Portfolio financing
Borrowing against a portfolio
The securities stay in the account. Cash is advanced against them. Nothing in the portfolio has to be sold to raise that cash.
Key takeaway
Borrowing against a portfolio is a loan secured by investments you still own. The securities are collateral, and they can be sold if the collateral rules stop being met.
Sell
Shares leave the account. Cash is sale proceeds.
Borrow
Shares stay. Cash is an advance against them.
What changes, and what does not
| Sell | Borrow | |
|---|---|---|
| Position | Smaller | Unchanged |
| Cash received | Sale proceeds | Loan proceeds |
| Collateral | None | The portfolio |
What this means
A sale disposes of shares. A borrow does not. The cost of the borrow is interest, plus the broker’s right to treat the portfolio as collateral. Haven’s reference rate for that kind of financing is the Haven SPX Box Rate, read from listed SPX and SPXW options. It is not itself the loan.
Related
Why borrow instead of sell?How much can I borrow?How does box financing work?Haven SPX Box RateFinancing simulator
Haven Funding LLC is owned by Haven Systems LLC. Neither firm is a bank or a registered broker-dealer. Securities and execution services are provided through Interactive Brokers LLC. The Haven SPX Box Rate is a constant-maturity reference rate. It is not a Truth in Lending APR and not a commitment to lend.