Bitcoin future (BRR) at IB, 200,000 USD margin requirement?

G

GRULSTMRNN

Not a technical issue really (or is it?) but those margin issues that IB is creating are slowly testing my patience. I generally am a strong proponent of conservative margin requirements.

200,000 USD initial margin for 1 bitcoin futures contract, a contract that trades a notional of around 64k USD and the given volatility of this contract is outrageous. This 200k I see prior to order submission (first time I wanted to shoot a test order but this is out of any proportion and I actually consider the possibility of this being an error), so I did not go ahead.

In the TWS contract details, it says IM stands currently at 31,187 USD per contract. Anyone trading this contract and who can shed some light into this?

Edit: Going long requires 35k margin but short 200k. WTF??? The contract price would have to rise by 312% from current levels for the margin cushion to be used up (on the other side a 100% loss (price goes to zero) would cost the trader 64k but only 35k margin is asked for when going long. What is that 200k for? Chatted with IB's trading desk, all they say is that is the level that their Risk department set, nothing that can be done. This is the most outrageous and stupid example of IB margin policy I have so far seen. This is not even pseudo-science, this is some retards sitting at the risk department wheel.

upload_2019-6-26_13-35-14.png
 
Last edited:
For comparison, the CME Bitcoin symbol is BTC. BBR is the I assume this is the same contract. It is not 1 bitcoin but for 5. The CME sets initial margin at 44%. As an example, if the settlement price yesterday was 11,380. 11380 * 5 = 56,900. 56,900* 44% = $25,036 per BTC. At Wedbush, they double the CME requirement for long or short. So yesterday 1 BTC at the close would have required $50,072.

Bob
 
The problem with the BTC contract is that the cash market is open 24/7. You do not have the ability to exit/reverse on the weekends. Most would want close to notional value to manage risk.
If you day trade it, it's a different story.

We offer it on a case by case basis.
 
Yes, I thought I said one futures contract, and yes multiplier is 5. I thought 200k was a joke but they seem dead serious.

Robert Morse said:
For comparison, the CME Bitcoin symbol is BTC. BBR is the I assume this is the same contract. It is not 1 bitcoin but for 5. The CME sets initial margin at 44%. As an example, if the settlement price yesterday was 11,380. 11380 * 5 = 56,900. 56,900* 44% = $25,036 per BTC. At Wedbush, they double the CME requirement for long or short. So yesterday 1 BTC at the close would have required $50,072.

Bob
More...
 
I understand all that and appreciate conservative risk assessments. But 300% appreciation in the underlying is just completely unheard of. Remind me when a regular futures contract appreciated 300% in value (excluding single stock futures? No underlying trades at such implied vol.

MattZ said:
The problem with the BTC contract is that the cash market is open 24/7. You do not have the ability to exit/reverse on the weekends. Most would want close to notional value to manage risk.
If you day trade it, it's a different story.

We offer it on a case by case basis.
More...
 
By the way do you guys assess span for all exchange traded spreads? How do you guys calculate margins on synthetics?

Robert Morse said:
For comparison, the CME Bitcoin symbol is BTC. BBR is the I assume this is the same contract. It is not 1 bitcoin but for 5. The CME sets initial margin at 44%. As an example, if the settlement price yesterday was 11,380. 11380 * 5 = 56,900. 56,900* 44% = $25,036 per BTC. At Wedbush, they double the CME requirement for long or short. So yesterday 1 BTC at the close would have required $50,072.

Bob
More...
 
GRULSTMRNN said:
I understand all that and appreciate conservative risk assessments. But 300% appreciation in the underlying is just completely unheard of. Remind me when a regular futures contract appreciated 300% in value (excluding single stock futures? No underlying trades at such implied vol.
More...

Risk managers at FCMs do not look at stats and probabilities. They work off the one off on many issues...BTC, Naked Options, etc.
 
as a retailer it just makes no sense to trade BTC on the CME. As MattZ already stated, it's a 24/7 market and in my opinion 200k margin is still too low.

Without a solid understanding of the cash and derivatives market (options, swaps, forwards and futures) any IB - dabbler will just get smoked.

Get started with trading the cash market via coinbase...that's the only option for US citizens anyways. Get your feet wet with 500$ and see how it goes.
CME is too big and too unflexible for the small fry.
 
Care to explain? I did not get what they use if not probabilities, exchange guidelines, and prices

MattZ said:
Risk managers at FCMs do not look at stats and probabilities. They work off the one off on many issues...BTC, Naked Options, etc.
More...
 
I transfered around 500k from one of my main accounts to my sub accounts so thank you I don't need coin base or other shenanigans to have my account hacked or assets stolen outright or whatever else we read in the news every other day about crypto exchanges and wallets.

I have 15 years pro experience, am not a US citizen, certainly don't dabble in IB but perhaps you can clarify alongside some numbers and calcs how 200k or more makes sense?

Thank you

MrMuppet said:
as a retailer it just makes no sense to trade BTC on the CME. As MattZ already stated, it's a 24/7 market and in my opinion 200k margin is still too low.

Without a solid understanding of the cash and derivatives market (options, swaps, forwards and futures) any IB - dabbler will just get smoked.

Get started with trading the cash market via coinbase...that's the only option for US citizens anyways. Get your feet wet with 500$ and see how it goes.
CME is too big and too unflexible for the small fry.
More...
 
You must log in or register to reply here.
Back
Top