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IB buying power
- Thread starter Bob111
- Start date
Bob:
The Margin Report seems to be incorrect in that it does not conform to IB's published margin computation methodology. . As you said, even though IB special margin requirements for your bonds are under 100% (except WM) IB is keeping the entire portfolio at the initial margin requirement of 100%.
The excess liquidity amount is correct but the Margin Ratio is wrong. It should be about 39% not the 99+% shown.
IB appears to have a problem in their implementation software. Kostia00 should have enough info based on your postings to see this. Perhaps he will have an explanation.
Jack
The Margin Report seems to be incorrect in that it does not conform to IB's published margin computation methodology. . As you said, even though IB special margin requirements for your bonds are under 100% (except WM) IB is keeping the entire portfolio at the initial margin requirement of 100%.
The excess liquidity amount is correct but the Margin Ratio is wrong. It should be about 39% not the 99+% shown.
IB appears to have a problem in their implementation software. Kostia00 should have enough info based on your postings to see this. Perhaps he will have an explanation.
Jack
That what i keep telling them for few months already. they even agree on it. their answer to me-why don't you make a suggestion in suggestion box, on IB website about those incorrect margin rates. then-maybe some one will change them on website to 100% initial,100% maint. they not willing to change the rate,they not even willing to change information on their own website, misinforming existing and potential customers and likely violating few things..
you can't advertise 35% rate and apply 100. it's just plain wrong..then-what is the maintenance margin for? if they applying initial rate?
as i said to them-it should be big red sign on bond margin page-ALL BOND PURCHASES or POSITIONS ARE NOT MARGINABLE!!! you will not be able to borrow from us,even if you hold AAA bonds
you can't advertise 35% rate and apply 100. it's just plain wrong..then-what is the maintenance margin for? if they applying initial rate?
as i said to them-it should be big red sign on bond margin page-ALL BOND PURCHASES or POSITIONS ARE NOT MARGINABLE!!! you will not be able to borrow from us,even if you hold AAA bonds
I have a question on realized P&L in IB.
So, I have exited 2 lots of a contract and I have let's say $200 gross profit. Commissions might be $11 at most(for rounding sake). But IB is showing only $167 Realized profit? Why is that? Where's the missing $?
I've noticed that every time across the board. Does it have to settle for the rest of the cash to flow in? Is it not MTM?
Well, I also have overnite position in the same contract above. So, is that why the my calculated intraday realized p&l is different b/c it takes into account of the overnite realized p&l?
And to this thread, when will those profits become part of my buying power? right away or when it settles.
thanks!
99
So, I have exited 2 lots of a contract and I have let's say $200 gross profit. Commissions might be $11 at most(for rounding sake). But IB is showing only $167 Realized profit? Why is that? Where's the missing $?
I've noticed that every time across the board. Does it have to settle for the rest of the cash to flow in? Is it not MTM?
Well, I also have overnite position in the same contract above. So, is that why the my calculated intraday realized p&l is different b/c it takes into account of the overnite realized p&l?
And to this thread, when will those profits become part of my buying power? right away or when it settles.
thanks!
99
99:Quote from trader99:
I have a question on realized P&L in IB.
-snip -
I've noticed that every time across the board. Does it have to settle for the rest of the cash to flow in? Is it not MTM?
-snip-
And to this thread, when will those profits become part of my buying power? right away or when it settles.
99
As far as I can tell IB shows the P&L based on first-in first-out rules. Thus your overnight holds would be used ( or intermingled) to compute the P&L shown. You did not provide enough info to provide a definitive answer but -
If you have a margin account the net sale amount (amount received less commission), be it profit or loss, is available immediately.
Cash account: available on settlement.
Jack
Quote from Bob111:
That what i keep telling them for few months already. they even agree on it. their answer to me-why don't you make a suggestion in suggestion box, on IB website about those incorrect margin rates. then-maybe some one will change them on website to 100% initial,100% maint. they not willing to change the rate,they not even willing to change information on their own website, misinforming existing and potential customers and likely violating few things..
you can't advertise 35% rate and apply 100. it's just plain wrong..then-what is the maintenance margin for? if they applying initial rate?
as i said to them-it should be big red sign on bond margin page-ALL BOND PURCHASES or POSITIONS ARE NOT MARGINABLE!!! you will not be able to borrow from us,even if you hold AAA bonds
Time to address various misconceptions:
(1) Last autumn, as markets collapsed and corporate bonds dropped rapidly in price and liquidity, IB made the INITIAL margin for corporate bonds 100%. The reasons were as follows:
(a) with vanishing liquidty, the prices became unreliable. We saw cases of different bonds from the same issuer, having similar properties (time to maturity, coupon structure, etc), but widely divergent prices (one bond might be 40 while another would be reported at 60). With such high uncertainty as to the valuation, we set initial margin high to limit the degree clients could get into positions in these highly illiquid contracts.
(b) it was not necessary to specifically notify clients that the INITAL margin was increased because it only affected the NEXT trade, we can't see into the future to understand who MIGHT buy a bond, and only a small percentage of the client base has any interest in these markets. As initial margin only applies to NEW positions, no client with existing positions was impacted at the time of the change.
(2) At the same time we reviewed MAINTENANCE MARGINS:
(a) we DID notify all clients that maintenance margins were changing (mostly increasing)
(b) the assertion about GE being AAA seems to forget the rumors about GE Capital's financial distress and the rapid collapse of the stock price at the same time. During this period, it is hard for me to think of ANY corporate bond that was truly AAA (forget the ratings agencies: they were clearly far behind the curve).
(c) remember: marginability defines the amount of money IB is willing to lend against an asset. If the account becomes under margined, IB would liquidate the asset to meet the margin call. At that moment, it will not matter what the rating of the company is; it only matters the price at which the asset could be liquidated. If the bond is "worth" 60 but the only buyer is at 40, then 40 defines the upper limit of how much we should lend. It is all about price reliability and liquidity, not value. The banking crisis was created as much by the sudden lack of buyers for real estate, as the fall in 'real' value. No buyers means no ability to foreclose (=liquidate collateral).
(3) It seems several of the posts in this thread are confusing INITIAL and MAINTENANCE margins. Looking at the margin report posted by Bob111 on 6-29-09 02:11 PM, my points 1 and 2 appear to be properly reflected on this statement.
(4) Furthermore, the same reports shows maintenance margin rates that I think are reasonable (or at least not unreasonable). AIG is effectively government guaranteed and it is a short term note; most of the other financials also have government protection, direct or implied so the reality of the firm's credit worthiness is less relevant than the implied safety net to creditors. Still, the liquidity for these remains generally unreliable. WM is bankrupt and we have no ability to rate its buyer's appetitie for its debt. Ergo no willingness to lend against this asset.
(5) There are certain industries -- financial services and automotives are obvious examples -- that are under particular pressure in the current economic environment. There are others industries, of course, as well affected, but these ones were of such high profile that we manually established margin requirements that may be higher than the default as posted on our web site. GM, F, C etc. The margin requirements are reported on the following web page: http://www.interactivebrokers.com/en/p.php?f=margin&ib_entity=llc . Please evaluate the margin requirements in your account according to this list as it overrides the default model of 35%/50%/70%. If you find an inconsistency, please email me via E-T. [this is answer to JackR's statement on 6/29 at 04:19 PM]
(6) IB is not a bond trading house; we don't have a dealing desk. Accordingly, because the public information flow about valuations is poor, we are very conservative in the leverage we allow on these illiquid assets (marginability) and will remain so for the foreseeable future. We are aware of some inconsistencies in the margin rates for similar bonds; we are actively working on harmonizing these cases; in general, this will mean increasing the maintenance margin on the bond that is lower than its peers. We will notify any affected clients prior to deploying the new margin rates.
(7) Clients who want more leverage immediately on corporate bonds than IB is willing to grant will have to consider using another broker or bond house who are more specialized in these instruments. We will become more fluent in this asset class, but it isn't going to happen overnight.
(8) The formula for buying power can be found here: http://ibkb.interactivebrokers.com/node/100
(9) I will look at the margin report. It is calculating the margin ratio at 99% which may be factually accurate if we cared about initial margin. I find maintance margin to be more useful. We will re-label or change the report. But I do not expect this non-realtime report to have anything to do with the real-time ability to trade the account.
I hope this clarifies most of the issues.
(7) Clients who want more leverage immediately on corporate bonds than IB is willing to grant will have to consider using another broker or bond house who are more specialized in these instruments. We will become more fluent in this asset class, but it isn't going to happen overnight.
you put 5000+ characters in this post..
i can make it make it shorter,using your own words-IB not willing to grant a dime on those bonds.
don't like it? go away. nice and short. not user friendly, but short.
regardless that fact, that markets are back to normal,spreads too,bond prices are even higher that year ago and it's actually very easy to value those bonds positions,if only any one at IB is willing to do this. i'm small retail guy,but all my bonds, that are on my watch list have their ratings updated weekly(IB never done this,no matter how many times we asked for it). i have all transactions on each bond and any sudden price change can be easily spotted. but...it's a lot of work. much easier is just to say NO to bond holders, instead of carefully track, value each bond positions and maintain margin adopted to particular security and market conditions. even WM, on my account. hard to value?
there is tens of transaction on it every day..
http://cxa.marketwatch.com/finra/Bo...nOption=2&TradeSize=&SortBy=0&ID=OTM5MzIyQUw3
once again-why IB not even trying to release a portion of the bond value? i'm not asking 65%. 10%? 25%? 35%
do you believe that ALL bonds on that account AT SAME TIME may loose 80-90% of their values? it's impossible and even if this happens-you can (and i know, you will)liquidate positons on other accounts that i have.
once again-your approach is not practical..not for trader,not for IB.
Bob:Quote from Bob111:
Once again-why IB not even trying to release a portion of the bond value? i'm not asking 65%. 10%? 25%? 35%
do you believe that ALL bonds on that account AT SAME TIME may loose 80-90% of their values? it's impossible and even if this happens-you can (and i know, you will)liquidate positons on other accounts that i have.
once again-your approach is not practical..not for trader,not for IB.
Kostia00 said: " The margin requirements are reported on the following web page: http://www.interactivebrokers.com/e...n&ib_entity=llc . Please evaluate the margin requirements in your account according to this list as it overrides the default model of 35%/50%/70%. If you find an inconsistency, please email me via E-T. "
I'd suggest sending him the Margin Report you posted earlier in the thread or the latest version you have. It demonstrates what your problem is. But send it to him with your account number so he can see it for real.
Jack
Quote from JackR:
Bob:
Kostia00 said: " The margin requirements are reported on the following web page: http://www.interactivebrokers.com/e...n&ib_entity=llc . Please evaluate the margin requirements in your account according to this list as it overrides the default model of 35%/50%/70%. If you find an inconsistency, please email me via E-T. "
I'd suggest sending him the Margin Report you posted earlier in the thread or the latest version you have. It demonstrates what your problem is. But send it to him with your account number so he can see it for real.
Jack
Jack! they know my problem. you know the problem, i do..but from IB's point of view-it's not a problem. this is their current policy regarding corp.bonds.. don't like it-go away. just like IBj said above.
so -it's make no sense to me to post and point to margin report or any other statements, account numbers etc..IB is simply refuse to recognize the problem or propose/negotiate any sort of solution(except one above). i post plenty of propositions in this thread, if only someone would listen..