Interactive Brokers Margin Account Liqudiation Conditions?

Discussion in 'Retail Brokers' started by lownetworthpers, Jun 19, 2013.

  1. For IB's margin accounts, they dont do margin calls but instead go straight into liquidation.

    I'm wondering under what metric is this done? (ie in terms of Net Liquidation Value, Initial/Maintenance Margin etc)?

    Does your Initial and maintenance margin need to be higher always than your net liquidation value? So the moment Maintenance margin > Net Liquidation Value, it is autoliquidation?

    Or is it Equity with Loan < Maintenance Margin = liquidation?

    Im trying to understand the specific metric and condition where liquidation occurs.
     
  2. Call them and ask.
     
  3. NOT always a useful option.
    IB will incorporate CBOE's SPAN into retail accounts' margin requirements WITHOUT WARNING ~12pm, and again at ~12am. This will SEVERELY SCREW your available dollars AND your ability to trade.

    After the most recent FOMC announcement, I got severely tagged in ES options positions on the upside. By 4:15pm ET, I had moved, rolled, shucked and jived my way back towards the land of the living, with a 36% "cushion" remaining for further work in the morning when spreads re-tightened.

    Relieved, I relaxed to patiently watch the Asia reaction at 8pm-9:30pm ET. Nothing there! Cool! Theta ticks away..... (these were weeklys)... All positions improve.... ("Tick-tock tick-tock, Clarice!")

    If you don't allow a daily log-off of TWS (initially set for midnight), your accounting numbers for the following day can be pretty iffy, so around midnight, I logged off to allow TWS to re-set. When I logged back on at 00:12am ET, my "cushion" had gone from +0.36 to -0.17, the TWS banners were all flashing red, and I was in a severe liquidity shortage.

    "Hold on," I thought -- just a little, typical, TWS glitch. No worries. Log off TWS; reboot entire computer[!]; log onto alternate accounts; etc etc, NOTHING is changing this "deficit", BUT NEITHER ARE MY POSITIONS BEING LIQUIDATED?????

    Can I actually trade? {Attempted.} Nope. Truly frantic now.
    Something's up, and yet -- no liquidations (of dozens of ES credit spreads on top of and below the market).....

    I get on a chat with IB personnel, and every 30 minutes, "The Chat" is "reset" {auto-logged-out}, and I have to explain things all over again to the new respondent.

    What I wanted was
    1) An explanation of what happened between 11:55pm and 00:12am.
    2) An evaluation of my then-existing resources/opportunities to trade (since the old deck had apparently been reshuffled!!)
    3) An expectation of when/why/how this might EVER happen again.

    I got none of those. I got
    1) This is SPAN and SPAN happens. (Yes it does, but what triggers?? What happened to 9:30/4:15 margin rules?? (Which I was well inside!)
    2) What are the rules on remaining (BUT NEGATIVE?!?!?) resources, such that I can execute continuing, revenue-replacing trades?? NO INFO.
    3) NO explanation or ability to plan. "Just trade, and find out."

    In a 36-hour period, I executed 10 days worth of trades. (If I could have that period's commissions as net revenue instead? I'd be pleased.) I NEARLY escaped flat after the market moved against me post-FOMC. BUT I WOULD'VE BEEN PROFITABLE by a grand percentage, had I had the resources at 9:30am Thursday that I had at 11:55pm the previous evening.

    I'm sure I'm not the only one who's ever been SPANNED.
    But no notice as to why/how/when SPAN vetoes/supersedes normal, WRITTEN, LAUDED, TWS "real-time" margins??? What a crock of shit. (This comment comes from a 7 year IB trader/fan.)

    The overnight IB personnel? They gave it a shot, but it was obvious to me that the question and SPAN were both more esoteric to them than to me. I don't find even that to be very troubling. ("Esoterica" happens!) But that there is no warning, no notice, AND THEREFORE NO EXPECTATION of SPAN incorporation -- That's just rotten.

    So again, on something about which IB personnel and users remain ignorant:
    IB will incorporate CBOE's SPAN into retail accounts' margin requirements WITHOUT WARNING ~12pm, and again at ~12am. (And) This will SEVERELY SCREW your available dollars AND your ability to trade.