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One other point to note here: when you open a margin account at a brokerage, you are asked to sign a number of agreements such as a credit agreement (officially recognizing that you will be borrowing money and specifying the interest rate), a hypothecation agreement (pledging the assets of the account as collateral for the margin loan and permitting the brokerage to subsequently re-pledge them as collateral to a bank from which it borrows the money that it loans you), and a loan consent agreement, which gives the brokerage the right to loan your shores to clients who wish to borrow stock for short selling. The broker will certainly require you to sign the first two, but according to the regs, they cannot require you to sign the loan consent agreement. However, I didn't see an easy way to opt out of it when I signed up for my account with a discount broker and it didn't seem worth the hassle to navigate their customer service to opt out even though lending provides them with a profitable business which I, as the ultimate lender, am not compensated for.



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