Margin account debits will be charged interest on a monthly basis. The rate is based upon the Broker Call (Call Money) Rate*, and varies according to the average debit balance for the month.
|MARGIN INTEREST RATE TABLE|
Debit Balance Tier Interest Rate
$00,000-$49,999.99 5.00% (Broker Call + 2.00%)
$50,000-$99,999.99 4.25% (Broker Call + 1.25%)
$100,000-$249,999.99 3.50% (Broker Call + 0.50%)
$250,000-$499,999.99 3.00% (Broker Call + 0.00%)
$500,000-$999,999.99 2.50% (Broker Call - 0.50%)
$1,000,000 and above 2.25% (Broker Call - 0.75%)
*As of June 15th 2017, the broker call rate is 3.00%. This rate is published in financial newspapers.
Short Sale Interest Borrow Charge:
For short sales on stocks which are deemed "hard to borrow", there may be interest-like fees (known in the industry as "negative rebates") associated with carrying the short position. This interest will accrue from settlement date of the short sale until settlement date of the buy-to-cover. The charge will levied on or about the 20th of the month.
The formula for the interest calculation will be: (Market Value x Rate x # of days) / 360.
For example: ($10,000 principal x 3% interest rate x 2-day holding period) divided by 360 days = $1.68.
i.e. Feb 1st, sold short 400 XYZ Corp at $25 per share. Feb 2nd, bought to cover 400 XYZ at $25 per share.
In the above example, a $10,000 short position, with a 3% rate, was held for two days, before covering. On or about Feb 20th, a fee of $1.67 would be charged to the account.
The entry on you History screen/monthly statement will read "SHORT SALE INTEREST BORROW CHARGE". If you would like to find out the possible interest rate (if any) for a particular stock, please contact us before entering a short sale order.
A negative cash balance in a Cash account is subject to an interest charge. Interest on any debit balance will start accruing after settlement date of a purchase. It is possible a debit balance may also be created as the result of a fee charge. The interest rate shall be equal to the Pershing Base Lending Rate (PBLR) plus 300 basis points.
Disclaimer: Trading Direct is a deep-discount broker, who does not provide investment advice. All orders are unsolicted. Use of margin entails risk, and is not suitable for all investors. Clients may make or lose money with investments. Obtain and review a Margin Agreement & Disclosure Statement from the Document Center, or contact us with any questions.