Anybody got IB Daily Exposure Fee for Crude?

[winnertakesall]

My system happened to be shorting two contracts of crude oil last week. Over the weekend, I receive an email threatening to charge $0.59 per contract per day if I don't liquidate those positions in 4 days. The emails says that my worst exposure is $102,906, which in my case is for two contracts of crude oil. So I suppose IB thinks crude can rise from $57 to $108 over some weekend.

The email says "Exposure will be calculated for accounts based upon open positions at the end of business on Friday, Saturday, Sunday and the Fee will be charged to accounts on Monday (Next Trading Day)." Does that mean as long as I don't hold positions over weekends, I won't ever be charged?

If I sell and hold that one contract of crude for one year, I will only be charge $148 per contract for daily exposure fee. Gosh I hope I can make more than that! But to see this in different way, $148 is the equivalent of me being charged the regular commission 60 times just for holding one contract for a year. That sounds more like a sure way for IB to extract profit, even if I don't trade 60 times per year.

 

[d08]

The exposure fee is for everything, not just futures or CL.

 

[Robert Morse]

If you open an account at Wedbush Futures through us starting with $25,000 or more, your requirement on the crude will be exchange SPAN margin, https://www.lightspeed.com/futures/
On a side note, we can also offer a Futures account to an IRA as long as you use a Self-Directed IRA company like Midland IRA with the same margin.

 

[Visaria]

. So I suppose IB thinks crude can rise from $57 to $108 over some weekend.

be

Say a nuke goes off in Saudi Arabia...you don't think crude oil would at least double in price?

 

[Sig]

Say a nuke goes off in Saudi Arabia...you don't think crude oil would at least double in price?

In which case IB collecting $0.59 per contract accomplishes exactly what?

 

[d08]

It's just a way for them to keep advertising "Lowest commissions" while creating new fees. Notice the transaction fees that used to be part of commissions are now gigantic and not included in commissions.

 

[truetype]

In which case IB collecting $0.59 per contract accomplishes exactly what?

Peterffy discusses IB's risk management in a Barron's article recently posted on another thread.

 

[Sig]

Peterffy discusses IB's risk management in a Barron's article recently posted on another thread.

That doesn't actually answer my question as to how a $.59 per contract fee helps IB in a situation where a nuke goes off in Saudi Arabia. It is a good example of how IB answers a legitimate question with a non-answer though, so good job on that.

 

[truetype]

Obviously IB collects lots and lots of small fees per its exposure program. In aggregate, they compensate IB for debit-account risk. Whether you like that business policy (I suspect not) is another question.

 

[Sig]

Obviously IB collects lots and lots of small fees per its exposure program. In aggregate, they compensate IB for debit-account risk. Whether you like that business policy (I suspect not) is another question.

Except it doesn't do anything for their risk. Increasing margin does that. Even thousands and thousands of $.59 fees won't help them when a nuke in Saudi Arabia doubles the price of crude over the weekend, that's the kind of senseless "logic" you get out of IB all the time.

I don't care if IB is concerned about the risk and takes rational actions to address that, like increasing margin. That's called a business policy. I don't care if they decide to increase fees to make more money. That's called a business policy. I do care when they insult their customer's intelligence by acting as if a revenue generating fee is somehow an altruistic act to make their customers safter. That may be a business policy, but it's hard to see how anyone but a complete sheeple could defend it.