IB Margin requirements

Discussion in 'Retail Brokers' started by trader1, Jul 19, 2001.

  1. trader1


    I'm new to using IB and I'm having trouble understanding how IB handles margin. I'n not exactly sure how to phrase this question so I will give an example. I'm curently long 4400 shares of QQQ.

    initial margin requirement $92,003
    maintance margin requirement $55,202
    stock market value $184,007
    cash balance $-92,519
    equity with loan value $91,448
    net liquidating value $91,448

    what I dont understand is why with the above account, I can't buy any more stock on the following day? It tell's me initial margin requirement with new position will be greater then equity with loan value. Does that mean I can never open a position and go above 2:1 margin? What's the point of maintenace margin then? In my other account at Southwest securities, this exact position would give me excess equity of $36,246($91,448-$55,202) x2 =$72,492 to trade with for the following day. If this is how IB really uses margin I will have to find a new broker.

  2. jsmith


    When someone answers the above question.
    Please answer this question too.
    Where can I find the Buying Power for my account in IB?
    Don't see it in the TWS or web Account Info.

  3. jsmith


    4400 shares * $43 = $189200
    Looks like you have around 91k in your account.
    You are aleady using your full margin on this position.
    Your open position is 2 * your cash balance.

  4. def

    def Interactive Brokers

    you will get 2x cash buying power with IB as specified by the SEC/NASD rules. (all you guys studying for the series 7 should be able to confirm this).

    Buying Power = SMA/(Reg T%)
    SMA = Account Equity - (Reg T. Requirement)
    Account Equity = Market Value - Debit balance.

    RegT% = 50 so applied to your example:
    Account equity = 184,007 - 92519 = 91488
    SMA = 91488 - (184,007 x 50%) = -515.50
    Since the SMA is a negative value, you do not have additioanl buying power. As I understand it, this is the limit allowed in accordance with SEC/NASD rules.

  5. trader1


    That is simply not true. That example works only on the day you initially take a position. You cannot go over 2x your account size in one day. The following day. Most brokerages release a portion of the funds to trade with. That is figured out by subtracting the maintenance requirement from net liquidating value of the account, that figure is the excess equity. This excess equity x2 is what your supposed to have to trade with on the days after you take the initial position. If you add to the position, then again the same calculation is performed using a higher maintenance requirement. I have had many situations with both datek and a Realtick broker where I couldnt buy any more one one day, but the next day, some of the funds were released for trading. I've had situations where my equity hs been 80K and my margin loan being well over 100K and still I had funds to trade with. So I really don't understand what IB is trying to pull. They are being ultra conservative in using the initial margin requirement to set your daily buying power istead of the maintenace requirement. This might all be a moot point soon enough when the margin increases to 4:1 but for now it really tied my hands not being able to buid a larger position on the way down.