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No doubt business picks up in bad markets.... no one is saying that the
brokerage firms don't make money from stock loans... as I stated earlier....
that's why they do it. One of the things I ask when I call for ok to short
a stock is to see if it is busy or if very many brokers are shorting
stocks... I use it like most use a put to call ratio.. some days if I'm not
shorting I call just to see how business is going just to see what their
business is like so I'm aware obviously after 27yrs in the biz. I would
still maintain that the average broker does not short and that many that do
have only a few sophisticated clients that do. Most brokers have gone to
fee based busines vs comm.. .. I'm curious why the thought out there would
be that the brokerage firms would not charge interest on margin acct..(that
would be like going to a bank and not expecting to be charged interst on a
loan and if fact int rates at brokerage firms are often lower than loans
that you can get at a bank!!! so don't know that "rip off" as suggested by
Norm is accurate)..to my knowledge there is not such thing as a "stock loan
fee" as suggested in Norm's post... you are charged margin interest
though. anyway.. Thank God Monday is coming so we can get back to market
trading ideas .. This thread is getting old..
----- Original Message -----
From: "Infernal Elk" <infernalelk@xxxxxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, October 07, 2001 2:47 AM
Subject: Re: [RT] VERY HEAVY BLK activity ON MSFT
>
> >> NW: No, they are loaning the stock so they can earn the stock loan
fees such
> >> as interest on the credit balance. This source of income often exceeds
the
> >> commission end of the biz. Given the recent deep discounts on stock
> >> commissions, I am sure the stock loan fees and interest they rip off
from
> >> the public is more important than ever as a source of income.
>
> <unlurk>
>
> having worked in back offices on & off in the past, i have to say that
> stock loan (equities) & repos ("fixed" income) can be a *substantial*
> source of financing at relatively little risk to a large firm,
> depending on the sophisication of the software systems that enable the
> stock loan or repo desks (stock loans are essentially equity "repos")
> to manage the huge volumes of stock in & out of the firm's box hourly.
>
> some of the stock loan desks i have seen rival some proprietary
> trading desks in number of personnel. and the stock loan folks are
> just as busy, sometimes busier!!!
>
> it's not as sexy as the proprietary side, but in bad years, the stock
> loan & repo desks subsidize the proprietary traders' bonus pools -- no
> joke! i've seen it happen often enough at bonus time. stock loan is
> steady money.
>
> - *lk
>
> <relurk>
>
>
>
>
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>
>
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