IB Exposure Fee

1245 · Jul 30, 2014

butterfacetrader said:
Can someone clairfy how the calculation is made or how they think its made?

IB's website describes it in none other than words, and makes no qualms about it being a 'black box' that they define at their own discretion and can change at any time without warning kinda thing.

So, how does one determine whether their portfolio will be charged this fee or be close to getting there?

Is this interpretation correct: Goto risk navigator. Find out maximum of either -30% or +20% loss exposure. Take this number and subtract from net liquidation. If negative, then this amount is charged a fee per day? What rate is this?

This was posted by someone else.

https://gdcdyn.interactivebrokers.com/Universal/jsp/Reference/masterReference.jsp?jump=7151

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J.P. · Jul 30, 2014

N.B. from the above link:
"Interactive Brokers will calculate the Exposure Fee in its own discretion and using its own proprietary algorithms (which are subject to change without notice)"

tiddlywinks · Jul 30, 2014

I'm not riding anyone here or slamming IB, BUT...
I really don't understand why you people continue to trade at IB.

Exposure fees, higher futures margins, margins on VIX verticals, auto-liquidate, poor support and I'm sure other things IB clients can speak of.

I just don't get it. With the exception of product selection, which you may not even need or use for your particular trading, IB does not offer much of anything awesome, and that includes commissions.

I'm just saying. There is enough BS traders need to deal with on a regular or daily basis. As a brokerage, IB is pretty much flying solo in adding new BS to your plate.

sellindexvol66 · Jul 30, 2014

tiddlywinks said:
I'm not riding anyone here or slamming IB, BUT...
I really don't understand why you people continue to trade at IB.

Exposure fees, higher futures margins, margins on VIX verticals, auto-liquidate, poor support and I'm sure other things IB clients can speak of.

I just don't get it. With the exception of product selection, which you may not even need or use for your particular trading, IB does not offer much of anything awesome, and that includes commissions.

I'm just saying. There is enough BS traders need to deal with on a regular or daily basis. As a brokerage, IB is pretty much flying solo in adding new BS to your plate.

i switched after 15 yrs with them (to a FCM ) and OMG what a difference..wish i did it a few yrs back.

nanama · Jul 30, 2014

Me too. I left them after tears/years of complaining. I moved to a new broker for and use optionvue 7.45 to submit my trades. I should have done it a few years ago too.

1245 · Jul 30, 2014

sellindexvol66 said:
i switched after 15 yrs with them (to a FCM ) and OMG what a difference..wish i did it a few yrs back.

I agree. Futures traders should be at a FCM, not a retail broker.

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RichardRimes · Jul 30, 2014

sellindexvol66 said:
i switched after 15 yrs with them (to a FCM ) and OMG what a difference..wish i did it a few yrs back.

My only concern with an FCM is the security of your funds...what is the risk of them going out of business with your money tied up?

Also how knowledgeable are the risk managers, how good the algo's that calculate daily margin exposure etc? The ppl that work there?

just21 · Jul 30, 2014

You can be long dividend stocks, even international dividend stocks and use them as margin for futures/options on futures trades. Before IB you needed tens of millions of dollars and an investment bank account to do that.

sellindexvol66 · Jul 30, 2014

RichardRimes said:
My only concern with an FCM is the security of your funds...what is the risk of them going out of business with your money tied up?

Also how knowledgeable are the risk managers, how good the algo's that calculate daily margin exposure etc? The ppl that work there?

of course; i would be misleading if i was not concerned..but i think its more of ignorance still.

in my case these guys are big..been through 2008 crash and others. i also do my share of wire outs, thankfully.

what i love is they know futures (margins etc), and the risk department is imo first class..gotta say i love the group.

1245 · Jul 30, 2014

RichardRimes said:
My only concern with an FCM is the security of your funds...what is the risk of them going out of business with your money tied up?

Also how knowledgeable are the risk managers, how good the algo's that calculate daily margin exposure etc? The ppl that work there?

Understand the even though retail brokers like IB and TD give the illusion that you have one account, a securities account, that is NOT true if you trade futures. All futures transactions must take place in a segregated futures account and have the funds available to meet those margin requirement in that account. (There are some exceptions for hedgers where the FCM can loan the account money.) Those funds in that seg account while there, are NOT protected by SIPC. I wish there were a SIPC type protection for future accounts, but the NFA/CFTC decided against it. The best protection you can get is to choose an FCM without a prop trading desk. Then, the only way you can lose you money is by your losses or theft, like MFG and PFB.

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