I received the following information from IBCS in response to my inquiry about the lack of details in the calculation of the exposure fee, not sure why this isn't posted on their web site:
Does the IB stress test recognize hedged positions, or is the algo strickly very simple and does -30% and +20% valuation change on each position? Say you are long ES at 1930 but hedged with long puts at 1920 strike paying $5 premium, your loss is theoretically limited, but does the risk analysis algo calculate -30% on your position anyway for both the underlying and the hedged options? So in that case, do they apply -30% to your long ES and also -30% to your long puts also? Because that is kinda silly. Also, when they say -30%, is that -30% against you, or a -30% move in the price. This matters whether you are long or short a position.
Rules? Free-riders? You know IB was running advertisements encouraging over-leveraging. These ads were saying that they would "lend you 500,000 for every 100,000 in a portfolio management account" to buy high dividend paying stocks. That strategy (which they recommended) would put you into this exposure fee category.
Interesting point I have to admit. If * If what you stated is correct and * If leveraging at stated multiples in stocks would lead to such exposure fee and * If the time span between said advertisement and the introduction of the exposure fee was relatively short Then I would agree that IB's ethical behavior can be questioned. Not that I ever not question ethical behavior of brokers but in this case there is a point that can be made.
Is anyone else having problems with IB's Stress Test Report? I'm only getting a message "No Stress Test Summaries available".
Looks like IB's Stress Test Report is "refunctioning" again. Well, at least through Friday. (h/t to GWB for the word "refunctioning" and phrasing it with the word "again").
It’s been just over a couple months now since they implemented this fee, I think enough people have received different language/details of how it works to almost fully understand it, certainly when it comes to a single underlying its fairly straightforward. Does anyone have experience trading different asset classes with regards to the fee? If so, and lets for example say your holding both equity and commodity underlying’s – as defined by IB (so placed on their respective tabs in the Risk Navigator) – are they each treated separately in terms of exposure or aggregated? To further illustrate, let’s say I have $95,000 USD of exposure on the equity side, and $50,000 USD of exposure on the commodity side. We have been told that the fee kicks in when you reach approximately $125,000 USD of exposure, so will this scenario be treated as one of 95 and separately one of 50, or will it be 95 plus 50 to total 145,000?
Hi Risknav, To your question, there is no minimum level for teh exposure fee. It will be charged based on the amount thet the calculated risk for the exposure fee exceeds your equity value (cash value). Exposures for different categories are agregated as far as I know for risk in teh 'same direction' (+30% or -30%).