MoneyTec Traders Community Forum - View Single Post - How do brokers pay your leverage? How does it work?

cornellj · 21-12-2005, 02:17

The market maker,jobber, broker makes his money on the spread he charges the smaller trader to whom he sells smaller parts of deals he has made with larger institutions acting as a retailer of a product he bought wholesale. He covers positions inhouse between buyers and sellers and offsets the difference in the market. The broker is thus the counterparty to my trades.

For this reason they carry huge creditlines with the institutions they deal with. The brokers also leverage their available funds the same way we do with the institutions they deal with. Because they make use of creditlines that can hurt them, they have to cover themselves on all trades. They use a variety of methods to do this, a few that has been mentioned in this thread already.

I do not really care how it is done (if well done) as long as I am given the opportunity to participate.

Socrates and MM I enjoy your posts.

Merry Christmas to all.

21-12-2005, 02:17	#18
cornellj level 3 Join Date: Oct 2003 Posts: 216 Downloads: 0 Uploads: 0 Rep Power: 0	Re: How do brokers pay your leverage? How does it work? The market maker,jobber, broker makes his money on the spread he charges the smaller trader to whom he sells smaller parts of deals he has made with larger institutions acting as a retailer of a product he bought wholesale. He covers positions inhouse between buyers and sellers and offsets the difference in the market. The broker is thus the counterparty to my trades. For this reason they carry huge creditlines with the institutions they deal with. The brokers also leverage their available funds the same way we do with the institutions they deal with. Because they make use of creditlines that can hurt them, they have to cover themselves on all trades. They use a variety of methods to do this, a few that has been mentioned in this thread already. I do not really care how it is done (if well done) as long as I am given the opportunity to participate. Socrates and MM I enjoy your posts. Merry Christmas to all.