Why do securities companies allow margin financing and securities lending?

There are only two real reasons for securities companies to let investors open margin financing and securities lending. One is for the benefit of securities companies; The second is that the securities company in order to complete the task; Similar to why banks want people to open credit cards.

Securities companies' margin financing and securities lending business is equivalent to the nature of banks' loan business. I believe everyone knows about bank loans. If the bank gives you money, you should return it to the bank with interest at the specified time, and the bank will earn interest from it. This is the bank's operating income.

Securities companies offering margin financing and securities lending are also equivalent to lending money or shares to investors. For example, if investors want to raise funds, they can hold their own shares as collateral, and securities companies will invest and raise funds according to the mortgaged shares, but the precondition is that financing needs to charge interest. Generally, the financing of securities companies starts at 5%, that is, financing 1 10,000 needs interest of 50,000, which is the interest of securities companies.

The same is true of securities companies' securities lending. Securities companies themselves speculate in stocks. Securities companies use funds to buy stocks first. When investors want the stocks in the hands of securities companies, securities companies can lend their stocks to investors. When the stock falls to a certain price, investors buy the same stock and return it to the securities company. Interest is calculated according to the time when the shares are repaid.

Therefore, according to this inference, the biggest reason for securities companies to open margin financing and securities lending business to investors is for their own interests. Interest income not only earns interest, but also receives commissions. As long as investors buy and sell securities after margin financing and securities lending, any trading operation of securities companies will have commission income. The larger the amount, the higher the commission, which is beneficial to securities companies.

Of course, in addition to profit income, securities companies will also have task indicators when they open margin trading business. How many indicators does a business department of a securities company need to complete? Similar to a bank, how many depositors or credit accounts need to be opened. In order to complete the task index, the staff of securities companies will also strongly recommend investors to set up securities companies.

To sum up, we know that the real reason behind the securities companies' opening of margin financing and securities lending is to earn interest, increase the commission income of securities companies, and complete the tasks assigned by superiors to securities companies. It is the most favorable for securities companies to open margin financing and securities lending.

Finally, investors are advised to stock rationally, and never borrow money to stock, that is, don't blindly open margin financing and securities lending business. As long as the margin financing and securities lending business is opened, it will produce margin financing and securities lending business, which is equivalent to borrowing money for stock trading. Borrowing money for stock trading is the most terrible thing. I appeal to you not to borrow money for stock trading.