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