IB Exposure Fee

You are of course right, but IB imposed this fee with only a week notice. Need some time to close the positions.
This fee is totally ridiculous as it only focuses on overnight risk and it treats all instruments the same. 30% risk for an index or index based instruments (like SPY) is crazy

 

Even during the teeth of financial crisis in 2008, SPX never went down more than 10% in one day. The crash of 1987 was down 22% in one day. Even in 1929, we never got anywhere close to down 30% in one day.

Yes, it is crazy to put a 30% stress test, but I am sure the higher the %, the more fees IB collects, so its all good for them.

 

Audio between 23:30 and 28:00 has short discussion on Exposure Fees
http://ec.libsyn.com/p/6/1/6/616737...1ce3dae902ea1d06c8853fd7c05e8fb1&c_id=7280459

 

You know exactly how I feel about that. They should just turn off the sell to open choice on the option ticket! Not what I would do if I was head of risk and still wanted to generate revenues.

 

IB created another blackbox, and charge customer for IB's own good only. I tried to talk with IB, they do not care. So only choice is to move to other low commission broker.

I did some research, it looks lightspeed has similar commission as IB, it can offer portfolio margin for account with $250,000. I plan to give it a try.

http://www.lightspeed.com/pricing/commission/http://www.lightspeed.com/pricing/commission/

 

Those accounts will custody at Apex. Your house rules will be worse than IB for SPX and SPY, but better for equities, up/down 25%.

 

A word of caution about APEX, at least if your money is there via OptionsHouse or TradeMonster: They don't like OTCBB trades. I had a few buy and hold Canadian companies in my portfolio when I transferred an account to TradeMonster. A month or two later I wanted to sell two of them and they charged $50 per equity to close the positions. I complained because they saw my positions before the account was established and never suggested exiting before the ACATS was complete. I may have missed the fine print, but $50/transaction is excessive and said so. They cut me a check as reimbursement but the whole thing was a headache.

 

1)Is there any evidence to show any index has ever be up 30% in one day? if not, why it is used in calculation of exposure fee?

2) because all stock exchange have trading brakes, the chance of 30% down is almost impossible.

3) IB just use this execuse to milk more fee from traders. Remember every trade we make will take risk, IB not appreciate the commission we generated, they punish us.

4) if you take a risk to trade, which may loss your hard earned money and at the same time to pay a fee. why do you still trade.

5) I suggest we all stop trading for a while to transfer to another broker.

 

if many of us do what you suggest, there may be a faint chance ., that IB will rescind this..

 

1. Most traders are too lazy to transfer assets to another broker and get used to another trading platform.

2. I am sure most traders here are trading equities, not futures or options so they won't be able to leverage enough to lose more than 100% with a 30% move.

3. Lastly, most ET traders are not trading big enough to really incur much of an exposure fee anyway.