Margin account debits will accrue interest on a daily basis, and will be charged monthly. The rate is based upon the Broker Call (Call Money) Rate, and varies according to the current debit balance.
|MARGIN INTEREST RATE TABLE|
|Debit Balance Tier||Interest Rate|
|$0 to $49,999||10.00% (Broker Call +2.75%)|
|$50,000 to $99,999||9.25% (Broker Call +2.00%)|
|$100,000 to $249,999|| 8.50% (Broker Call +1.25%)
| $250,000 to $499,999
|| 7.625% (Broker Call +0.375%)
|$500,000 to $999,999||7.00% (Broker Call -0.25%)|
|$1,000,000 over||6.75% (Broker Call -0.50%)|
For short sales on stocks, 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 at the end of the month. The description of the entry will reference a Stock Loan Fee (STK LN FEE).
The formula for the interest calculation will be: (Market Value x Rate x # of days) / 360.
For example: ($10,000 principal x 1% interest rate x 7-day holding period) divided by 360 days = $1.94.
i.e. Feb 1st, sold short 400 XYZ Corp at $25 per share. Feb 7th, bought to cover 400 XYZ at $25 per share.
In the above example, a $10,000 short position, with a 1% rate, was held for seven days, before covering. At the end of the month, a fee of $1.94 would be charged to the account.
Most easy-to-borrow (ETB) stocks have a nominal interest rate charged in order to carry the position. Stocks considered hard-to-borrow may have a significant interest rate charged in order to carry the position, in addition to a "locate fee" for finding stock for shorting.
To check the approximate interest rate for a particular stock, or any other questions, please contact us.