How to contact with Bob Morse? Thanks!
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
IB is going to start charging a daily exposure fee
- Thread starter fbell50
- Start date
20K exposure fee and it's only 3 months in? Or you project 20K for the whole year? Either way, wow. In spite of that you're still game, so I guess you're really rolling in the dough with the overall premium collected. Here I am thinking even $1 a day exposure fee is ridiculous as $30 a month is a steak dinner.
Actually you can buy that insurance for yourself. It's being long options and turning the naked short into a spread. Of course, that leads to slightly more trading commissions generated and debit costs of long option leg.
I mean, at 20K exposure fee as you claim, wouldn't you come out ahead just capping all positions off with an extra position to turn it into a spread? Or does trading cost and cost of long leg 'cost' more than the 20K?
It's the projection for 2017. Spread or not, it's about the strategy, depending on what you trade. In this thread, the topic is about if it's illegal for IB to charge the risk fee. The margin requirements and margin call is for preventing the risk already and IB can leverage the margin requirements to further reduce the risk. Why charge risk fee?
This is also the question I asked IB but didn't get response for over a month. If it's self-insuring, then IB has to send the policies what to cover. The problem is the risk fee charged doesn't do anything good to my account.effectively "self-insuring" against it
How can you buy so called "credit insurance" on a client? Who sells such insurance? Like a CDS? lol?
And isn't a 'perfect hedge' to the client pretty simple? Just go out and buy the tail end options of the client's position (the position the client refuses to buy themselves to juice up premium collection) and it becomes the 'perfect hedge' on the client's risky positions. And they shouldn't cost too much too going far out. I mean, if you're trying to 'hedge' a client's position that is.
Yup. They probqbly buy tail options to hedge catastrophic losses in their customers accts.
Do search 'Posted by member: Robert Morse'.How to contact with Bob Morse? Thanks!
It kind of does if you buy the argument that's been espoused many times on ET that your money is "safer" at IB because they're so risk averse.Regardless of whether IB uses the "exposure fee" it collects to buy options to protect against tail-risk, or if they just keep the premium to buffer against clients busting out their accounts and leaving IB to hold the bag.... It makes no difference to you.
Well, if you're speaking in legal terms, since IB operates around the world, and each region has their own securities regulartor, it becomes kind of a complex subject on whether or not charging a certain fee is legal or not. But in general, as a customer, you would have agreed to the terms and as such, you implicitly agreed to the fee.It's the projection for 2017. Spread or not, it's about the strategy, depending on what you trade. In this thread, the topic is about if it's illegal for IB to charge the risk fee. The margin requirements and margin call is for preventing the risk already and IB can leverage the margin requirements to further reduce the risk. Why charge risk fee?
Can IB charge you a fee for whatever, as they see fit? Yeah sure. They charge interest for margin loan too. What 'number' is too high for you? Is it 'illegal' then if it is 'too high' to a customer?
Also, a brokerage account is not a right, but a privilege. They certainly have the right to choose customers. What if they chose not to hold accounts of risky customers?
Ultimately I agree that if the ultimate goal is to influence behavior of their customers, that it can already be done with tweaking margin requirements for positions without this exposure fee invention. I guess another way to spin this is, this exposure fee at least allows people an option to do risky trades. You can think of this as IB drawing a line in the sand for risky portfolios and risky behavior. However, instead of outright banning or making it impossible for you to put on the position (by raising margin requirement), they allow it and charge you a fee. This way you can still put on the risky trades if you want. A little bit more liberty and capitalist vs totalitarian.
Last edited:
I think they should use the revenue from the exposure fee and actually use it to on hedges that the customer refuses to buy themselves. At least it will end this controversy. I mean, how much dough are they raking in with this exposure fee? Hardly enough to raise the EPS. Is the controversy worth the fee? It's easy enough to end all controversy if the money is actually spend on hedges and they are transparent about it.
For example, we charge you $10 over the span of the trade. And this is what I'm doing with the $10. I'm buying puts similteanous to your short put trades to cap the loss. If you had purchased the puts yourself, it would have costed you $8 + 2 trading commission. So we are flat. We are doing what you're not doing. The end. It would look a lot better.
For example, we charge you $10 over the span of the trade. And this is what I'm doing with the $10. I'm buying puts similteanous to your short put trades to cap the loss. If you had purchased the puts yourself, it would have costed you $8 + 2 trading commission. So we are flat. We are doing what you're not doing. The end. It would look a lot better.