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Just like the credit industry (credit cards, home loans, etc). Consider
the penalty and membership fees for some of the credit cards out there,
not to mention the interest rates. The cost of money is 2.5% and yet
card issuers are charging anywhere from 13-19%.
What a scam!
-- John
> -----Original Message-----
> From: Infernal Elk [mailto:infernalelk@xxxxxxxxxxxxxxxx]
> Sent: Saturday, October 06, 2001 11:47 PM
> To: realtraders@xxxxxxxxxxxxxxx
> 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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