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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Brokers pushing retailers to the Trap

Brokers pushing retailers to the Trap

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1Brokers pushing retailers to the Trap Empty Brokers pushing retailers to the Trap Thu Feb 09, 2012 7:46 am

CHASE

CHASE
Manager - Equity Analytics
Manager - Equity Analytics
Guys I notice something strange in my PFs & thought to
share with you to protect you from blood suckers. Twisted Evil


I ‘m controlling 2 accounts in one broker firm. My fathers
& mine.


I bought some shares on credit last week from both the
accounts.coz I thought to put the money this week. (Otherwise i’ll never buy on
credit)


As of today my credit in one account I have about 30% credit
& other one about 55% credit.


But the strange thing is I have no buying power in the
account which I have credit of 30% & the other account I have another 20%
buying power.( I have no pending buy orders)


Yesterday I got a call from my
broker, asking to put some money to my account that have over 50% credit to
bring down below 50% otherwise they might force sell.


My prob is if I used over 50% they
why the hell they are giving me buying power of another 20% & no buying
power to the account which I have only 30% credit. This means that they are pushing me to buy from the account which i already used the full credit.



So guys be careful when you use credit. Brokers are pushing retailers to
the trap & force selling to suck the last blood of retailers.

2Brokers pushing retailers to the Trap Empty Re: Brokers pushing retailers to the Trap Thu Feb 09, 2012 10:41 am

K.Haputantri

K.Haputantri
Co-Admin
As far as I understand, you are entitlled to buy on credit only upto 50% of the portfolio market value. In a bear market, this value goes down fast daily and brokers become uneasy because they are not sure if they will be able to recover the credit even by force selling. That is, your buying power & its 50% credit limit gets eroded daily. The moment you buy upto 50% of the portfolio your buying power becoms zero and broker can force sell after T+5. However, if you pay & reduce credit to below 50% broker might give further time to settle (beyond T+5) depending on SEC rules compliance limits, their policy & your relationship with them.

If you still feel that the broker is at fault you can first make a complaint (e'mail complaint would be sufficient) to the compliance officer of the broker firm and if no remedy is forthcoming make a complaint to SEC. SEC Web has a facility to make such complaints on line. They will look after your interest.

3Brokers pushing retailers to the Trap Empty Re: Brokers pushing retailers to the Trap Thu Feb 09, 2012 11:00 am

CHASE

CHASE
Manager - Equity Analytics
Manager - Equity Analytics
Yeah I can understand 50% credit & I have no problem with that.
what I trying to say is they are so cunning.
They are allowing me to buy 20% more from the account which I already used my 50% & they are not allow me to buy from the account which I have less credit.


4Brokers pushing retailers to the Trap Empty Re: Brokers pushing retailers to the Trap Thu Feb 09, 2012 11:12 am

K.Haputantri

K.Haputantri
Co-Admin
Certain brokers block your entitlement of buying power when you are in default after T+5 even if you haven't used buying power to the maximum. This is unethical. You have a case here to make a complaint. Yes, encouraging to buy exceeding 50% of MV may become a trap.

CHASE

CHASE
Manager - Equity Analytics
Manager - Equity Analytics
@K.Haputantri wrote:Certain brokers block your entitlement of buying power when you are in default after T+5 even if you haven't used buying power to the maximum. This is unethical. You have a case here to make a complaint. Yes, encouraging to buy exceeding 50% of MV may become a trap.

Thank you for the reply. Yes it's unethical & luckily I had preplanned to invest. I'm sure more retailers got in to the same trap

market bull

market bull
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Brokers are not good at all.They know only how to people with innocent people not others.Bro in this world everything going with the relationship(Ex jobs,business).If broker wants to keep you,they will give you credit for months also.

@CHASE wrote:Yeah I can understand 50% credit & I have no problem with that.
what I trying to say is they are so cunning.
They are allowing me to buy 20% more from the account which I already used my 50% & they are not allow me to buy from the account which I have less credit.


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