pricing/interest-margin-rates 1.25% spread over Libor rates for Euro/USD/GBP margin at Degiro. Cheaper than IBKR! https://www.degiro.ie/data/pdf/ie/IE_Feeschedule.pdf For someone who buys and holds stocks for a long time, the biggest cost is margin interest.