Borrowing power
See how Reg T and portfolio margin accounts calculate how much you can borrow, with worked examples using blended LTV.
How does Frec determine how much I can borrow?
Reg T
Borrowing power in a Reg T account is primarily determined by your blended loan to value amount or 50% of your portfolio value, whichever is lower.
Your borrowing power can increase above 50% of your portfolio value as your assets at Frec appreciate, or if you transfer assets that have appreciated from an external margin account.
Example 1: A customer transfers $100,000 worth of diversified securities with a blended LTV of 75%.
|
Description |
Amount |
|
Portfolio Value (securities only) |
$100,000 |
|
Blended LTV amount |
$75,000 |
|
50% of Portfolio |
$50,000 |
|
Maximum Borrow Amount |
$50,000 |
Example 2: A customer transfers $100,000 worth of diversified securities with a blended LTV of 40%.
|
Description |
Amount |
|
Portfolio Value (securities only) |
$100,000 |
|
Blended LTV amount |
$40,000 |
|
50% of Portfolio |
$50,000 |
|
Maximum Borrow Amount |
$40,000 |
Only your direct indices and self-managed positions are included when calculating your LTV. It doesn't include cash, Treasury, or long short direct indices.
Portfolio margin
Portfolio margin accounts don't rely on the LTV of securities to determine how much can be borrowed against a portfolio of assets. Instead, the composition of your portfolio is analyzed dynamically to determine what can be borrowed against your holdings. This means a well-diversified portfolio typically allows for a higher degree of leverage, while a more concentrated portfolio may have more stringent requirements than a Reg T account. Other factors, such as market volatility or sudden shocks in the prices of specific securities, may change how much can be borrowed.
On the Frec platform, the account minimum to open a portfolio margin account is $500,000.