Yes, for sure they know something about future market moves that the rest of us don't. Why would they be in the broker business if they knew?
I'm agreeing with you. Doesn't make sense to raise ES margin when VIX is historically low unless you're contrarian or know something the rest of us don't!
Nobody changes any rules. Adjusting margin requirements is purely at the entire discretion of the the broker. You signed the contract, it's clearly stated in there. And if a slight margin increase boots you out of your position then you got MARGINCALLED, meaning, you are trading too large a position or are severely underfunded. I can teach you some position sizing rules that will prevent you from being MARGINCALLED. Call my assistant to schedule an appointment.
Lower margin is better than higher margin for sure. But only for people who have good self control. Just like a credit card limit. Not everyone deserves a high limit. Those that have a high limit may never even fully utilize their limit. But the 'shady' characters may max out their CC all the time and even pay credit card interests every month. I think strict house rules are there to protect everybody as a collective. Your trading book and what you do affects the broker's books and thus everybody who has money with that broker. If you cause a mess, you affect others. They are making sure their customers are safe. I don't see a problem with that. The people that need the absolute lowest requirement for margin on futures are probably people who put on too big of a position given their NAV. Probably can't survive a few point adverse swing in an era where there are flash crashes, where moves become exaggerated and moves instantaneous (and counter intuitive also). My guess is, given the historic low VIX, it is a matter of time before VIX shoots up to the moon again like it inevitably will. As each day ticks by where volatility remains low, the probability of a high volatility environment tomorrow becomes greater. Everyone is long the S&P right now. Wake up one morning, and you get a 'healthy' pullback of 5-10% from 2300? Thats quite a drop given the levels we are at to around 2150 of 150 points. Can a person's overnight position handle 150 point drop per contract in a day or two? That's a $7500 loss per contract.
@Sig is right in that decisions and actions by a broker will impact its business. In this specific example, setting a minimum deposit and raising margin requirements above mandated exchange levels has the effect of keeping people away that take large risks with very little downside while putting existing account holders at an additional risk. We agree on the business impact, what he does not understand is that IB does that on purpose and for the good of the existing customers who prefer a broker with a rather conservative mindset towards risk management. He seems to want every broker to offer $500 day trading margin in ES. But not every investor has the same utility curves, not every customer has the same risk preferences. And I welcome that IB differentiates itself in that regards.