Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2 9/18/84; site ucla-cs.ARPA Path: utzoo!watmath!clyde!burl!ulysses!allegra!oliveb!hplabs!sdcrdcf!ucla-cs!brett 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.