Portfolio margin, Canada

Discussion in 'Retail Brokers' started by rokka, Aug 2, 2014.

  1. rokka

    rokka

    Hi trading gurus,

    I'm using IB, pricing is probably the lowest in Canada, but recently I learned they don't offer portfolio margin.

    Questions:
    1. do I need it? I'm trading futures mostly but would like to do much more options selling, hence PM could be helpful.
    2. They haven't been able to tell exactly how much margin would change, if I switch to PM, maybe somebody can explain on 100k account?
    3. Any other brokers in Canada offer PM?
    4. If not, should I just find a workaround and open account in US?

    Thanks,
    R
     
  2. 1245

    1245

    PM is for a securities account, not a futures account. PM only applies to USA listed eligible securities. IB Canada does not let you open a PM account? You need your equity account to be offer $110,000 at IB.

    If for some reason that I can't explain, you can't open a PM account at IB Canada, you will need a legal entity like a LLC or LP with a legal address in another country. Did you call them and ask why you can't open a PM account? There no restriction that I know of for this.

    1245
     
  3. rokka

    rokka

    Why, isn't futures just another type of security?

    They said we don't offer PM accounts in Canada, only standard reg-T. Opening corporation in US shouldn't be an issue, but will add bunch of tax form, which I hate.
     
  4. 1245

    1245

    I future is not a security. I future is a forward contract. An option on a future is an option contract on a forward contract. FX is not a security either. Spot FX is a forward contract and non-deliverable FX is like placing bets with a bookie. You make you bet with a bank, the FCM is your counter party risk, and your P&L is the difference between when you make your bet and when you take it off.

    A security a financial instrument that represents ownership in a company or a debt instrument.

    All futures in the US are traded in segregated futures accounts. As to why IB Canada won't offer PM, I'm not sure.
     
  5. I thought there was a difference between a forward contract and a futures contract. A forward contract is often OTC and has unique terms and does not trade over an exchange, while a futures contract is exchange traded with standard contract terms set by the exchange.
     
  6. 1245

    1245

    My general explanation was not meant to be complete. It was meant as a general response. All futures are forward contracts because they have terms that are agreed upon for a future time and place. OTC is a general term for any non standard listed or unlisted product. Many OTC products are traded on an exchange, but the terms are not preset. Two examples are swaps traded on CME Clearport and FLEX options traded on the CBOE (and other option exchanges).

    Even though option on equities are forward contracts, they are deliverable for a securities so are traded through SEC rules, not NFA rules.

    In the end, the answer to his question is that PM is not available for futures yet. PM is risk based and uses the OCC TIMS calculation to determine your haircut while Futures are margined based on the CME SPAN margin criteria. Although SPAN is also risk based, it offers less offsets so OCC margin is generally more liberal.

    At some point the regulators will get together and decide upon a way to have one margin standard with cross margining for risk for customer accounts too. Not any time soon. Then,maybe you can have one account with PM for everything.

    1245
     
  7. rokka

    rokka

    1245, thanks for the information.

    I probably just need to talk to IB and get all the details.
     
  8. 1245

    1245

    "IB Canada customers are not eligible for Portfolio Margin accounts due to IDA restrictions. In addition, all Canadian stock, stock options, index options, European stock, and Asian stock positions will be calculated under standard rules-based margin rules so Portfolio Margin will not be available for these products."

    I'm not sure what IDA is. Do you know?

    1245
     
  9. The old name for IIROC. The self regulatory body of the Cdn brokerage industry.

    http://www.iiroc.ca/Pages/default.aspx
     
  10. Chubbly

    Chubbly

    Can a Canadian open a Portfolio Margin account in the US or is it restricted to US citizens only?
     
    #10     Feb 28, 2017