There should be laws against this, raising margin requirements unless the stock or asset class in question is above its 200 day moving average should be illegal, forcing brokers to do more long term planning and thus enabling customers to do the same without having to deal with this kind of randomness.
Effective Monday, stocks with market cap under $100M will be non-marginable at IB
- Thread starter isaac000
- Start date
it should be a simple algorithm:
volatility * liquidity * size of position in the account =
Your Margin %
Something along these lines would be more effective and work across all securities- options, bonds, mutual funds, etc.
The typical margin charts in various SEC and other countries filings is not viable or in the best interest of traders or brokerages. It's antiquated at best.
volatility * liquidity * size of position in the account =
Your Margin %
Something along these lines would be more effective and work across all securities- options, bonds, mutual funds, etc.
The typical margin charts in various SEC and other countries filings is not viable or in the best interest of traders or brokerages. It's antiquated at best.
Hmmm.... the bulletin is gone from my accounts this morning -- did IB change their mind? If so, please give us a little more advance warning of a drastic margin rule change that can create margin calls. I can just imagine hundreds of CEO's of smallcap stocks wondering why their stocks had suddenly dropped 20-30% around 3:45 Monday afternoon.
The problem with a 100mm market cap no-margin rule is for the trader trying to determine when it kicks in. A smallcap that was marginable at $15 falls to $12, becomes un-marginable and the trader suddenly cannot buy it on the dip for a quick profit. At least consider using a stock price limit, like smallcaps under $5 (or even $10) cannot be margined so we'll have some type of warning.
Ironically I've seen very few smallcaps go bellyup in this market turmoil. Most of the problems are in the bigcaps, like WM, WB, LEH, etc. Maybe the no-margin rule should really apply to bigcap banks.
The problem with a 100mm market cap no-margin rule is for the trader trying to determine when it kicks in. A smallcap that was marginable at $15 falls to $12, becomes un-marginable and the trader suddenly cannot buy it on the dip for a quick profit. At least consider using a stock price limit, like smallcaps under $5 (or even $10) cannot be margined so we'll have some type of warning.
Ironically I've seen very few smallcaps go bellyup in this market turmoil. Most of the problems are in the bigcaps, like WM, WB, LEH, etc. Maybe the no-margin rule should really apply to bigcap banks.
Why do these margin changes always appear so suddenly and at the exact wrong time? We DO NOT NEED any more forced selling into this panic.
These margin changes should be implemented during less volatile times. After all, it should be no surprise that volatility and risks increase at some point.
These margin changes should be implemented during less volatile times. After all, it should be no surprise that volatility and risks increase at some point.
When an exchange modifies performance bond requirements, the modification affects every trader of that instrument, everywhere on the planet.
When IB modifies margin requirements, it affects only IB customers that trade the instrument, wherever they are located.
When IB makes modifications to out-think or otherwise preempt official modifications, whether perceived or ultimately actual, it skews the playing field.
It is not IB that is "wimpy" (correct spelling). To the contrary, it is the so-called "professional" traders that continually find themselves dis-advantaged by impromptu rule changes, while the vast majority are not affected. You'll just have to wait to see if the login message, prepared especially for you, will let you trade your normal strategy.
BTW; Where are you seeing bond futures performance bond increases??
Last revision on the CMEGroup site, at time of this post, is 9/24/08.
Osorico
as some one has pointd out, its a private company so they can change the rules as they see fit. and at the end of theday, if you dont really like it, then theres plenty of other brokers to choose from.
And if I was wanting to know the status of this change Id be pickin up the phone and calling them. Not asking around on some message board.......
Ah yes, common sense...... So simple yet so lacking....
And if I was wanting to know the status of this change Id be pickin up the phone and calling them. Not asking around on some message board.......
Ah yes, common sense...... So simple yet so lacking....