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IB Exposure Fee
- Thread starter mastacoli71
- Start date
I received the following information from IBCS in response to my inquiry about the lack of details in the calculation of the exposure fee, not sure why this isn't posted on their web site:
The daily Exposure Fee charged to the account is in the “Estimated Exposure Fee” cell in the Risk Stress Test Report. If the “Estimated Exposure Fee” cell is not on the report then there would have been no fee assessed for that business day. This Estimated Exposure Fee umber is calculated from the worst-case exposure scenario within the – 30 % / + 20 % range. Although the tool allows you to select and preview P&L and exposure at ranges from – 30 % to + 30 % the “Estimated Exposure Fee” is always charged from the worst case value.
To find the Exposure Fee for the previous day you can Log into Account Management Reports Risk Stress Test Select a Date Click View.
The scale below is the actual fee for each amount of exposure. The “Exposure” column is for “millions” and the “Exposure Fee” column is the dollar amount charged for one day. The scale below is to give you an idea of the fees at different levels of exposure. The lowest daily fee starts at 1.00 USD and this would be at approximately 125,000 USD of Exposure. Then the daily fee increases exponential higher from that amount of exposure.
Exposure ($M)
Exposure Fee ($)
1 -- 17
2 -- 45
3 -- 79
4 -- 117
5 -- 160
6 -- 205
7 -- 254
8 -- 305
9 -- 359
10 -- 416
15 -- 728
Does the IB stress test recognize hedged positions, or is the algo strickly very simple and does -30% and +20% valuation change on each position?
Say you are long ES at 1930 but hedged with long puts at 1920 strike paying $5 premium, your loss is theoretically limited, but does the risk analysis algo calculate -30% on your position anyway for both the underlying and the hedged options? So in that case, do they apply -30% to your long ES and also -30% to your long puts also? Because that is kinda silly.
Also, when they say -30%, is that -30% against you, or a -30% move in the price. This matters whether you are long or short a position.
Say you are long ES at 1930 but hedged with long puts at 1920 strike paying $5 premium, your loss is theoretically limited, but does the risk analysis algo calculate -30% on your position anyway for both the underlying and the hedged options? So in that case, do they apply -30% to your long ES and also -30% to your long puts also? Because that is kinda silly.
Also, when they say -30%, is that -30% against you, or a -30% move in the price. This matters whether you are long or short a position.
It does make sense, it makes sense to deter those who run insane risk levels to reduce their risk, add funding, or cough up a penalty charge. If it was me I would vote to have this exposure fee increased 10 fold or better even, do not allow those would would be subject to this exposure fee to even build such positions. Simple as that. I do not want to carry the risk of some of the idiots on this website who believe they can get rich by betting the farm. As long as it is their own farm I do not care, but they put others at risk as well and I do not appreciate that at all. Make them pay and bleed.
Bufferfacetrader, it does not make EVERYONE pay higher cost, it makes those who do not play by the rules to pay higher cost. Anyone who was ever caught drunk driving or speeding or those who cause accidents should pay higher insurance premiums, what is not logical about it? Fat people who occupy 1.5 or 2 airplane seats should pay 1.5 or 2 times standard fare. What is not fair about it? People who smoke, take drugs, live unhealthy life styles should pay higher health insurance premiums. Not fair? The problem why a lot of costs in our society are exploding is because there are so many free-riders who think they can socialize their cost that result from their irresponsible life styles. And funnily the very same free-riders and other assholes always argue the biggest reason is that companies just want to add to their bottom line. That argument would work if world-wide all brokers would collide and run a cartel and charge the same fees, which is hardly the case. If some of those guys think their broker charges too much they can go somewhere else. I honestly do not believe IB charges this fee just because they want to add to their bottom line. They have much simpler ways to do so. Plus keep in mind it only hits those who run at extremely high risk levels. I executed with IB year-to-date several BILLIONS in USD notional equivalent cash fx in aggregate and have not once seen such exposure fee on my statements nor have I been charged.
Rules? Free-riders? You know IB was running advertisements encouraging over-leveraging. These ads were saying that they would "lend you 500,000 for every 100,000 in a portfolio management account" to buy high dividend paying stocks. That strategy (which they recommended) would put you into this exposure fee category.
Interesting point I have to admit.
If
* If what you stated is correct and
* If leveraging at stated multiples in stocks would lead to such exposure fee and
* If the time span between said advertisement and the introduction of the exposure fee was relatively short
Then
I would agree that IB's ethical behavior can be questioned. Not that I ever not question ethical behavior of brokers but in this case there is a point that can be made.
If
* If what you stated is correct and
* If leveraging at stated multiples in stocks would lead to such exposure fee and
* If the time span between said advertisement and the introduction of the exposure fee was relatively short
Then
I would agree that IB's ethical behavior can be questioned. Not that I ever not question ethical behavior of brokers but in this case there is a point that can be made.
Rules? Free-riders? You know IB was running advertisements encouraging over-leveraging. These ads were saying that they would "lend you 500,000 for every 100,000 in a portfolio management account" to buy high dividend paying stocks. That strategy (which they recommended) would put you into this exposure fee category.
Is anyone else having problems with IB's Stress Test Report?
I'm only getting a message "No Stress Test Summaries available".
I'm only getting a message "No Stress Test Summaries available".
Same hereIs anyone else having problems with IB's Stress Test Report?
I'm only getting a message "No Stress Test Summaries available".
Looks like IB's Stress Test Report is "refunctioning" again. Well, at least through Friday.
(h/t to GWB for the word "refunctioning" and phrasing it with the word "again").
(h/t to GWB for the word "refunctioning" and phrasing it with the word "again").
It’s been just over a couple months now since they implemented this fee, I think enough people have received different language/details of how it works to almost fully understand it, certainly when it comes to a single underlying its fairly straightforward.
Does anyone have experience trading different asset classes with regards to the fee? If so, and lets for example say your holding both equity and commodity underlying’s – as defined by IB (so placed on their respective tabs in the Risk Navigator) – are they each treated separately in terms of exposure or aggregated?
To further illustrate, let’s say I have $95,000 USD of exposure on the equity side, and $50,000 USD of exposure on the commodity side. We have been told that the fee kicks in when you reach approximately $125,000 USD of exposure, so will this scenario be treated as one of 95 and separately one of 50, or will it be 95 plus 50 to total 145,000?
Does anyone have experience trading different asset classes with regards to the fee? If so, and lets for example say your holding both equity and commodity underlying’s – as defined by IB (so placed on their respective tabs in the Risk Navigator) – are they each treated separately in terms of exposure or aggregated?
To further illustrate, let’s say I have $95,000 USD of exposure on the equity side, and $50,000 USD of exposure on the commodity side. We have been told that the fee kicks in when you reach approximately $125,000 USD of exposure, so will this scenario be treated as one of 95 and separately one of 50, or will it be 95 plus 50 to total 145,000?
It’s been just over a couple months now since they implemented this fee, I think enough people have received different language/details of how it works to almost fully understand it, certainly when it comes to a single underlying its fairly straightforward.
Does anyone have experience trading different asset classes with regards to the fee? If so, and lets for example say your holding both equity and commodity underlying’s – as defined by IB (so placed on their respective tabs in the Risk Navigator) – are they each treated separately in terms of exposure or aggregated?
To further illustrate, let’s say I have $95,000 USD of exposure on the equity side, and $50,000 USD of exposure on the commodity side. We have been told that the fee kicks in when you reach approximately $125,000 USD of exposure, so will this scenario be treated as one of 95 and separately one of 50, or will it be 95 plus 50 to total 145,000?
Hi Risknav,
To your question, there is no minimum level for teh exposure fee. It will be charged based on the amount thet the calculated risk for the exposure fee exceeds your equity value (cash value).
Exposures for different categories are agregated as far as I know for risk in teh 'same direction' (+30% or -30%).