Compiling Margin Rate data from online Brokers

11/28/2012

I've spent a lot of time talking about the margin rates offered by various on-line brokers and the impact it can have on a trading strategy. Unfortunately, I have yet to find a decent comparison of margin rates across various brokers. While a handful of sites compile this data they are almost always lacking in some critical way (updated infrequently or incomplete in their list of brokers).

So, I've created a new page on The Margin Investor site with an updated comparison of broker margin rates.

The chart below illustrates margin rates for a small brokerage account. It continues to surprise me just how how much variability there is between different brokers.
See here for the full list.

6 Comments

Tim

1/28/2013 08:43:58

Can you please clarify whether these are initial or maintenance margin rates? Also, it is not clear which security types these rates are for? I believe they are not for stocks because margin rates for stocks must be much higher. Are these rates for one-day positions or positions held more than one day?

Jason Apolee link

1/28/2013 09:13:34

These rates apply to both initial and maintenance margin and the rates are applicable to cash stocks. I'm not sure why you think that margin rates should be higher. From my standpoint, most of the rates listed here are quite high considering how low interest rates are in general right now. Only Interactive Brokers really has a rate that I would consider competitive.

Tim

1/28/2013 13:19:04

Now i understand that there is misunderstanding here. Please read my comment to the article "Margin Rate Comparisons - The make or break factor for advanced trading strategies" written on

05/14/2012

gregorio

2/28/2013 01:42:40

I wonder if you might be able to help me with some historical margin interest rates. I'm looking for E*Trade's margin interest rates going back a few years, ideally as far back as 2006, I'll take anything you can provide. I know this is a bit out of the ordinary. I thank you in advance for any help.

Jason Apolee link

2/28/2013 08:41:52

Hi Gregorio,
Unfortunately, I don't archive the historical data so I don't have this info.
All the best with your search.
-Jason

Kevin Apte

1/5/2015 17:05:56

Traditionally, margin borrowing has represented only a very small percentage of total portfolio. I have a Fed study in my evernote that mentions the number 8%. So out of 100 billion dollar portfolio held with E-trade, only about 8 billion in loans are outstanding.

I am now discussing margin rates over a historical time horizon spanning decades. Please forget the last six years of near zero Fed Funds rates.

Historical Rate for margin borrowing: Margin Borrowing rate has usually been linked to "Broker Call Rate". This is the rate at which banks are ready to lend to brokers like Schwab, Ameritrade, Interactive Brokers etc.

Broker Call Rate is usually the overnight Fed Funds Rate, plus 1 to 3%. Fed Funds rate has varied from 0.5% to 6%.

Fed Funds Rate + Markup charged by Banks to Brokers + Markup charged by brokers to customers = Margin Rate

Fed Funds Rate + 1 to 3% is the rate large accounts can expect.

For large accounts- the margin rate has never been anywhere close to the advertised rates.

Compiling Margin Rate data from online Brokers

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