IB Exposure Fee

To me this is all very simple. Every business should be able to do business and charge what they want to customers and the customer has the right to stay or go. What I don't like is the lack of clarity. Give everyone the current stress test formula. Tell every client in real time what that is and if it were end of day, what you will get charged. With this knowledge, each customer has the choice each day of covering risk or getting charged. The current system only gives you that information the next day...too late

1245
 
Buy T-Bills with the cash over the limit

Gldr said:
This is totally new and a fee that will be introduced as per the end of next week.

One more remark on it. IB suggest that you can add money to your account to avoid the charge. However, to compensate for the (large) exposure they calculate, you will have to add a lot of cash in such a way that you will large exceed the amount of cash that is guaranteed by IB and its guarantee program. This will increase your risk to the extend that you not only risk your own account, but also risk loosing when others go under.
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I got the notice too.

It seems to be a new thing since the "Stress Test" page did not have a box with the estimated fee in it until 5/31/14.

From what I can tell with some rough calculations the daily fee is computed by

(Max exposure {-30% move, +20% move} - NetLiq) * .0000116

ie $1.16 / $100,000 excess exposure per day
 
so if it is 125 /day for that 4 million $ account.. do u have to pay for all days. including SAT /SUN.. .thats 46K for u... like 1%.

i got 8$. daliy... that 2900 annually... for my 280K. account.....

i hold naked strangles on indexes . lot of them. far OTM......
 
darwin666 said:
so if it is 125 /day for that 4 million $ account.. do u have to pay for all days. including SAT /SUN.. .thats 46K for u... like 1%.

i got 8$. daliy... that 2900 annually... for my 280K. account.....

i hold naked strangles on indexes . lot of them. far OTM......
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I think its fair that you should pay insurance for the blow up risk you undertake.
 
newwurldmn said:
All brokers bear this risk and the margin balance is designed to account for this risk. And no brokerage firm charges a fee for tail insurance (that doesn't even payout to the insuree).

This smells like IB passing their own liability expenses to their customers.
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Exactly...like the airlines now charging for drinks..carry on...basically another excuse for a fee.
 
stock777 said:
I think its fair that you should pay insurance for the blow up risk you undertake.
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and if you don't like it you can go to another brokerage.......................but the reality is they are just looking for ways to extract more $$$... when there is real risk of blowing up (usually to the downside) the margins go up....lets face it there is virtually little risk of blowing up to the upside....calls are cheap... so if your leverage is out of whack you should buy more calls/puts rather than have to pay a fee. At least the long call or put "may" give you some kind of return...there is no "return" on fees.
 
I'll assume they are seeing positions that are trying to mint money assuming the future will be just like the recent past. low vol, upside bias.

No problem if thats your game, but IB shouldn't have to assume massive losses should your pipe dreams vanish into a puff of smoke.
 
yes. i will most probably move to Optionshouse .- but no PM there.. or is it?

trademonster needs 300K .. i have 270K. so need to muscles up another 50K to meet PM margins for tradesmonster. but not sure how the commisions..
I B is simply the best. so far... but this 1% specificaly for folks who use PM to the hilt is now goin to be a deal breaker... lets see how it plays out.....
 
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