IB Exposure Fee

[RichardRimes]

1. Most traders are too lazy to transfer assets to another broker and get used to another trading platform.

2. I am sure most traders here are trading equities, not futures or options so they won't be able to leverage enough to lose more than 100% with a 30% move.

3. Lastly, most ET traders are not trading big enough to really incur much of an exposure fee anyway.

You might be surprised....I am curious if/how IB measures exposure fee's on futures options since the futures market is settled each night my guess is if you duplicate your short SPY trade using ES options they would NOT charge the fee??

 

[Gldr]

You might be surprised....I am curious if/how IB measures exposure fee's on futures options since the futures market is settled each night my guess is if you duplicate your short SPY trade using ES options they would NOT charge the fee??

I think they will still charge you the fee because you still have the obligation and thus exposure regardless the daily settlement. It is all about getting more fee.

 

[darwin666]

see.. the point is... the way.. Reg T margin and Portfolio margin are designed, there is a reason. for that . ie. to allow you to be short a specific number of Calls/.
So if you feel this person is HOLDING undue risk, just increase the margin requirements..

but now they are making this so complex... this is unprecedented- - u have to meet all Reg T and Portfolio Margin requirements and then . pay this also..
unbelievable.!

 

[jeb9999]

You might be surprised....I am curious if/how IB measures exposure fee's on futures options since the futures market is settled each night my guess is if you duplicate your short SPY trade using ES options they would NOT charge the fee??

I have the same question.

Has anyone who shorts futures options at IB been charged the Exposure Fee?

With ES overnight margin at $5406.25 IB wants $8400 margin to short an OTM ES put or call. Seems like plenty of risk coverage to me to have an extra $3000 margin over the futures margin for options with deltas below .30. Volatility would have to outragously explode with a large move to lose more money on an OTM option than on the underlying futures contract.

This whole thread makes it sound like only equity/cash index option shorts are being charged the Exposure Fee.

 

[lassic]

I have the same question.

Has anyone who shorts futures options at IB been charged the Exposure Fee?

With ES overnight margin at $5406.25 IB wants $8400 margin to short an OTM ES put or call. Seems like plenty of risk coverage to me to have an extra $3000 margin over the futures margin for options with deltas below .30. Volatility would have to outragously explode with a large move to lose more money on an OTM option than on the underlying futures contract.

This whole thread makes it sound like only equity/cash index option shorts are being charged the Exposure Fee.

yea, I tested this out last week shorting some ES options, IB included them in their Stress Test. Looks like IB is throwing everything in their stress test even though there are different margin requirements

 

[RichardRimes]

This has to be a huge revenue stream for them and if they stay with it .....others will follow...very troublesome .

 

[tiddlywinks]

This has to be a huge revenue stream for them and if they stay with it .....others will follow...very troublesome .

Others will use it to their own advantage.


Tiddlywinks... Not an IB client past or present, and very unlikely in the future.

 

[jeb9999]

This has to be a huge revenue stream for them and if they stay with it .....others will follow...very troublesome .

Hard to tell the size of the revenue stream.

As of 05/31/2014 IB has 259,000 customer accounts with equity of $51 billion (average account has $197,000 equity).

IB says "Exposure Fees only apply to a small minority of IB customer accounts with unusually risky positions."

How many accounts are getting hit with the exposure fee? 1,000, 5,000, 10,000?

And what is the average account size?

I doubt this will be a separate income line item in the quarterly reports. Will just fall under "Other Income".

Have to see how much pushback there is. If large accounts leave IB things might change.

I agree with others that IB should just raise the margin requirements for the high risk accounts.

 

[elite74]

I'm not going to leave, but I am going to sell less options so I don't have to pay any fee.

Therefore, this fee is costing them money (less commissions) instead of making them money.

 

[1245]

Hard to tell the size of the revenue stream.

As of 05/31/2014 IB has 259,000 customer accounts with equity of $51 billion (average account has $197,000 equity).

IB says "Exposure Fees only apply to a small minority of IB customer accounts with unusually risky positions."

How many accounts are getting hit with the exposure fee? 1,000, 5,000, 10,000?

And what is the average account size?

I doubt this will be a separate income line item in the quarterly reports. Will just fall under "Other Income".

Have to see how much pushback there is. If large accounts leave IB things might change.

I agree with others that IB should just raise the margin requirements for the high risk accounts.

Where did you find that information on their customer accounts?

1245