Lots of us have experience with other futures brokers. I have at least 4 that come to mind immediately. Strangely after that experience we end up satisfied with IB. Funny that.
Yes Kiwi. We end up satisfied with IB untill they started "protect our customers due to increased volatility". I just want them to honestly say :We cover our ass ,not your,you stupid retail customer.(waiting for PM lol) Other than that no complains.
Most brokers, most banks, most individuals blow out as much due to liquidity as to actual losses. Liquidity issues tend to be systemic, in other words the recent market gyrations were driven by liquidity concerns about the entire financial sector and the ability of the market to keep money moving from where it IS to where it is NEEDED. Should these fears have developed into a real liquidity crunch (and the developing US housing crisis does not seem to be at its worst so I would not say we are past that possibility), we would be considering the consequences of the inability to close positions at proper prices. Those who were around in 1989 and trading options will recall quotes for puts like 300-400. On an index that was only 500. When one has a market for an instrument 28% wide, 4% margin does not really cover the problems. Please remember that IB is a 3B (book value), 10B (market value) company. We aren't really worried about going out of business and taking clients down with us. That is a problem for small FCMs perhaps. But our low commissions are supportable by not ever taking losses on clients. If our gross revenues are 80M a quarter, net say 50, then if we were to drop 10M due to client losses, it would not affect our financial stability at all. But are you willing to pay 20% higher commissions (10M/50M) to altruistically support your fellow risk-taking brethren? My example is obviously simplified, but the point is also simple. In risky times, it is better to be safe. IB has been successful this way and we see no point in allowing clients to fund their risk-taking against other clients. Lastly, please note that the exchanges have been raising their margin requirements as well. Please look at the CFE changes on the VIX options and futures. Or the recent GLOBEX increases. Everyone is examining their risk paradigms, we just did it faster. When more realistic risk metrics are in place, we will adjust appropriately.
Maintaining your current high intraday margins is indefensible. And I doubt you'll ever lower them, quite frankly.
You are absolutely right FutureScalper. Quote from IB post : "In risky times, it is better to be safe". Agree,but the problem is when these "risky times" pass present margin will stay. By the way IB was quiet effectively liquidating positions that went under maintenance requirement under previous intraday maintenance margin ($2050).I recall reading somewhere ,probably here about their (IB) protection software working very well. Anyway,They will always have something to say in their defense. It's just going nowhere. Whoever want's just to take it of his chest,this is what this forum is for.
Firstly, I am not an IB client, past or present. Make of that what you will. Since when are option margins, option quotations, and the option market et al likened to regulated futures markets that do not utilize a market maker model? Im sure Delphi, Interstate Bakeries, PG&E, and many others past and future never intend(ed) to go broke and take employees and clients with them. Maybe you should worry about going out of business. What a stupid, self-righteous, self-serving statement... We aren't really worried about going out of business and taking clients down with us. That is a problem for small FCMs perhaps. ha. Who the hell do you think you are? IB as a business controls all things associated with all aspects of doing business with you. Additionally IB as a business has the right to refuse or deny to do business with anyone. You dare to place "guilt" on traders of certain instruments and/or certain types of trading which you offer and/or allow? Why not close the accounts you deem too risky, and cease offering the products deemed too risky? An intraday futures trader at IB is unsavory with known capabilities of causing harm to others? Nice. Merv the Perv. Good thing your trading desk was able to offload that 37M loss last quarter. What's the altruistic way of support for those traders, my brother. What you really mean to say is regulatory requirements are changing, sometimes daily, but no other firms have taken the changes to the extreme that IB has. What if the VIX never returns to single digits? Or worse, continues to rise? Maybe you'll be first-to-market with 2x exchange requirements, adjusted appropriately of course, if the exchanges don't follow. Osorico
It must be something with the Govt, CFTC or something. IB still has 50% margin on the German indexes. Must be something no one is seeing
IB , How about limiting how much one can lose in a day on there account. That would probably work much better then screwing over clients with high intraday margins. Since it is the actual loss your worried about!! If you have not noticed, all the other firms worth trading at have not increased there commissions. I guess taking a company public pretty much ruins it.
The firm is strong and obviously is doing it for reasons unknown to retail customers. Instead of getting frustrated about it people should be happy the firm is one step ahead of everyone else.
Many IB customers will be happy when next major crash (like Black Monday) sends many gambler friendly futures brokers to bankrupt. Automated stops made 1987 dip really strong. With low margin requirements automated liquiditions can create the same effect.