Let's look at the economics of buying on margin in a Reg T account. Since they are not going to earn that rate it must be used along side the cost to borrow from the broker to calculate the total cost of carry of the position. For some that is the spread that means something.
In the link above you will find our trade data. The most useful dates are during Roll week which for March was between Mar 11 and Mar Focus on those. In the spread sheets you want to sort the data by column C and isolate Spreads SS. These are the purest view of finance rates per security as we force them to be competitively traded and you will notice that many of the trades go up at one price in one transaction. If you multiply column H and Column M and then by the multiplier of you will see the notional value of the transactions. How much more liquidity do you need?
Now sort the SS by Column J and you will note the interest rate em-bedded in the spreads. They don't all trade the same interest rate. Why don't margin loans vary by security as well?
Lastly, notice that the big trades are done in the first 3 or 4 days of the spread week. Be sure to compare the rates that occur on expiration day as small investors look to roll their positions forward. They would do themselves a favor to interact with the markets when the liquidity providers are paying attention. Sorry for any typos, I'm in the middle of a number of mini-storms. Let me know if I can clear up anything confusing.
Best David. I do appreciate your concern but you seem to be missing something. If one party is paying 3bps then another party is earning them. For customers who are getting 1. For those with HTB names in their cash accounts they could be replacing those positions with identical risk positions that are trading at substantial discounts. It is not for everyone but for those that have cash and appreciated stocks that are in demand it is a no-brainer.
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