Mar

24

I received a message from a brokerage of mine that some perceive as working contrary to the interest of clients. It was to inform me that one or more accounts of mine held CHF, EUR or SEK. If I were not aware of the fact, the memo was to serve to inform me that I would be charged interest for holding these currencies.

The message goes out to managed account holders as well who then question the wisdom of holding any sort of position positions with negative carry.

For institutional traders who understand annualized day counts, it seems manipulative and contrary to the interest of the clients. The brokerage makes institutional traders fill out forms indicating their levels of expertise so it borders on manipulative to me to inform both those whose expertise was vetted and those whose money is run by those who vetted the expertise.

Though I have no formal model to incorporate the messaging intentions of brokerages, I have used it to increase my position in a negative carry position somewhat.


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