IB Margin requirements

Discussion in 'Interactive Brokers' started by scorinaldi, Jul 12, 2007.

  1. What is shameful about all this is not only the margin increases, but the fact that IB misrepresented (aka "lied") about the futures margin's policy applying ONLY (and they capitalized it, emphasizing it...) to "equities based futures and options". It has started me looking for another API providing brokerage, although currently I am tied technologically to IB's service. As soon as I can find time to port, I may be leaving them unless they drop the intraday pretty soon.
     
    #11     Aug 25, 2007
  2. IB's increased margin requirements give greater protection, to its trader customers, against the danger that its gambler customers will incur large uncovered trading losses which might bankrupt the brokerage and then need to be covered by drawing upon the assets of all other customers.
     
    #12     Aug 26, 2007
  3. Yes, but surely intraday traders are not "gambling" more than overnight traders are gambling? I would argue a daytrader has a much greater continuous control over events than overnight or longer term traders have.

    I execute trades, often in seconds; and have total control; unless, of course, there's some catastrophic failure which is pretty unlikely.

    Anyway, what's done is done, and IB will reap the consequences probably smaller traders will leave; and probably IB won't care much about that, so no love will be lost.
     
    #13     Aug 26, 2007
  4. No love lost, very true. In fact, the move will be greeted with cheers and adoration for IB! ET members will/are not affected by higher margins, intraday or otherwise...ET demographics show 99% of ET members have over 500K of trading capital, 98% are swing or position traders, and 97% have over 90% of their available trading capital held at IB! I can't figure out why the latest IBKR 10Q doesn't reflect this though. Oh well, I hope Baron is capitalizing.

    Good trading to you FuturesScalper
    Osorico :)
     
    #14     Aug 26, 2007
  5. rayl

    rayl

    I agree with the sentiment but I hope the statistics are not true bec of so ET members (79,354 as of this writing) would make up what.... 85+% of IB's customer base? :)
     
    #15     Aug 26, 2007
  6. cstfx

    cstfx

    I've been away from the futures trading for a while and just looked at IB's page for margin calculation.

    So, based on what they say, at 4% of contract value, a 5/10/30 yr with 100k face value its intra day would be calculated at 4k, but because it is greater than the overnight, intraday would be the same as the overnight so no intraday trading advantage. Did I interpret that correctly?
     
    #16     Aug 26, 2007
  7. I believe so. FS.
     
    #17     Aug 26, 2007
  8. 2ticks

    2ticks

    According to another thread, an IB rep suggests checking margin requirements in real-time via TWS. Unless verified via real-time or official correspondence, best to assume no intraday advantage; full overnight margin levels for all futures instruments.
     
    #18     Aug 26, 2007
  9. Only hard-core daytraders ever leverage their accounts to near full margin anyway, so I guess it's their way of "throttling us back" just a bit :) FS
     
    #19     Aug 26, 2007
  10. As of right now, IB has apparently updated the listed tabular intraday margins. Of course it is unknown whether their web updates are the same as the margins they are actually applying.

    IT'S WORSE THAN THEIR FORMULA SUGGESTED

    Their formula is:

    "We feel the current market volatility warrants additional margin to ensure accounts have adequate financial capacity to handle sharp, adverse movements. Accordingly, effective August 6 2007 and until further notice, IB will apply the following logic to determine the intraday margin:

    Effective Intraday Margin is equal to the table value (listed below) or 4% of the contract value (price times contract multiplier). If this amount exceeds the normal overnight margin as listed on the below table, it will be capped at the overnight amount. Mathematically, this can be expressed as:
    IntradayMargin = MIN( overnightMargin, MAX(tableMargin,4%*contractValue) ) "

    Unless I can't calculate... :(

    ES should be around $2948, by their formula, but the table pegs intraday = overnight = $3500.

    YM should be around $2672, but they peg it up to $2813.

    Agricultural futures ECBOT like corn, wheat also intraday=overnight generally.

    metals, etc. generally the same thing.

    Now we all live in a "safer", if less leveraged, trading world :( FS
     
    #20     Aug 27, 2007