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IB Exposure Fee
- Thread starter mastacoli71
- Start date
Lol, that is your reading of it? And others, not being native English speakers, do not get it? So you can actually get a schooling in English: There was not the slightest mentioning of liquidations in the sentence you cited. So, your interpretation that IB will liquidate positions based on the calculation of an Exposure Fee is PLAIN WRONG. IB liquidates positions based on a very transparent way which is a) for those who are not using portfolio margin, publicized margin levels and as long as your account stays within those limits IB has zero discretion to liquidate any of your positions, or b) you are subject to portfolio margin in which case you can at any time calculate your portfolio margin using IB's provided tools and can easily find out whether your portfolio stays within the limits.
Nothing of what you cited has the slightest bearing on liquidations. So, calm down, take a deep breath, get down from your "native English speaker horse" and read again ;-)
Nothing of what you cited has the slightest bearing on liquidations. So, calm down, take a deep breath, get down from your "native English speaker horse" and read again ;-)
Understand that with IB you are buying into this: "Interactive Brokers will calculate the Exposure Fee in its own discretion and using its own proprietary algorithms (which are subject to change without notice)"
volpunter (and others who do not have English as their native language) does not understand this. For them, I will translate. It means that everyone, including and most especially volpunter, would be subject to immediate liquidation of their account in its entirety, for any or no reason, regardless of position profit or loss. There is no minimum or maximum. There are no if ands or buts. IB can "adjust" their exposure fee algo to simply take any and all funds from your account. At any time, for any reason. Period.
No, it means that IB will charge you an exposure fee when your account is so highly leveraged (not relative to your funding) but relative to an amount and positions that would be posing a credit risk to IB that IB determined it should be compensated for taking on such risk. What is so hard to understand? Do I agree that the way it is computed is as of today opaque and not transparent? No, I wished it was clear to everyone how the numbers add up, but everything else aside, I think IB made it crystal clear and some hot-heads on this website freak out and just do not get it...
I just wanted to clarify - does this mean that this exposure fee has not yet been charged to any IB account as of this date? And it will start actually going into effect on August 14th? So previous notifications of the charge were just warnings for the future?
No, it means that IB will charge you an exposure fee when your account is so highly leveraged (not relative to your funding) but relative to an amount and positions that would be posing a credit risk to IB that IB determined it should be compensated for taking on such risk. What is so hard to understand? Do I agree that the way it is computed is as of today opaque and not transparent? No, I wished it was clear to everyone how the numbers add up, but everything else aside, I think IB made it crystal clear and some hot-heads on this website freak out and just do not get it...
Reread my question and don't jump to conclusions. I am asking if anyone has actually been charged any money for this exposure fee yet or if all the moaning about it has been because they have been just warned (and not charged). If no one has been charged yet for "overexposure", then effectively IB is giving people time to adjust to this new policy. In which case, a lot of the posts on this thread come across as annoying/whiny.
Understand that with IB you are buying into this: "Interactive Brokers will calculate the Exposure Fee in its own discretion and using its own proprietary algorithms (which are subject to change without notice)"
volpunter (and others who do not have English as their native language) does not understand this. For them, I will translate. It means that everyone, including and most especially volpunter, would be subject to immediate liquidation of their account in its entirety, for any or no reason, regardless of position profit or loss. There is no minimum or maximum. There are no if ands or buts. IB can "adjust" their exposure fee algo to simply take any and all funds from your account. At any time, for any reason. Period.
Being overdramatic is not going to convince people of your position. I've traded with IB for many years and I have come to trust their decisions.
What I find to be strangest of all is the (daily)amount that is being charged. I'm talking about the nominal value itself. I understand, it's proprietary black box calculations using extremes of generally accepted risk scenarios.
Someone recently posted a fee of $3.03. Earlier someone posted a fee of $1 and change. In their own description of the fee, IB states the fee affects only a small number of their clients. Someone posted IB has 262K clients in total.
Without knowing how many accounts are affected and the size of those accounts, it's not even a valid speculation, but the total fee being collected by IB doesn't seem to be nominally meaningful for a firm controlling multi-billions in assets. And this is an over exposure fee designed to protect IB and it's customers. Very strange imo.
Someone recently posted a fee of $3.03. Earlier someone posted a fee of $1 and change. In their own description of the fee, IB states the fee affects only a small number of their clients. Someone posted IB has 262K clients in total.
Without knowing how many accounts are affected and the size of those accounts, it's not even a valid speculation, but the total fee being collected by IB doesn't seem to be nominally meaningful for a firm controlling multi-billions in assets. And this is an over exposure fee designed to protect IB and it's customers. Very strange imo.
I posted the $3.03 fee - I got another bulletin today, based on the numbers they provided it appears the charge is $1 per $100,000 in "excessive exposure" which is the maximum loss (per their calculation) - your available capital.Someone recently posted a fee of $3.03. Earlier someone posted a fee of $1 and change. In their own description of the fee, IB states the fee affects only a small number of their clients. Someone posted IB has 262K clients in total.
The maximum loss calculation seems to assume a 30% market drop, I don't know if they use different values for different markets or not, currently I am trading NQ futures. So the maximum loss calculation for me appears to be current index value ~3860 x $20 x 30% x number of contracts
volpunter and sprstpd:
You can have a billion dollar account, buy one share of IBM and IB can impose an exposure fee that exceeds your account size plus the value of your stock thus taking all of your money and stock and have you owing a deficit. That's what it says and that's a fact, volpunter. It doesn't matter if you believe it or not. It doesn't matter if you like it or not. And it doesn't matter if you understand it or not.
And sprstpd, so you've "traded with IB for many years and I have come to trust their decisions." Well, daily exposure fees started to be deducted from my account in early July with no notice; I only discovered them when I tried to balance my account.
You can have a billion dollar account, buy one share of IBM and IB can impose an exposure fee that exceeds your account size plus the value of your stock thus taking all of your money and stock and have you owing a deficit. That's what it says and that's a fact, volpunter. It doesn't matter if you believe it or not. It doesn't matter if you like it or not. And it doesn't matter if you understand it or not.
And sprstpd, so you've "traded with IB for many years and I have come to trust their decisions." Well, daily exposure fees started to be deducted from my account in early July with no notice; I only discovered them when I tried to balance my account.
I posted the $3.03 fee - I got another bulletin today, based on the numbers they provided it appears the charge is $1 per $100,000 in "excessive exposure" which is the maximum loss (per their calculation) - your available capital.
The maximum loss calculation seems to assume a 30% market drop, I don't know if they use different values for different markets or not, currently I am trading NQ futures. So the maximum loss calculation for me appears to be current index value ~3860 x $20 x 30% x number of contracts
Thanks for the followup.
It's now even stranger to me...
$1 per 100K of "excessive exposure" X small number of clients affected = safety from catastrophe.
Carry on.
Hi JP, I agree 100% that the following is language unconscionable:volpunter and sprstpd:
You can have a billion dollar account, buy one share of IBM and IB can impose an exposure fee that exceeds your account size plus the value of your stock thus taking all of your money and stock and have you owing a deficit. That's what it says and that's a fact, volpunter. It doesn't matter if you believe it or not. It doesn't matter if you like it or not. And it doesn't matter if you understand it or not.
And sprstpd, so you've "traded with IB for many years and I have come to trust their decisions." Well, daily exposure fees started to be deducted from my account in early July with no notice; I only discovered them when I tried to balance my account.
https://individuals.interactivebrokers.com/en/index.php?f=otherFees&p=exposure
Interactive Brokers will calculate the Exposure Fee in its own discretion and using its own proprietary algorithms (which are subject to change without notice) to determine the exposure that an account poses to the firm.
However I disagree that they could go so far as in your obviously over-the-top example. If you had an account where there is no risk at all (not using margin / market going to zero would not cause an account deficit) then I do not believe that IB could charge any fee even with the weasel words they wrote above.
At a minimum they should publish the rates they charge for excess exposure so that would give a hard limit on how much they could charge no matter how absurd their calculations - clearly they cannot assume that the market goes any lower than zero so if they publish the fee per $100k of "excess exposure" then customers will have an upper bound on what they could be charged based on their positions.