IB Margin Changes

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I have a hard time believing people on a web site called elitetrader would support such a move on the part of a firm like IB. Making comments such as it is not a game, you agreed to the rules, etc doesn't take into account the way the rule was implemented and the time frame traders or investors for that matter are given time to make position changes. And for those of you who don't think it is a major deal imagine if all firms decided to implement the same rule all at once. It would truly be a bloodbath for the small cap market with ripple effects to other portions of the market.

Applying a blanket rule such as this is always a bad idea in my opinion. Not separating out things such as ETF's, closed end funds, and preferred stocks with little volatility makes little sense. Lets just continue the process of herding all investors into Apple and the like. As we know they are the only quality companies left in this country.
 
Sep 16, 2011

Margin Increases on Low Cap Securities


As a result of recent market volatility, please be advised that IB is increasing the margin rates on low capitalization stocks (currently defined as companies with less than $250 million in market capitalization). The margin increases will occur in three steps beginning on Wednesday, September 21, 2011 and ending on Friday, September 23, 2011. The margin rates will increase to 50%, 75% and 100% at the open of business on 9/21/2011, 9/22/2011 and 9/23/2011, respectively.

The current list of stocks which are subject to this margin increase is subject to change. The current list can be found on the following page:

http://ibkb.interactivebrokers.com/node/1788

Upon implementation, any of the incremental margin increases may result in a margin deficit in the account. A margin deficit implies that an account becomes subject to automated liquidation. Please carefully review the current positions within your account and adjust the portfolio accordingly.

Interactive Brokers Risk Management


Message Reference Number: 3154644-1316225056959

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Sep 16, 2011

CORRECTION - Margin Increases on Low Cap Securities

Please be informed that the link in the previous notification regarding a margin increase on low cap stocks contained symbols for securities which have a market cap well above the $250 million threshold and which will not be subject to a change in margin. We apologize for this reporting error and are in the process of correcting and updating the list.

Interactive Brokers Customer Service

Message Reference Number: 3155859-1316224149896
 
Move your money elsewhere. There are fine introducing brokers on this site as well as other online brokerage sites that will offer portfolio margining. They may not offer the same margin rates, but they will have better customer service and better liquidation policies.

I've been margin called 3 times on Etrade in the last two weeks and always had till the end of day to figure it out (in Reg T) and in my Portfolio margin account I had 2 days to figure it out. And they have not changed the marginable list... of course all their services and offerings are more "conservative" than interactive brokers.

It seems as a rule that IB will let you do whatever you want until there is risk for it to affect their business then they will cut it fast. It's your job to account for this abrupt change. Other companies won't offer you a lot just so they don't have to change it.
 
Quote from jayre:

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?
More...
Any thoughts here?
 
Quote from jayre:

Any thoughts here?
More...

I'm not sure who to trust here. On the one hand there is you have been on the wrong end of an IB autoliquidation and are bitter towards the company. On the other there is IB who has been a great brokerage for me personally for more than a decade. It's a tough call!
 
Quote from sprstpd:

I'm not sure who to trust here. On the one hand there is you have been on the wrong end of an IB autoliquidation and are bitter towards the company. On the other there is IB who has been a great brokerage for me personally for more than a decade. It's a tough call!
More...
TRUST in a great company?? remember enron? lehman? tyco? worldcom? and lately goldman ? It seems that the adittude in corperate americe today is to do "anything" that could make these CEO's richer no matter if its ethical or not. (especially if its technically legal)
 
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