Does anyone know in detail how do the Brokers compute PORTFOLIO MARGIN?

Discussion in 'Options' started by tabasco mark, Nov 29, 2011.

  1. as far as I know they don't
    #31     Dec 8, 2011
  2. What are the Best Brokers on Portfolio Margin ?
    consider also the rates..
    There is IB , TOS
    #32     Dec 8, 2011
  3. rmorse

    rmorse Sponsor

    I don't know of any broker neutral trading platforms that provide accurate margin calculations for Reg-T, Portfolio Margin or Futures Margin.
    #33     Dec 8, 2011
  4. They will tell you that they normally don’t, which is true, and as opposed to IB which does it all the time. However, TOS will and does auto liquidate your account when they panic. Which means you will get a bunch of market orders without any notification, but if you read any broker’s contract they all have the right to do it.
    #34     Dec 8, 2011
  5. Options12

    Options12 Guest

    Yes, but with a pm account, auto liquidation adds a new layer of risk that I was wondering if TOS has a handle on. The process of reducing risk via liquidation in a pm account would be very different than in a Reg T account.
    #35     Dec 8, 2011
  6. The “process” is brokers at the firm throwing in orders as fast as they can because the firm is panicking. It will be neither efficient nor pretty, your only protection at TOS, IB or any other broker is to not let your account get close to their limits.
    #36     Dec 8, 2011
  7. Options12

    Options12 Guest

    Yes, by all means try to avoid getting near their limits.

    But with pm, the margin requirements are opaque and change frequently according to a nearly incalculable number of inputs.

    Moreover, bad quotes, erroneous trades or even an erroneous pm calculation might put you into a brief intra-day (or night) margin call when you otherwise may have felt sufficiently cushioned.

    In any of these situations a pm account that suffers an auto liquidation in which you have "brokers at the firm throwing in orders as fast as they can because the firm is panicking" will have a disastrous impact on the ability of a customer to reduce margin and satisfy a call.

    Has anyone out there had TOS auto liquidate a pm account? How did it turn out?
    #37     Dec 8, 2011
  8. Couple points: PM margin per the OCC is not that hard to figure out or anticipate if you know what you are doing; figuring out IBs margin on top of the OCC is not that easy as even they have admitted; but you are right that if a firm with liquidate you based on erroneous trades then you have a problem.

    I have never been auto liquated by TOS but I know someone who has, and no it did not turn out well, but I have only heard of it happening once in relation to the flash crash and no other times in quite a few years.
    #38     Dec 8, 2011
  9. yshterk


    CQG allows FCMs to set real time margining risk limits which cover both futures and options on futures.
    #39     Dec 10, 2011
  10. Thanks.

    Can the client see the actual margin used updated in real time or only an approximation from the previous day's close? This may depend on the platform used?
    #40     Dec 10, 2011