IB Margin requirements
- Thread starter scorinaldi
- Start date
Perhaps I chose imperfect examples.
Look at VIX FUTURES in mid-August. Quotes were regularly as wide as 5-8% in many contracts, some even wider. Front month contracts moved 20% within the trading session. Liquidity was 10 contracts a side and the markets would spread even further until the repost some non-trivial time later. Obviously not all contracts were so thin, and for a 1 lot here or there, that isn't what we are talking about. If one has to unload thousands of contracts, even liquid contracts were of concern.
When I said "we are not worried about going bankrupt", I was addressing previous posts that were attributing our decision [to increase index margins to at least 4% and increase intraday margin] to a fear of insolvency. We were not concerned with going under; we were concerned about taking unnecessary losses when clients go under. The first step to insolvency is to lose money. We have no interest travelling even one step down that road. I am not familiar with the reasons the firms you mentioned went under but if it was because of a failure to adequately control risk, we are taking reasonable means to avoid joining them. Having a large capital base improves our credit worthiness relative to a small firm (from a client perspective) as does the up-to 30M account insurance.
I realize there are other firms that have a less conservative approach to margin and risk and I am sure most will be fine even in chaotic markets. For IB, being conservative with other people's (and our) money just seems to make sense.
So all these years you were in terrible Danger but you didn't realize it, I suppose? ha! FS
IBj, please don't PM me with this:
(Did you actually remove some of your public posts?)
"You may want more leverage than we are currently willing to make available. It is OK to go to a firm that will give this to you. An open, competitive, capitalistic market allows you to vote your priorities with your business which will probably give you a better return than sarcasm.
Our reasons for being concerned about the systemic liquidity seem to be shared by financial insitutions around the world (see the USD LIBOR - vs - fedFunds spread, or any of the emerging market, and even developed market credit spreads to see this is the case)."
IB's intraday policy is indefensible in my opinion. I am not being sarcastic. Even despite today's down movement on U.S. jobs decline, etc.
Let's keep this discussion public.
(Did you actually remove some of your public posts?)
"You may want more leverage than we are currently willing to make available. It is OK to go to a firm that will give this to you. An open, competitive, capitalistic market allows you to vote your priorities with your business which will probably give you a better return than sarcasm.
Our reasons for being concerned about the systemic liquidity seem to be shared by financial insitutions around the world (see the USD LIBOR - vs - fedFunds spread, or any of the emerging market, and even developed market credit spreads to see this is the case)."
IB's intraday policy is indefensible in my opinion. I am not being sarcastic. Even despite today's down movement on U.S. jobs decline, etc.
Let's keep this discussion public.
Above suggestion seems very reasonable.
There are plenty of less risk-averse futures brokers than IB around.
If you have leverage problems you can find broker which gives you possibility to take more risks.
Anyhow I think there is currently system risk in derivates market which will bankrupt futures brokers which give customers too much leverage every major crash like black monday.
There are plenty of less risk-averse futures brokers than IB around.
If you have leverage problems you can find broker which gives you possibility to take more risks.
Anyhow I think there is currently system risk in derivates market which will bankrupt futures brokers which give customers too much leverage every major crash like black monday.
If Risk has increased, then Overnight margins should be affected in direct proportion to the punitive changes in intraday margins. But that would cause IB to lose many more important customers, so they won't being do that, of course. That reveals the "convenient expediency" of the current approach of simply penalizing the daytraders by approximately doubling their cost of doing business. Generally daytraders tightly control their positions and their risk.
IB is not just a broker but one of the larger market makers in options. They invented some of this stuff, Peterffy was the first person ever to trade on an exchange floor with a hand held computer, at fist they banned him 
,and know more about risk then we can grasp.
Astutely they do not want to be instrumental in over leveraged client's blowouts.
Any experienced business person will at least see that it is fair for them to decide on what terms they are willing to do business.
I want to be with the strongest broker and actually appreciate seeing them making decisions like this.
GC
,and know more about risk then we can grasp.Astutely they do not want to be instrumental in over leveraged client's blowouts.
Any experienced business person will at least see that it is fair for them to decide on what terms they are willing to do business.
I want to be with the strongest broker and actually appreciate seeing them making decisions like this.
GC
I guarantee you wouldn't be so smug if IB just doubled *your* cost of doing business. Must make you feel good to cheerlead for IB, sir.