Why? Was Reg-T enough to protect traders/brokers in a stock like DNDN? The stock was up some 300% in pre market trading yesterday. So - "potentially" portfolio margin may increase margin requirements for some spec type positions when such volatility is known. - as the statement says "for margin requirements to more accurately reflect the actual risk of the positions in an account" and if that means requiring more than Reg-T then that is exactly what any competent broker should apply. In 99% of cases - "spec positions" will require less margin using Portfolio Margin but in some special cases, a 50% requirement may not be enough. In 100% of cases - "hedged positions" will require less using Portfolio Margin. Keep digging - you may find something - I've been working with my broker, the CBOE and the NYSE as well as sending multiple comment letters to the SEC on this topic for many years - and to be quite honest I was never sure I would see the day when it would be implemented for customer accounts (beyond that of the recent pilot program). But - without a doubt - Portfolio Margin will be a huge net plus for retail customers. I know for a fact that Interactive Brokers was instrumental in these changes and as such I would like to thank everyone at IB who put in so many hours to make this possible. I don't think many people realize how much influence IB has had over the years on the marketplace - without them - well I hate to even think what kind of market would be out there.........
I'm not disagreeing with a lot of this. I have also spoken to Fimat on a lot of these issues and my concerns are they are creating huge loopholes to have the right to control your account. The wording is very subtle but it is there. You'll see what I mean once you start trading in it. In fact, it will be interesting to see the case studies of ET members if they post them on forced margin calls or situations where their margin suddenly changes for no reason. When they start using ambiguous terms like, we may need more margin in certain situations, you are signing away your right to debate that. You will see it on the document you sign to get the PM account. Like I said, nothing more to argue here till you actually start trading in it and can start citing examples. Again, I will always take the JBO over the PM because I can borrow trading capital from the JBO to trade. Again, a lot of people here may discount that but if you trade option spreads, you will see what I'm talking about. As you go into expiration your margin usually triples and like I said, reverts back to Reg T. Well, what's the point in that? If I'm going to have to eventually put up Reg T like margin, you better put it up in the beginning and not wait till expiration week where you might not have the cash to do so!!!! Trust me, I have seen this play out so many times even in haircut accounts. And I have watched guys in my group blow out their entire accounts for not understanding this concept. For 98% of the traders on ET, PM will be of little benefit. Partly because of the 100k minimum. And btw, you really need to come in with 150k or so. You need top give your account some room for a drawdown. That's why Fimat has a 150k minimum and a 100k maintenance level. IB is just saying if your account drops below 100k then it goes right back to Reg T. Like I said, you'll see what I mean once guys actually start trading in a PM account. Just as guys come on here and complain about slow data, or margin issues, etc, they will post about how they got hosed on a PM issue that was out of their control. Of course my theory is this, you will see very little post activity about it here. Why? Because 99% of ET doesn't have the capital to get in it! But, we'll see if I'm wrong. It starts Monday!
So why is there no reduction in margin req when i buy 1000 QCOM at $45 and short 1000 QQQQ at $45 on IB's PM demo? BUY 1000 QCOM margin req becomes $6363 then SHORT 1000 QQQQ and margin req becomes $13008 for the combined (hedged?) position Am I wrong in considering this a hedged position?
qcom and qqqq are not correlated, so you cannot use one to hedge the other. You need to find correlated positions
Mav, why is it that you will not get the short rebate on a short sale? It appears the type of trading I might do--say a pair trade, would be subject tp 15% margin--whuch is the same as an outright long or short under these rules. Why would you not get the short stock interest, or any credit interest on excess longs?
Because this is how retail brokers make their money!!!!! If your retail broker already pays interest on short stock now, then they will most likely pay it in your PM account. If they don't, then they won't in a PM account. This is of course another favorable aspect to the JBO vs PM account. Much more favorable long/short rates and on short stock. Most retail brokers enjoy close to a 1000 bp spread on short stock!!!!! Did you know that? Their long/short rates are abysmal. Here are TOS credit/debit rates: https://www.thinkorswim.com/tos/myAccounts/displayRates.tos You get 1.50% for credit and 9% for debit rates!!!!! That is insane. I would give my left nut to be able to scalp those rates risk free. Ahh, the joys of being a retail broker.
The spread at IB is less than 280 basis. Maverick, what spread between lending and borrowing does your firm offer?