Wednesday, May 12, 2021

The Communists At WSWS Are Keeping Tabs On Broker/Dealer Margin Loans

 I do not know if they track other aspects of Reg. T such as settlement and securities lending.

From the World Socialist Web Site, April 30:

Wall Street margin debt surges to record high

Wall Street’s S&P 500 index reached a new record high on Thursday on the back of the decision by the Fed the previous day that its continuous boosting of financial markets, through the injection of more than $1.4 trillion a year in asset purchases, would continue for a “long time.”

The commitment came despite indications of increased US economic growth and rising inflation which, in times past, would have set the stage for a tightening of monetary policy. But such is a fear that even the hint of a move in that direction will spark a collapse of the speculative financial boom that Fed chair Jerome Powell took every opportunity at his press conference to rule it out.

The extent of the speculative mania, which goes way beyond anything seen in the past, is indicated by broad financial trends and specific events.

One of the most significant broad indicators is the escalation of margin lending in which investors borrow money from brokers to finance share purchases and trade in financial markets. The collateral for the loan is the financial asset purchased, with the broker able to demand more cash from the investor—a margin call—if its market value falls....