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RIO wrote:Rajitha wrote:If I had the option I would allow the brokering firms to give retailers to be given up to 20% credit of the portfolio value at between 10-18% interest rate!
Rajitha, The problem here is not the Credit facility for Retailers ..even now all Brokers provide 30% to 50% credit in par with Portfolio...the the problem is retailers are expecting an unlimited number of days for credit settlement which is highly unrealistic request, which could blow a Bubble in the future if allowed...!
Even with interest charged all the financial institutions lend with a settlement date for any kind of Loans or Lease...so even if brokers are allowed providing Credit...they should be given a stipulated period for settlement to their clients instead of just pumping credit on credit every day...!
Rio, I think Rajitha is correct. Now brokers are not allowed to lend to their clients. Only financing institutions can provide margin credit. But few brokers have establised their own financial institutions to provide credit according to SEC rulling. But Most brokers are not capable to do so. Hence their clients unless marbin credit facility has obtained from a bank/financil institution are now in trouble. They will have to settle by paying cash or selling same shares he bought or any other shares in his PF within the T+5 limits.(within 5 days)Therefore it is considered as force selling and this would cause for increasing selling preasure.
