IB Margin Changes

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Quote from Bob111:

i was always curious how their auto liquidation mechanism will work on long term portfolio of not really liquid corp bonds,that about to be liquidated? at what prices they will liquidate position,if there is no bid and ask(totally possible and very common situation on bonds)?
tell you more disturbing news-i've been in this situation once and know for sure that IB's CS have no ability to stop or override the process.
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It's just so bizarre to me. A human being should be able to look at an account and it's history and see what the risk is of IB taking a loss. Clearly there should be at least a day before they autoliquidate. It's like they assume everyone is trading S&P futures only.
 
Quote from jayre:

No big deal if that's the rule to begin with, its quite big of a deal if its getting changed in middle of the game. Hey, you never know when the the margin rules on "your" positions will change..
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This isn't a game. This is business and investing. While it seems IB is offering a service (providing lots of margin) they are doing what they can to minimize their risk. They are lending you money to effectively gamble with.
Part of trading is that rules change all the time.
 
Quote from newwurldmn:

This isn't a game. This is business and investing. While it seems IB is offering a service (providing lots of margin) they are doing what they can to minimize their risk. They are lending you money to effectively gamble with.
Part of trading is that rules change all the time.
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That's really absurd. Obviously you'd have an issue if in the middle of the day they changed their commissions to $1000 a share or they changed margin intraday out of nowhere. Nobody is saying they can't manage their risk. What we're saying is:

1) An arbitrary rule on sub $250 million market caps is completely absurd. I can name you a dozens of large cap stocks that are infinitely more risky than my small cap value holdings.
2) They are not losing money by offering margin at these levels. My guess is they had 1 bad account and are acting as a result.
3) They could have offered more than 2 days before implementation. As you said, this isn't a game. I have major tax issues I'd have to deal with if I was forced to sell many of my positions.
 
Quote from given2trade:

That's really absurd. Obviously you'd have an issue if in the middle of the day they changed their commissions to $1000 a share or they changed margin intraday out of nowhere. Nobody is saying they can't manage their risk. What we're saying is:

1) An arbitrary rule on sub $250 million market caps is completely absurd. I can name you a dozens of large cap stocks that are infinitely more risky than my small cap value holdings.
2) They are not losing money by offering margin at these levels. My guess is they had 1 bad account and are acting as a result.
3) They could have offered more than 2 days before implementation. As you said, this isn't a game. I have major tax issues I'd have to deal with if I was forced to sell many of my positions.
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On a side note, lest time I checked IB's market cap, it was around 650M, not much higher then the 250M micro cap limit (charles schwab market cap for ex is 16 Billion).
If small marker cap means highest risk, is your money safe at IB??
 
Quote from jayre:

On a side note, lest time I checked IB's market cap, it was around 650M, not much higher then the 250M micro cap limit (charles schwab market cap for ex is 16 Billion).
If small marker cap means highest risk, is your money safe at IB??
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Actually not true. The diluted market cap, adjusted for all the shares that are private and part of the partnership, is >$5b. The CEO owns 85+% of the company. The market cap you see on yahoo is only the float available to non insiders. It's a very big and healthy company. Even more the reason this rule is absurd. They aren't going to go insolvent based on a guy or two losing $1 Million on margin. They will do > $300m in NET profits this year.
 
Quote from given2trade:

Actually not true. The diluted market cap, adjusted for all the shares that are private and part of the partnership, is >$5b. The CEO owns 85+% of the company. The market cap you see on yahoo is only the float available to non insiders. It's a very big and healthy company. Even more the reason this rule is absurd. They aren't going to go insolvent based on a guy or two losing $1 Million on margin. They will do > $300m in NET profits this year.
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Agree 100%. Would the IB micro cap rule
"adjusted for all the shares that are private and part of the partnership" when they calculate if a stock is a micro cap? Also how about small etf's can they use margin?
 
Quote from jayre:

On a side note, lest time I checked IB's market cap, it was around 650M, not much higher then the 250M micro cap limit (charles schwab market cap for ex is 16 Billion).
If small marker cap means highest risk, is your money safe at IB??
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you see, its traders like you that force IB to do draconian things.

cluelessness is a terrible thing.
 
Quote from Wayne Gibbous:

Do you have a copy of this email? I don't think they sent it to me.

And I can't find any mention on the IB site...
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Didnt get anything yet either. maybe its only for turkeys?
 
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