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Stock brokerages also offer margin accounts. You send them $5k and you buy stock worth $20k. How do you suppose this happens?
by drexlspivey 4y ago
Stock brokerages also offer margin accounts. You send them $5k and you buy stock worth $20k. How do you suppose this happens?
- jcliff 4y agobrokerages need to have cash on hand to loan. they can partner with a bank, or it can come from their own balance sheet or investors, but it's not printed out of thin air.
- aeternum 4y agoIn practice, aren't almost all of them either a bank themselves or partner one or more banks and auto-sweep customer deposits into these 'program banks'? Sure it might be slightly more convoluted, but at the end of the day isn't this still customer deposits funding margin/loans?