The problem is that some people like to take on larger overnight positions and a lack of significant warning. I haven't heard the definitive reason for the change but I believe it is due to a Reg T requirement. If the change was prompted by regulators, that would explain the rapid implementation. Sorry, but that's all I have for now.
The problem is that for the past few months, IB has been allowing 4:1 margin at ALL times, not just during the day. Now they are switching back, but didn't bother informing the customers of this move.
I also was nailed by the unsupsected liquidation from IB. Turns out after a certain hour (when your coach turns into a pumkin), you original daytrading margin turns into after hours trading margin that is doubled. They failed to mention this.
Is twofold,Number 1 No notice given,how much trouble is it to send a "communique"? Number 2 between 350and 400 the initial and maintenance are BOTH 50%. Between 4PM and 930AM the initial is 50% and the maint is 30%, In reality this means the maint is always 50% because you will be liquidated if under 50% at 350 every day!
from the IB website: Maintenance Purchase: maximum (25% * marginable stock value, $25,000) or maximum (100% * non-marginable stock value, $25,000). If there was an increase in US securities positions between 16:00 - 15:50, between 15:50 - 16:00 ET initial margin requirements will be applied. It appears that if you enter a trade in the last 10 minutes that were to increase your overall margin then maintenace would aslo be 50%. This makes no sense!
I remember that communique saying they were allowing 4:1 margin overnight and I found that a bit crazy. So now it has gone back to 4:1 intraday only, 2:1 overnight starting at 3:50pm ET or what?
Well, there is nothing like having time to post during the open. Right now my Current maintenance requirement is greater than my Net liquidating value (has been for several minutes), and no liquidation has occurred. Maintenance is being calculated at about 29%, and I am guessing that liquidation will occur at 25%. I don't dare make a purchase anyway, because I think that if I do, half of my account will be liquidated at 3:50. I am going to try to get some clarification on this - if anyone other than the chairman of IB knows what is going on. But, I think that if there is any increase in US securities positions then the 2/1 margin applies from 3:50 to 4:00. In other words, the next time I buy so much as a share of stock, half of my account will be liquidated at 3:50 that day. I guess I am out of business until I am ready to liquidate half of my account.
My other accounts have the same requirement: I believe it is the stated Reg T. I am about to open an IB account as well. When I first saw their policy I was puzzled in how it differed from other firms. My perception is that a few trading firms were not - until recently - adhering to the letter of the law. I know that some of my other accounts changed their policies over the last 6 months ...... Bad behaviour on IB's part with repsect to warning- but they may have had no choice. looks like bad business processes as well since their own help desk didn't know what was going on... Typical.
I found out why my maintenance margin was off. I am short some under $17 stocks that are not given 4 to 1 margin. If I put on any more positions, my margin will drop to 2 to 1 at 3:50, so I guess I will have to pick a good place to liquidate half of my account.
I trade several pairs of stocks. Part of my money management is to be nearly maxed out on margin when spreads are at a maximum. On the other hand, when the spreads are at a minimum I'm not using margin. Without doing this my size has to be too small. Naturally, this mess happened when I was approaching my maximum. Things are improving now, so hopefully I will be able to ride it for a few days, and liquidate half of my account. This really sucks though. Not being able to day trade part of my positions is a real hindrance.