IB Margin Changes

[given2invest]

Quote from sprstpd:

I find it funny that you think you know more than IB does about its own business. There is obviously a reason why they are doing this, even though it may seem bizarre to you. As an account holder, I find it reassuring, rather than concerning, that they are proactive with their margin changes.

Businesses don't make mistakes? Have you heard of New Coke? How about Netflix?

They have $4+ Billion in shareholder equity. Your account was never and will never be at risk. You guys love to talk about how IB protects you with their auto liquidation, with their bullshit overnight rule changes. I can assure you - they don't even have clients that are $1 Billion in size that prime with them, but if they did, the entire client could go to 0 and then lose $1 Billion on margin on top of it (absurd to think that could even happen) and your money would be safe and sound. They have $4 Billion in equity!

 

[jayre]

Quote from sprstpd:

I find it funny that you think you know more than IB does about its own business. There is obviously a reason why they are doing this, even though it may seem bizarre to you. As an account holder, I find it reassuring, rather than concerning, that they are proactive with their margin changes.

Let me throw out some wild speculation here.
Is it possible that mabye..mabye IB knows how to run their business, and are actually profiting when Timbar hill consistanly buying positions for rock bottom prices when accounts get autoliquidate?? and so mabye IB has a vested interast to have a consistent amount of client liquidations??
(Timbar Hill is an IB partner and is market maker who has first right to buy when IB clients are selling,-see your agreement. last year "50%" of IBs profit was from timbar hill).
Does anyone here think that's impossible?

 

[newwurldmn]

Could it be that IB cant finance these low market cap stocks themselves? I doubt they have cash sitting on the sidelines to fund every margin request. It might be that whomever they repo with will not take these stocks as collateral without a haircut that is higher than IB charges you.

 

[given2invest]

Quote from newwurldmn:

Could it be that IB cant finance these low market cap stocks themselves? I doubt they have cash sitting on the sidelines to fund every margin request. It might be that whomever they repo with will not take these stocks as collateral without a haircut that is higher than IB charges you.

No other prime broker or e-broker for that matter has made this change. Further, they just borrow from the fed hence why their rates are against fed funds. There is absolutely no restrictions on the type of security they (or their client) can borrow against, however, if the client loses all his equity and they can't liquidate the stocks fast enough (absurdly unlikely) then the broker firm would take the losses. In their mind, they think that small cap stocks are less liquid and harder to liquidate, hence why they made this stupid decision.

 

[jayre]

Quote from newwurldmn:

Could it be that IB cant finance these low market cap stocks themselves? I doubt they have cash sitting on the sidelines to fund every margin request. It might be that whomever they repo with will not take these stocks as collateral without a haircut that is higher than IB charges you.

So what happens if those people decide that they would not accept anything less then 1B, or any financial stock, or ony europeen stock, and you get a 2 day notice on that?? Do you feel comfertable that your positions not next in the row be put off margin??

 

[newwurldmn]

Quote from given2trade:

No other prime broker or e-broker for that matter has made this change. Further, they just borrow from the fed hence why their rates are against fed funds. There is absolutely no restrictions on the type of security they (or their client) can borrow against, however, if the client loses all his equity and they can't liquidate the stocks fast enough (absurdly unlikely) then the broker firm would take the losses. In their mind, they think that small cap stocks are less liquid and harder to liquidate, hence why they made this stupid decision.

Other brokers charge higher interest which can cover higher repo rates and/or are known to have more sophisticated and stable clients.

Just a thought...

And if IB is that stretched where they can't absorb this, it is a problem. I don't have any accounts there.

 

[given2invest]

Quote from jayre:

So what happens if those people decide that they would not accept anything less then 1B, or any financial stock, or ony europeen stock, and you get a 2 day notice on that?? Do you feel comfertable that your positions not next in the row be put off margin??

Yah, that's really what it comes down to. This is an absurd, baseless, rule they put in place. They advertised low margin rates in financial papers almost daily. They attracted clients based on their rates. And overnight, they cut them off to a vast majority of equities.

It's just very poor business. As you can see, I'm very angry about it.

 

[stock777]

have to admit, thats quite a shitlist .

ib charges very little for margin, so their , ahem, 'margin for error' is pretty low.

most of you dweebs have no clue as to how little liquidity is available when tshtf. apparently they don't want to supply the diaper when your port poops itself.

 

[stock777]

Quote from given2trade:

Yah, that's really what it comes down to. This is an absurd, baseless, rule they put in place. They advertised low margin rates in financial papers almost daily. They attracted clients based on their rates. And overnight, they cut them off to a vast majority of equities.

It's just very poor business. As you can see, I'm very angry about it.

how is it that you just got here and are ranting like a schoolgirl? new nick just for this occasion?

 

[jayre]

Quote from stock777:

apparently they don't want to supply the diaper when your port poops itself.

Diaper, port, poops? What's the relevance here?