Where does it all come from?

Discussion in 'Prop Firms' started by Babak, Mar 20, 2002.

  1. Babak


    This may be a really dumb question (but that has never stopped me before): When a professional firm such as Bright, Echo, etc. give 20X margin intra-day and 5X overnight, where does the credit/money come from? Thanks
  2. The prop firm and or the clearing firm.
  3. Banjo


    The clearing firm. They set all the rules, the broker who uses them cannot be more expansive w/ the rules but can be more resrictive. Instinet clears for terranova-mb, penson for cyber, and mbt. When you margin you are using the clearing firms $. The clearing firms have revolving credit lines w/ banks.
  4. Babak


    Thanks for the replies. It reminds me of another question that I´ve always had, which is what do clearing firms do exactly?