here we go again.(with volume and volatility close to all time low) not sure what was the rationality right now for such increase. what's up with node/2007 ? any explanation will be appreciated. Margin Increases on Low Cap Securities Please be advised that IB has increased the initial margin rates to 100% on low capitalization stocks (currently defined as companies with less than $250 million in market capitalization). The maintenance margin increases will occur in stages starting with an increased to 50% beginning after each region's market close on Friday, January 11, 2013 and will be implemented as follows: Friday January 11, 2013: Maintenance Margin - 50% Wednesday, January 16, 2013: Maintenance Margin - 75% Monday January 21, 2013: Maintenance Margin - 100% The list of stocks which are subject to this margin increase can be found on the following page: http://ibkb.interactivebrokers.com/node/2007 to be honest-looking on my BP during the day makes me think that they done this long time ago.. few days back my BP before market open was > 250K.but as day goes by-it's runs out to zero while i was holding <100K worth of stocks. go figure..
I agree - did they get burned in small cap names? If not, why are they doing this when it will cause customers to trade less and earn low ROCs, presumably going elsewhere if necessary. Does anyone know if this will apply to portfolio margin calculations as well, somehow? One of IB's main attractions is cheap leverage and they're giving up this on the vast majority of all names!
Well, the good thing about high margin requirements on shorts is that your buying power will go up fast if you are right.
Yes this sucks. Maybe they got a new spate of retail newbs who went for small-caps and then they lost their customers along with their capitals? I am holding 2 stocks with Mkt Cap less than $250m but they don't appear on that list they posted. I wouldn't be surprised if my margin went up on Monday, though I am still in safe limits even if it does, but that list seems incomplete. Are we supposed to monitor market cap now on a day-to-day basis as well? They're going to lose some customers over this rule, that's for sure. I know they made my trading more difficult now, as I have to refresh my candidate lists. Grrr..... edit: It seems like no ETFs, ETNs, Municipal Bonds funds, trusts, etc are on that list, which makes it ok for me.
Lol, true enough. The problem is that for long short trading, your ROE scales directly with your leverage ratio, so if they take me down from 6:1 to 1:1, my ROE will be only ~1/6 of what it was (ignoring financing costs). I heard ThinkorSwim offers portfolio margin with API and 15% on all single names. Not much international reach, but for US small caps, I'm not sure IB wants my business.
I recently pulled money from IB as their business is too murky behind the scenes for me to understand and I didn't like the fact that there is no FDIC insured account available for cash sweeps. There is a lot I like about IB though. But I think that this kind of risk control protects all account holders at IB and is a good thing in the big picture.
I believe IB sends out this notice every quarter or so to alert traders of *new* low cap stocks they're adding to the no-margin list. The list from that link is not all the low cap stocks they don't provide margin for, just the ones that supposedly fell below the 250mil threshold recently. I don't know the percentage but I would think at least half of the russell 2k stocks cannot be traded with margin at IB.
I'm with IB for several years and this was the first time I got this notification. Strange? You received it before this, say in the last 2 years?