IB buying power

OldTrader-it wasn't like this before and i don't believe that ALL bonds on my accounts are not marginable. i have several accounts and over 100 bond positions on them. they all looks like this.
before IB start messing with margin it use to be very simple(i'm with IB for almost a decade and they introduce direct access to bonds in 2005). example-i have 100K cash on IB account, i bought bonds on those money. after that my buying power USE TO BE at least 50% of the value of those bonds.
mean that while i'm holding those bonds, i can daytrade stocks, using IB margin and amount will be at least 50K.
right now- if i want to daytrade stocks and buy something for 50K- i must have 50K cash on my account. for some reason bonds did not count anymore. if you long stocks-you can borrow against it at 50% rate,but if you long bond(which have much greater security)-you can't borrow against it. does it sounds normal to you? once again-i should have AT LEAST 50% of those bonds value in my buying power.
 
I don't trade bonds. I don't margin bonds. But I doubt if every bond has the same margin. Some bonds are significantly more liquid than others. I'm just throwing this out there as possibilities. I obviously don't know the answer.
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they don't. maintenance margin depends on rating and it's on IB's page. once again-for some "reason" IB applying INITIAL MARGIN on existing positions instead of maintenance margin. and it only applies to bonds.
 
Bob:

Try this - Open your account from within TWS using View - Account Management. Then open Report Management - Margin Reports. Margin reports will show you each issue you hold, Initial Margin, Maintenance Margin, and Margin %.

That info might help you figure out what is going on and give you something to work with when you speak to Customer Service.

Jack
 
JackR-thank you for info. i did take a look on this report,but there is nothing new. maintenance margin is 35% on all those bonds. once again-i did not understand,why IB applying initial margin to old, open positions, that i'm holding for years?
i did talk to them few times, not once- they can't even understand what i was talking about. with all due respect to IB i'm probably going to file complain to FINRA and let them figure this one out.
i simply unable to reach anyone from management,how can understand the problem.

just like in case with wrong\incorrect sizes in IB's data-they keep saying everything is correct,we did not see any problem..
 
according to latest info on this issue from IB-they did applied some changes back in august of 2008 regarding those corp bonds. basically according to those "new rules" pretty much ALL corporate bonds are not marginable anymore. that is-you cannot borrow a dime against ANY long bond position,regardless to it's rating,liquidity or size. you got super liquid AAA GE bond in your portfolio? IB doesn't give a f*k about it. you can borrow against GE stock, but not against GE bond..nice job! brilliant..why bother with real risk valuations right? let just create the rules and all possible and impossible problems will go away..but..along with some customers..

there is another "new rule" in town(for those,who suggest to liquidate bonds positions)-your order will sit on IB's server (status will be "submitted", mean accepted by exchange, according to IB definitions of status colors) and will not be submitted to exchange until there is BOTH BID AND ASK presented on this exchange from some third party. that is-you can' t just place an order to sell your existing position at any price. you have to wait until someone else will provide any prices at the bid and ask. which on some not really liquid bonds may take a months, if not years.basically-i'm stuck with all those bonds because of those "in house" changes and even if it's not really fair(compare to margin for stocks)-there is nothing i can do about it.

read this, potential IB customers and think twice,before you sign up the agreement..
 
Quote from Bob111:

according to latest info on this issue from IB-they did applied some changes back in august of 2008 regarding those corp bonds. basically according to those "new rules" pretty much ALL corporate bonds are not marginable anymore. that is-you cannot borrow a dime against ANY long bond position,regardless to it's rating,liquidity or size. you got super liquid AAA GE bond in your portfolio? IB doesn't give a f*k about it. you can borrow against GE stock, but not against GE bond..nice job! brilliant..why bother with real risk valuations right? let just create the rules and all possible and impossible problems will go away..but..along with some customers..

there is another "new rule" in town(for those,who suggest to liquidate bonds positions)-your order will sit on IB's server (status will be "submitted", mean accepted by exchange, according to IB definitions of status colors) and will not be submitted to exchange until there is BOTH BID AND ASK presented on this exchange from some third party. that is-you can' t just place an order to sell your existing position at any price. you have to wait until someone else will provide any prices at the bid and ask. which on some not really liquid bonds may take a months, if not years.basically-i'm stuck with all those bonds because of those "in house" changes and even if it's not really fair(compare to margin for stocks)-there is nothing i can do about it.

read this, potential IB customers and think twice,before you sign up the agreement..
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Bob:

It's hard to believe that corporate bonds are not marginable at IB. That said, according to your account statement that's what it looks like. The equity is not released to buying power.

In terms of liquidating the bonds, let me say this. I have never bought illiquid securities ie those where a bid/ask is not present at all times. But it sounds like you may have done so. If that's the case, just transfer the bonds out of the account to somewhere else where they can either be liquidated, or can be margined according to you expectations.

So that you know, there are many, many bonds of all different qualities that aren't truly liquid. Because of this, to trade bonds you need a firm who makes a market in bonds. Most bonds are traded over the counter. Don't expect a narrow bid/ask like you might get in stocks though. To trade illiquid bonds you're probably going to need a full service broker rather than a discounter like IB. Unless of course they make a market in bonds which it doesn't sound like they do.

If these bonds are listed on the NYSE (there used to be a bond exchange), you should be able to get a quote.

I'm not doubting your information on the lack of margining of bonds, but I find it almost inexplicable that IB would eliminate something of this type. For instance, there are strategies that entail short stock, long convertible bond. Used to be alot of guys who played this strategy. Without margin this might be difficult to employ. I'd want to know without question that this is truly their policy, not some lower level employees statement about what their policy is.

Again though, if you want to margin bonds and they don't do it, just transfer them out to some other place. Check the policies of the new place before you do it.

OldTrader
 
Bob111:

If Customer Service has informed you correctly -- Very poor performance on the part of IB's management. My guess is that someone in their risk management structure decided things looked bad for bonds. Then they noticed that their auto-liquidation program could not run if there no bids. Thus, bonds became cash-only.

Fine, IB is well known, particularly here on ET, as a very risk-averse company. They chose to lower their potential profit from customer's trading as you (and others) were doing by lowering their risk. However, someone really should have notified their customers of this major change, even if it were only those customers who held bonds. As I said, very poor performance. One would think that if the change were made almost a year ago they'd have updated the bond margin page.

http://www.interactivebrokers.com/en/p.php?f=margin&ib_entity=llc

Jack
 
Quote from JackR:

Bob111:

If Customer Service has informed you correctly -- Very poor performance on the part of IB's management. My guess is that someone in their risk management structure decided things looked bad for bonds. Then they noticed that their auto-liquidation program could not run if there no bids. Thus, bonds became cash-only.

Fine, IB is well known, particularly here on ET, as a very risk-averse company. They chose to lower their potential profit from customer's trading as you (and others) were doing by lowering their risk. However, someone really should have notified their customers of this major change, even if it were only those customers who held bonds. As I said, very poor performance. One would think that if the change were made almost a year ago they'd have updated the bond margin page.

http://www.interactivebrokers.com/en/p.php?f=margin&ib_entity=llc

Jack
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100% agree. as you can see on my screen shoot -it is a good account,with 40K on it. But because all 40K are in the bonds -i can't borow from IB. in the end we both loose-i can't trade, IB is also loosing comissions from me and interest, that they can charge on borrowed funds. i really don't undestand their motivations on those changes. and why not release something? 20-30% of those bonds value? it seems to me that they choose easiest way-just ban them all. instead of carefully value each position. that's what i do on my side each week. i create a huge application,which tracks everything-ratings,yields,prices,volume. i've used for years and now it's pretty much useless. as i said-it was a great start for IB in 2005, when they provide direct access for us to a bond market, but now-it a shame...why i have to wait for some one to place a quotes? why i can't be NBBO? how the seller suppose to sell at bid, if i(as buyer) is banned, from showing my price? i'm not buying cars of houses at offer price. i propose a deal,where typically we agreed somewhere in the middle.
if you ever see bonds quotes-they pretty much like stock quotes in premarket 0.01 at bid,2000 at ask. yields on many of them are negative. why i can't post my own price,when i want to close my existing position? i understand, it's easier to ban orders, if there is no data presented, but it doesn't make any sense from trader point of view.
on monday i will provide a screenshot (if the guy is still out there)-i found couple bonds with decent yields, i place an order to buy them(at offer price and size) but order was never executed. i wait for like 3 hours then i did call to the trading desk. they said the same thing-the quotes on offer provided by IB customer. same guy like me just trying to sell his position, BUT! because there is no bid AND ask from exchange-the order cannot be executed. how is this sounds?
why IB cannot match two it's own customers? this is beyond me..
 
Jack-if you click on that margin page and then-go to bonds, you will see, there is link for "special margin requirements". ALL corp bonds are in it. regardless to rating,liquidity,size,exchange etc..
and once again- i did not understand, why IB is applying INITIAL MARGIN to existing, old position where as far,as i understand only maintenance margin requirements should be applied?
what is the 35-50% maintenance margin for? listed on that page.
it's mean to me(correct me,if i was wrong)
that if maintenance margin is 35%-then i should be able to borrow about 65% of this bond current value. i'm wrong?

Thank you!
 
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