IB Margin requirements rising as VIX falls, reaching nonsense levels
- Thread starter cruisecontrol
- Start date
True, a some sort of hybrid system is probably the likely route. Rewriting is always painful because bugs cost money and they're always there.
Order types are a minor issue for me, I probably only use about 4-5 different types and most IB specific things can easily be replaced.
RH proved the concept, now everyone jumps into the same boat. Yet there's an ever increasing number of algo traders who don't care about pretty charts nor trading apps for phones but about APIs, connectivity and reliability.
I'm not keen on the zero commission garbage at all because that means limited order types and bad fills. Lower commissions would be great but I'm not naive enough to believe in it -- brokers will still need to pay regulatory fees on every trade. That means they will get the funds for it through margin fees and order flow sales. You pay for trades in the end, just indirectly.
. Do you think they forgot the Swiss Franc debacle? https://www.google.com/amp/s/fortune.com/2015/01/16/swiss-franc-400-million-losses/amp/VIX peaked three weeks ago at ~85 and has since dropped by 50%.
Yet IB is continuously increasing their margin requirements as VIX is dropping. Every day is higher than the last. As I check it this morning, Portfolio Margin is barely better than reg T. I'm scared that it can just keep going higher and higher, because why not? Their system appears to have no sense to it. I might actually end up downgrading to a reg T account at some point if that gives more margin
I always believed IB's risk aversion was a good thing that protected customers like me, and people who complained about margin were just whiners who were taking too much risk anyways (naked option selling, etc). Seeing how their system behaves now, I no longer believe this.
This is, by far, the most profitable trading environment I've ever seen in my career. It might be once in a lifetime. And IB is hamstringing us with this goofy margin system. I am making a week worth of profits every day, but I could be making more than 2x that with a proper 15% PM account. (This is straight up equity trading by the way, cash neutral portfolios, no options.)
I hope IB gets their act together, but I am actively looking into switching brokers at this point.
Current CME initial is like $9,200 on GC. It is free money for IB at this point, because they know what the counterparty risk is. So they are jacking you and getting your cash for 1/2 their own risk when they margin-call the client with the weaker hand
Risk-free zero $$$ for Petterfy.
What kind of return is he getting on that on our excess margin?
His return is closing your GC position when it did not have to be closed, and him sucking the cash out of your trading account. Risk free $ zero.
I thought they sold Timber Hill. Their prop trading department that use to take the other side of those liquidations?
Apparently they did forget because they are still offering 33:1 on CHF.
Meanwhile, I can only get 3.5:1 on AAPL (normally 6.666:1) . The average stock is currently around 2.33:1, barely better than what you get with reg T (2:1)
As long as they have proper margin call & auto liquidation in place, they shouldn't face such a situation. Yes, gaps are more prone & frequent these days and they have to protect themselves and their customers. But we also have to remember that there are circuit breakers, which means that even at times of panic, there will be pauses and windows open for auto-liquidation of positions.
In these times, I agree with you, it's better to have higher margins (Reasonable) than to blow up.
It's understandable to have higher margins but they were hiked even before during no volatility. When we barely have 2 to 1 leverage in midcap equities with many at 1.5 to 1, that is beyond careful.