IB intraday margin requirements changed.

[petteri]

I wonder when overnight margin requiments will be adjusted as well?



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To CFE,ECBOT,GLOBEX traders:
Mon Aug 6 09:14:14 2007 EST

IMPORTANT MARGIN NOTICE

Effective Monday 6 August, 2007, and until further notice, there will be a
significant change in the intraday margins for most stock and index futures
and futures options. Specifically, the intraday margin will be set to cover
a price move of 4% in the instrument, but will not exceed the regular
maintenance margin. By example, a 4% move in the ES futures would require
intraday margin of 4% * 1450 price * 50 multiplier = 2900 USD. The regular
intraday margin is 1400 USD and the regular overnight maintenance margin is
2800 USD so for ES the intraday margin would be the same as the overnight.
PLEASE NOTE THAT THE ONLY MARGINS AFFECTED BY THIS POLICY CHANGE ARE
INTRADAY (REDUCED) MARGINS ON EQUITY-LINKED FUTURES AND FUTURES OPTIONS.

Please note that many of the statutory margin requirements for many US index
futures and options imply a very small intraday margin requirement (in the
case of ES, less than 2%). In light of the recent volatility in the markets,
we feel it is prudent to apply margins that are consistent with this
volatility.

 

[droskill]

Anybody know how many trades/contracts originated from IB? I wonder if that change will make any impact on volume....

 

[abxs]

this is quite a serious adjustments... it means the margin requirements will be doubled hmmm :-/

 

[notouch]

Is this move to protect IB or are they just acting as a "nanny broker" to protect its vulnerable little clients?

 

[droskill]

I suspect it is a bit of both, maybe combined with tightening of credit...

 

[OldTrader]

Quote from notouch:

Is this move to protect IB or are they just acting as a "nanny broker" to protect its vulnerable little clients?

I'd say this move was to protect IB. Anyone trying to trade the ES right now with $1750, the old margin, is an accident waiting to happen. I don't see this affecting volume. The vast majority of the players are using well in excess of this number for margin.

OldTrader

 

[abxs]

Quote from OldTrader:

I'd say this move was to protect IB. Anyone trying to trade the ES right now with $1750, the old margin, is an accident waiting to happen. I don't see this affecting volume. The vast majority of the players are using well in excess of this number for margin.

OldTrader

Nevertheless if you traded say 100 lots before, you'll now need twice the account size to compensate. Unless you trade 50 lots instead and on the larger scale this could affect volume (imho)

 

[notouch]

What if a client gets a margin call on a position they opened last week which they wouldn't have got if it wasn't for IB's new margin rules? What if that client makes a loss but if it hadn't been for the new margin rules they would have made a profit? IB needs to give more notice of these things instead of just coming out with it on a Monday morning.

 

[droskill]

Agreed - it could really kill someone's trading plan. I'm a bit surprised by the lack of warning and I'm wondering what's driving it. I wonder if they had to do a huge amount of margin calls last week.

 

[whitster]

the biggest moves in the futes are ALWAYS forced liquidations

when you see moves of over 100 pts in a matter of minutes - rest assured - others are feeling massive pain

every dollar marked to my account is somebody else's loss in futes (zero sum market).

IB is not stupid. brokers have to price risk in a way that makes them money

volatility has massively expanded . traders who have adapted are LOVING this market (this is the best market for futures i could ever imagine. loving it).

those who are used to playing the means regression game with small moves and big size are getting slaughtered.

good.