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by WalterBright 2332 days ago
I think if you work through the numbers, the risk level to the brokerage is the same. For example:

"But the goal is to align margin requirements with your portfolio's overall risk, based on the net exposure of all positions, and not just on individual positions. Portfolio margin is available to qualified investors who meet our minimum requirements and have $125k or more in total equity."

And by "qualified" investors they likely are looking at your other assets to see if they can be used as collateral. Note that if you go negative with your brokerage account, they don't just swallow the loss, they'll come after everything you have.
1 comments
manigandham 2332 days ago
Risk level to the brokerage is different from margin requirements and leverage, but they do trust you more. They don't look at or even know about any other assets though. It's based on your account size, trading experience and strategy. And of course negative balances are always owed.

But the point is that more capital does give you more leverage. The next step is $5M+ mark when you get even more access to trading vehicles.

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WalterBright 2332 days ago
> But the point is that more capital does give you more leverage.

I don't believe it. I do believe that if you have a track record of paying your trading debts and paying fat commissions, they'll let you take on more risk. Worst case, if you've got $5M in an account, you likely have other assets the brokerage can seize.

> They don't look at or even know about any other assets though.

I don't believe they're going to let you highly leverage $10m without checking you out one way or another.

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manigandham 2332 days ago
I have more leverage. You don't have to believe anything, it's right there in the description of Portfolio Margin, and it requires a certain account size.

What does any of this background check have to do with your claim that more capital doesn't provide more leverage - when it quite literally does?

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WalterBright 2331 days ago
A background check reveals assets of yours that would be collateral for the loan.
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manigandham 2325 days ago
That's not how it works. You have capital in the account or you don't. That's what the regulations stipulate and brokers can't break them just because you have more assets, nor have they ever run a background check on me.
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