When opening a margin account, debtors must sign a margin agreement. This agreement stipulates that the customer complies with the rules and regulations of the Federal Reserve Board, the OAR and DriveWealth. The margin agreement will include three separate agreements: the credit agreement, the mortgage contract and the credit approval contract. Credit AgreementBy the signing of the credit agreement, customers recognize that they borrow products from the company and are responsible for paying interest and repaying the loan amount. The agreement reveals all the credit conditions. The interest rate is variable and is usually linked to the Call Loan Rate broker. DriveWealth calculates a Fed Funds variable interest rate plus 400 basis points. Margin interest is charged daily and is booked monthly into the debitor account. In the United States, interest paid into a margin account is generally tax deductible from capital income.
Mortgage AgreementThe mortgage agreement stipulates that the client credits his securities to the brokerage company (in mortgage) and gives the company the right to re-mortgage (as a pawn) the securities to guarantee the loan from a bank. Securities held in a margin account are held in the street name in the name of DriveWealth. The securities are held in the street name, so the brokerage company can sell them if the customer does not meet a margin call. DriveWealth is the nominal owner (i.e. only on behalf of the owner). The stock belongs to the customer who is the economic beneficiary. Credit Acceptance AgreementThe Approval Agreement gives DriveWealth the right to lend customer securities. Dealers generally lend these securities to clients who wish to lend shares for short selling. Under current rules, the customer is not required to sign this contract. When a margina account is opened for a customer, DriveWealth provides the customer with a list of the amount of interest that is calculated and the method used to calculate interest. Information: From the customer`s point of view, signing a customer`s credit authorization has little impact, with the possible exception of the imposition of replacement payments instead of dividends, as shown in the Schwab agreement below. If the trader lends his shares to another investor for a short sale transaction, the client can continue to sell shares through a long transaction.
A client`s credit contract is a contract between a broker and a broker-Cum that allows him to lend securities and assets to the margina account managed by the client. You can add your own corporate logo and slogan to adapt it. Finally, you can save this template as a pdf and simply print this agreement.