I have recently opened up a brokerage account, and unfortunately, I was only allowed to open a margin account. Now, the most sensible option would be to switch brokerage that allows cash account, and I agree. However, I am not based in USA and hence, am limited to the brokerage that are offered in my country.
I have come across articles talking about rehypothecation, and while the risk is remote, it is a risk that I deem unnecessary, and I'd sleep better knowing that it does not affect me.
Suppose if I:
- Buy only stocks and nothing else (no shorting, no future, no options) - just plain, vanilla equity
- Use existing cash reserve in my brokerage account to buy securities (that is, fully sufficient cash levels exist within the account prior to buying)
Given the following assumption, would I ever be at risk of rehypothecation / are there scenarios where I would wake up to have all my equities wiped out, despite using a margin account?
Submitted August 25, 2017 at 04:57AM by OrangeCatPuddle http://ift.tt/2vm27mc
