Your brokerage firm has a fiduciary duty to you ho
Post# of 72440
Posted On: 12/12/2016 10:51:48 AM
Re: NotRichYet2 #29373
Your brokerage firm has a fiduciary duty to you however it is more concerned about its own survival. Some will find this revealing. Go CTIX!!!
Hedge funds are large, virtually unregulated pools of anonymous money, used to invest in any way the operator sees fit.
Prime brokers allow their hedge fund customers leverage on their assets, meaning that for every dollar of asset, they could easily hold $10 of short positions.
This over-leverage presents a systemic risk should positions in several larger funds go the wrong way, as there isn’t enough collateral to cover the domino effect of multiple positions being forced to cover.
This over-leverage creates an environment where the brokers are now pregnant with their hedge fund customers’ liabilities, and have a vested interest in seeing depressed stock prices remain depressed – if the stocks go up, the hedge funds could easily fail, and the brokers are on the hook to buy-in and deliver the stock owed by the funds – resulting in brokerage failures.
The DTCC is ultimately at risk for this domino effect, as brokerages fail.
The DTCC is owned by the brokers, thus is the brokers."
Hedge funds are large, virtually unregulated pools of anonymous money, used to invest in any way the operator sees fit.
Prime brokers allow their hedge fund customers leverage on their assets, meaning that for every dollar of asset, they could easily hold $10 of short positions.
This over-leverage presents a systemic risk should positions in several larger funds go the wrong way, as there isn’t enough collateral to cover the domino effect of multiple positions being forced to cover.
This over-leverage creates an environment where the brokers are now pregnant with their hedge fund customers’ liabilities, and have a vested interest in seeing depressed stock prices remain depressed – if the stocks go up, the hedge funds could easily fail, and the brokers are on the hook to buy-in and deliver the stock owed by the funds – resulting in brokerage failures.
The DTCC is ultimately at risk for this domino effect, as brokerages fail.
The DTCC is owned by the brokers, thus is the brokers."
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