Risky Brokers

sapumal · 1 Risky Brokers Thu Aug 25, 2011 2:16 pm

sapumal

Vice President - Equity Analytics

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Brokers can give credits upto amount which equals liquidable asset value (except assets like good will ). If your broker don't give credit that means he don't have much assets.
Buildings, furniture all the things might buy on credit. Don't invest your money with such a brokers. You will ended up with trouble on day.

Asha phillips is one broker who don't have assets

They told some of us including smallville , me,.. that they don't have liquid assets.

Last edited by sapumal on Thu Aug 25, 2011 3:20 pm; edited 1 time in total (Reason for editing : added the last line)

innam · 2 Re: Risky Brokers Thu Aug 25, 2011 2:44 pm

innam

Manager - Equity Analytics

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The fact that they don't give credit could mean that they don't have LIQUID assets (as per the SEC definition) OR it could mean that they don't want to take the risk of giving credit to retailers.

The counter point to your argument is that IF YOU DON'T NEED credit it is better to deal with a broker who doesn't give RISKY credit to everyone who walks through the door.

A kade type broker who gives out credit to everyone (even if it's upto the SEC limit) runs the risk of running into a liquidity crisis in a worst case scenario...and you may end up not getting your credit balances.

Those who don't need credit should stick with the brokers who provide the best service and who have a long standing reputation. Those who need to play with credit will have to switch to a broker who does give credit (Are there any brokers who give credit to new accounts?)

It seems that after the SEC rule change giving credit is at the discretion of the brokers -depending on their liquid asset limits-hence the continuation of forced selling of those who buy on credit and don't settle by T+3.

innam · 3 Re: Risky Brokers Thu Aug 25, 2011 3:30 pm

innam

Manager - Equity Analytics

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looks like FT spells out the current situation.

http://www.ft.lk/2011/08/25/brokers-scramble-for-new-capital/

brokers got the rules changed, now the solution to the lack of credit is in their hands. The brokers who want to give out more credit need to raise more capital....if the client base is demanding more credit -brokers now need to raise more capital.

sapumal · 4 Re: Risky Brokers Thu Aug 25, 2011 4:04 pm

sapumal

Vice President - Equity Analytics

Posts : 1105
Equity Stars : 6527
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Join date : 2010-07-30

If they don't want to give credit for better govern why they signed a MOU and forward MOU to SEC at the first place. I can remember that they gave a big publicity

I think they are lack with assets. Thanks innam for the detailed link.
Once I sold my stake I will quit from Asha phillips for ever. Needs to find a broker who is not among those 10