IB margin numbers on my account

T

tryingtolearn

I have a question about why I have an initial and maintenance numbers on my IB account.

Here's what I did

1) Converted 10k EUROS to USD using idealpro.
2) Bought 9k USD worth of ETF in a single transaction.

Now my account has 2250 initial margin and maintenance margin.

Is this because the currency conversion hasn't settled yet, and I used margin to buy the ETF? If so, how many days does it take to settle for the margin balance to go back to 0?
 
I'm not 100% sure if you're experiencing something different from what I'm familiar with due to the currency conversion, but I suspect you're not. Having said that...

The $2250 isn't going to change to $0 after your ETF + forex transaction are settled (I have no idea how long forex settles as I've never traded it). What I mean is, you have a margin account. You opened a position and you must maintain at least $2250 in your account to maintain that position. I'd say it's not really any more complicated than that except soon you'll discover the Special Memorandum Account (SMA) and notice that your Net Liquidity differs from your Excess Liquidity + Maintenance Margin and some time later you'll notice your "equity with loan" doesn't match your "net liquidation value". ;)

In summary, it's expected to see the $2250 as this is a margin account and they're saying if you don't want a margin call, you must keep at least $2250 in your account. Maybe think of it this way. You took out a $9k position with 4:1 margin requirement means you need $2250 cash to maintain the position.
 
I don't know the answer, all I know is IB is insane with their margin crap - literally the more my account goes up in value, and the greater my cash-to-position ratio becomes (due to me shoring things that went down in value), the HIGHER my margin requirement becomes. I have literally 28% of my cash invested in positions and IB is telling me I can't hardly increase my position side without going over my margin limit!
 
Lee- said:
Maybe think of it this way. You took out a $9k position with 4:1 margin requirement means you need $2250 cash to maintain the position.
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This is the the most plausible explanation. The margin you see is just an indication of the margin required to keep the trade open - you are not being charged interest on it.

Foreign exchange is settled in one day.
 
Saltynuts said:
I don't know the answer, all I know is IB is insane with their margin crap - literally the more my account goes up in value, and the greater my cash-to-position ratio becomes (due to me shoring things that went down in value), the HIGHER my margin requirement becomes. I have literally 28% of my cash invested in positions and IB is telling me I can't hardly increase my position side without going over my margin limit!
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You should've seen what they did to me last year when I was trying to invest in one of the VIX products when it was in Contango. They put in this portfolio margin which limits you to only be able to invest 25% of your cash in position, 25%!! That means I had to watch 75% of my money just sitting there doing nothing all because IB was afraid of volatility!! LOL The VIX futures were in Contango and they were afraid of volatility!! LOL And not only that, they literally locked up my account even after I have closed my positions to free up cash to get into this trade that I received a signal for because they couldn't adjust the change in the margin in my account fast enough due to my closing of my positions. You would think those margin adjustment process would be an automatic one but no I was told that it's actually a manual one; somebody actually sits in front of a screen and monitors the margin and then pushes a button to lock/unlock an account for trading. Go figure!

I agree IB's margin management is totally screwed up. There is only ONE guy in their margin department who knows what he's talking about; everyone else are totally clueless. If you want your margin explained to you, you have to ask to speak to the margins department. The wait time is at least an hour to talk to him and you have to go through 3 transfers at least.
 
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The currency conversion is immediate, it has nothing to do with that.


"It's important to note that the calculation of a margin requirement does not imply that the account is borrowing funds, employing leverage, or incurring interest charges. IB will only will only generate a margin loan in the event that the account does not have sufficient settled funds to support the purchase of additional securities or holding of existing securities. In situations where there is no margin loan, the reporting of a margin requirement on the trading platform is intended for monitoring the accounts financial capacity to sustain a margin loan".

 
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eves_banished_children said:
The currency conversion is immediate, it has nothing to do with that.


"It's important to note that the calculation of a margin requirement does not imply that the account is borrowing funds, employing leverage, or incurring interest charges. IB will only will only generate a margin loan in the event that the account does not have sufficient settled funds to support the purchase of additional securities or holding of existing securities. In situations where there is no margin loan, the reporting of a margin requirement on the trading platform is intended for monitoring the accounts financial capacity to sustain a margin loan".

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Thanks, that was very helpful.
 
Sometimes, cash get automatically transfered into a secondary account (due to the use of futures or foreign securities). Leverage might decrease. As a result to regain full leverage internal fund transfers between main and secondary accounts are required using one or more currencies.
By clicking TWS->Account, the account window appears. For full leverage, FX cash (under Market Value - Real FX Balance) should be 0 in all currencies.
 
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