IB Futures Intra-day Margins

Discussion in 'Retail Brokers' started by JamesL, Sep 29, 2010.

  1. JamesL

    JamesL

    Why does IB continue to peg their intraday margin to some archaic time frame? Just about everything is electronically traded from Sunday to Fri around the clock so why is 830 NY time so precious to them?
     
  2. Hours traded is not the same as liquidity, which is what is critical for managing things like margin calls.
     
  3. JamesL

    JamesL

    Their margining is automatic. Everything is done with their computer driven model. You run low, they liquidate you. That's their margin call.

    If brokers can do it (real time margining/automatic liquidations) offering their $500 margins at all hours, I see no reason why IB can't extend their 50% margins (don't need 500 margins, but a more practical approach to intra day traders) to hours other than RTH. This is just archaic.
     
  4. +1.

    Also one might think that a modern electronic system might be able to distinguish between an account holding 1000 YM (which might cause a liquidity problem) and an account holding 1 YM (which will never cause a liq. problem no matter what time of day).
     
  5. JackR

    JackR

    JamesL:

    Is this correct for US firms? As I understand it, exchange established (CME\GLOBEX) margins must be used outside of RTH. A broker can set any level during RTH as the exchange has no rules during RTH.

    Jack
     
  6. Exchange minimum margin (performance bond) is required ONLY during the exchange accounting (and maintenance) time window. For ES, that would be daily between 3:15 - 5:00pm CST.

    During this period, your brokerage MUST have the "exchange minimum" margin requirement per open contract on deposit with the clearing firm. It doesn't matter where the money for each open contract originates from so long as it is on deposit during that time window.

    After that time window, the brokerage can readjust margin to any value agreed upon between the brokerage, the clearing firm, and the client. If agreed, margin requirements outside of the exchange accounting window can even be zero!

    The "problem" so to speak is that for most multi-product brokerages the futures exchange accounting clock applies to only a small segment of customers. No product-specific clocks are offered. The day starts and ends around midnight, and the majority of products are not traded at that time.
     
  7. JackR

    JackR

    Tiddywinks:

    Thanks, most informative. I'm pretty sure IB is self-clearing with regard to GLOBEX issues. They've been upgrading their backoffice software the past few years. I now get my daily statements around 10 PM versus midnight in the past. And I used to hate options expiration weekend as statements often would not be ready until late Saturday evening. No longer a problem. So they could probably rejigger their magic-margin software to provide less restrictive futures hours but they are a rather conservative bunch.

    I think I read somewhere that IB has about 149,000 customer accounts. I bet a fair portion are futures types. But who knows when they trade.

    Jack
     
  8. Didn't IB take away intra-day margin for futures?
     
  9. Only for FX futures.

    "Due to market conditions and until further notice, Intra-day margin benefit rules for currency futures have temporarily been suspended."