For my portfolio margin account at IB, today my initial margin (but not maintenance margin) was much higher than it had been yesterday with no obvious change in positions. This caused my available funds to be large and negative, allowing no opening of new positions. Excess Liquidity, based off maintenance margin, was unchanged and positive, about the same as yesterday up to market movements. Is anyone else seeing something like this? When I contacted them, they said today there was some change for PM accounts that increased initial margin requirements by 10% per a management decision. It sounds like this was not well communicated, either to the staff nor certainly to customers such as myself. Does anyone have more information about this?
Normally specific stock increases are notified with a phase in over a couple weeks. I did not get anything like that, so it's hard to tell. I think it's an overall increase, but I'm not sure.
I had one client last year, that was long Alibaba when it was trading around 113. He was also long calls. As I was monitoring his positions, the margin requirement went up to a level that made no sense. ($150K available to $1500 available. The stock was up 4 points that day) When I called IB,they told me that they changed margin to PM*2.5 to cover the risk of the security. They even used 2.5*the long options! If the stock went up a little more, he would have been liquidated to comply. He was MAKING money that day! There was no notice at all. Bob
Sounds quite similar to how IB implemented another fiasco here: http://www.elitetrader.com/et/index...trading-futures-in-ira-accounts-at-ib.290101/
How levered was your portfolio? Were you using almost all of your available margin to hold your positions?
As a general rule... Brokers can mandate margins higher than exchange minimums as they see fit for the perceived risk protection of their clients and themselves. If you don't like what the broker does, you are free to change brokers. Personally, I like the idea of the custodian of my money being more conservative about risks assumed. It's one thing to be "inconvenienced" as a customer.... it's another to be "left holding the bag" when the SHTF.
I can see they increased initial margins for even big things like SPY by 10%, so instead of having the old 9% requirement, it's now 10%. Their 15% requirements for most stocks are now 16.5%. Said another way, if you were 2x leveraged on your holdings, you now have a 2.2x requirement and have to liquidate more than 10% of your holdings before you can acquire anything new. I suppose I should be grateful they didn't blow me out of 10% of my book :/
You saw my username, right? . I normally run within 0-5% of the limits, which in this case was around 2-2.5x before the change.