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From: brett@ucla-cs.UUCP
Newsgroups: net.invest
Subject: Re: Re: M-L CMA info request
Message-ID: <7276@ucla-cs.ARPA>
Date: Sat, 26-Oct-85 20:01:27 EST
Article-I.D.: ucla-cs.7276
Posted: Sat Oct 26 20:01:27 1985
Date-Received: Tue, 29-Oct-85 01:31:58 EST
References: <1723@akgua.UUCP> <109000007@ima.UUCP> <178@cadsys.UUCP>
Organization: UCLA Computer Science Department
Lines: 20

> 
> I will hesitate to call it a service. They don't "safekeep" your stock
> certificates; intead, the stocks are registered in "street name" or in
> other words, their name. They get to lend it out to people who short the
> stock, charging a "rent" for such use. Also, brokerage houses also
> "makes market" and keeps an "inventory". Sort of create stocks by a
> stroke of the pen; they will sell you stock from their inventory, if
> their trading desk think the stock will go down - when they maintain a
> "negative inventory" position - in other words, you may get to buy 
> what they short. You may find yourself at the disadvantaged end of 
> the "bigger sucker" theory.
> 
> Brokerage house don't provide the service out of the kindness of their
> hearts, that poor souls may lose their certificates if they are not
> careful.
> 
> 

Not quite accurate.  On cash accounts they are not allowed to 
lend your securities out, but on margin accounts they may.