100:1 intra day margin. How can a broker offer ?

tenthousandmen · Jul 4, 2012

Quote from bidask201:

I see these 100:1 intraday margin offers for ES. What I don't understand is why didn't some futures brokers go bankrupt on the flash crash day with this.

While some who use that 100:1 might actually not be net worth leveraged at all and just use it to have the rest of their money fdic insured, it must surely attract some people who bet everything they have.

It seems clear to me you can't guarantee some auto-liquidation to have a non negative balance per account on a big jump move even if say the program liquidates an entire position when there is just a .5% ES move which for someone at the edge would be double what is required.

Are you required to have an initial (regulatory) margin of roughly 10% for each margin contract ? This would mitigate it somewhat but I can still see some states that are almost as bad.

So how can a broker offer 100:1 ?
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People in the pit pay $ 0 margin. How do they avoid bankruptcy?

Swan Noir · Jul 4, 2012

Do you believe that they post zero?

Quote from tenthousandmen:

People in the pit pay $ 0 margin. How do they avoid bankruptcy?
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100:1 intra day margin. How can a broker offer ?

tenthousandmen

Swan Noir