IB Margin requirements rising as VIX falls, reaching nonsense levels

[Fain]

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.

They just lost 88 million with Oil Futures. I would say Volatility is elevated for quite awhile.

https://finance.yahoo.com/news/interactive-brokers-issues-statement-crude-200100659.html

 

[southall]

They just lost 88 million with Oil Futures. I would say Volatility is elevated for quite awhile.

https://finance.yahoo.com/news/interactive-brokers-issues-statement-crude-200100659.html

Posters here were remarking how low CL margin was vs ES.

IB seem a bit clueless.

And what happened to the Auto Liquidator.

Anyone know what time yesterday IB stopped trading in the May CL contract yesterday.

I thought they don't let you hold it last few days before expiry?
If so how did they lose so big?

 

[keesa]

CME removed circuit breaker for CL on 03/21 and allowed zero/negative values for CL on 04/15. I guess IB didn't even pay attention at all.

Without the help of the above "technical setup", CL would never had drama at all. I remember CL used to have 7%, 13%, 20% circuit breakers as ES. Remove them with an excuse of "market volatility"? Sounds fishy to me.

 

[southall]

CME removed circuit breaker for CL on 03/21 and allowed zero/negative values for CL on 04/15. I guess IB didn't even pay attention at all.

Without the help of the above "technical setup", CL would never had drama at all. I remember CL used to have 7%, 13%, 20% circuit breakers as ES. Remove them with an excuse of "market volatility"? Sounds fishy to me.

The whole thing is dodgy as fuck.
Market takedown to flush out all the weak hands and then rally it back up.

It all looked like margin call liquidations to me.

 

[cruisecontrol]

They just lost 88 million with Oil Futures. I would say Volatility is elevated for quite awhile.

https://finance.yahoo.com/news/interactive-brokers-issues-statement-crude-200100659.html

This doesn't justify their weirdo equity margins. The fact that they still as we speak offer more leverage on crude than on AAPL, MSFT tells me everything I need to know about the competence of their risk department.

 

[Sig]

This doesn't justify their weirdo equity margins. The fact that they still as we speak offer more leverage on crude than on AAPL, MSFT tells me everything I need to know about the competence of their risk department.

Yeah, typical IB. I love all the fanboys always crowing about how much they love IB's buggy autoliquidation routine because it keeps their money safe, ignoring the fact that buggy autoliquidation routines indicate sloppy programming and incompetent employees. Hopefully this will shut them up for the time being at least.

 

[southall]

indicate sloppy programming and incompetent employees.

88 million could of bought a lot of talent.

But most companies dont want to pay top rates. Most pay the least amount they can get away with.

 

[Sig]

88 million could of bought a lot of talent.

But most companies dont want to pay top rates. Most pay the least amount they can get away with.

Great point. GS, for example, pays top dollar for top talent. Even Schwab pays well and gets pretty good talent as a result. It's clear that IB made a conscious decision to be low price by being low cost and they thought they could do that by offloading everything that required intelligence onto "The Algorithm" and staffing the company at the minimum possible wage. Now we're seeing the predictable results.

 

[Fain]

This doesn't justify their weirdo equity margins. The fact that they still as we speak offer more leverage on crude than on AAPL, MSFT tells me everything I need to know about the competence of their risk department.

Is one of those a futures and one of them an option? Let’s do comparisons within the same product type. It’s easier and your not all over the place

 

[Fain]

Great point. GS, for example, pays top dollar for top talent. Even Schwab pays well and gets pretty good talent as a result. It's clear that IB made a conscious decision to be low price by being low cost and they thought they could do that by offloading everything that required intelligence onto "The Algorithm" and staffing the company at the minimum possible wage. Now we're seeing the predictable results.

I dunno man. A risk department of quants that many have graduated from MIT that make over 200k year on average doesn’t sound like a company skipping out on wages.