For the past month or so, it has been an absolute bloodbath for major US brokerages. From Charles Schwab to Interactive Brokers, major US brokerages are offering commission-free trading.

Apparently, the key to survival in the new world is the idle cash, i.e. the cash sitting in your brokerage accounts. One source of revenue for brokerages is to loan out clients’ cash to the market.

As of August 2019, the idle cash sitting in Schwab clients’ account total to about $3.7 trillion. And as of 2018, Schwab makes around $10.1 billion in net revenue from loaning out clients’ cash.  No small change.

Should you worry about brokerages loaning out your monies?

IMO, I don’t think so. In fact, you should be worried if they are not loaning out your monies. At the end of the day, brokerages are businesses and they got to report to