Moving Margin Holdings to a New Brokerage

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chris319
Posts: 1659
Joined: Thu Jan 28, 2021 5:04 pm

Moving Margin Holdings to a New Brokerage

Post by chris319 »

Hello,

I have a margin account at a brokerage I've been with for years and like a lot. The problem is, their margin rate is quite high at 8%. I'm about 10% margined (1.1x) with a small assortment of big-name stocks. The margin interest is putting quite a damper on the returns from these holdings.

I've found a brokerage which has much more attractive margin rates (don't worry, it's emphatically NOT a certain brokerage which has recently made headlines and has a number of pending lawsuits and regulatory issues). I do not do a lot of trading and am more of a buy-and-hold guy.

I'm thinking about transferring my 10% margined holdings to this new brokerage. I would keep the rest of my holdings at my incumbent brokerage and retire my high-interest debit balance there. My question is, if I transfer these shares to the new brokerage using ACATS, what happens to my debit balance at the incumbent brokerage? The market value of my margined shares exceeds the minimum account balance at the new brokerage. Should I open the new account with cash? To which brokerage would I owe any debit balance? I also have an IRA account at the incumbent brokerage and that will be untouched.

Thanks in advance for your help.
Financial decisions based on emotion often turn out to be bad decisions.
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