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Posted by: Net Advisor™ on 2010-03-08, 22:48:10
The stock broker earns part of the commission on the transaction whether it is a margin transaction or not. Depending on the firm, some brokers can earn a tiny bit of the margin interest collected over the course of the year. This is really a trivial amount of money, maybe $50-200/ a year or so tops depending on the amount of dollars that are being held on margin times the number of days of that margin. The broker dealer - the firm whom lend the investor money to trade on margin makes interest during the time margin is being used. This is just like if you borrow money from a bank, except buying merchandise, you are leveraging to buy more marginal securities (stocks). Keep in mind that having a margin account does not cost money. The only time you are being charged margin interest is when you buy a stock that exceeds your cash balance. The difference is the amount of margin borrowing used to make that purchase. Read more about margin, risk and rules. sec.gov/ investor/ pubs/ margin.htm |
