IB reduced ES margins
- Thread starter gmst
- Start date
From an IB Bulletin: (August 2007)
To CFE,ECBOT,GLOBEX traders:
Mon Aug 6 09:14:14 2007 EST
IMPORTANT MARGIN NOTICE
Effective Monday 6 August, 2007, and until further notice, there will be a
significant change in the intraday margins for most stock and index futures
and futures options. Specifically, the intraday margin will be set to cover
a price move of 4% in the instrument, but will not exceed the regular
maintenance margin. By example, a 4% move in the ES futures would require
intraday margin of 4% * 1450 price * 50 multiplier = 2900 USD. The regular
intraday margin is 1400 USD and the regular overnight maintenance margin is
2800 USD so for ES the intraday margin would be the same as the overnight.
PLEASE NOTE THAT THE ONLY MARGINS AFFECTED BY THIS POLICY CHANGE ARE
INTRADAY (REDUCED) MARGINS ON EQUITY-LINKED FUTURES AND FUTURES OPTIONS.
Please note that many of the statutory margin requirements for many US index
futures and options imply a very small intraday margin requirement (in the
case of ES, less than 2%). In light of the recent volatility in the markets,
we feel it is prudent to apply margins that are consistent with this
volatility.
Nov 2008:
IB's intra-day was the same as the exchange overnight. Not sure when they made the change. IB was changing things very quickly at the time.
YM $6875 initial $5500 overnight
ES $6188 initial $4950 overnight
NQ $4000 initial $3200 overnight
Not all brokers were being this conservative. IB is VERY conservative.
Jack
To CFE,ECBOT,GLOBEX traders:
Mon Aug 6 09:14:14 2007 EST
IMPORTANT MARGIN NOTICE
Effective Monday 6 August, 2007, and until further notice, there will be a
significant change in the intraday margins for most stock and index futures
and futures options. Specifically, the intraday margin will be set to cover
a price move of 4% in the instrument, but will not exceed the regular
maintenance margin. By example, a 4% move in the ES futures would require
intraday margin of 4% * 1450 price * 50 multiplier = 2900 USD. The regular
intraday margin is 1400 USD and the regular overnight maintenance margin is
2800 USD so for ES the intraday margin would be the same as the overnight.
PLEASE NOTE THAT THE ONLY MARGINS AFFECTED BY THIS POLICY CHANGE ARE
INTRADAY (REDUCED) MARGINS ON EQUITY-LINKED FUTURES AND FUTURES OPTIONS.
Please note that many of the statutory margin requirements for many US index
futures and options imply a very small intraday margin requirement (in the
case of ES, less than 2%). In light of the recent volatility in the markets,
we feel it is prudent to apply margins that are consistent with this
volatility.
Nov 2008:
IB's intra-day was the same as the exchange overnight. Not sure when they made the change. IB was changing things very quickly at the time.
YM $6875 initial $5500 overnight
ES $6188 initial $4950 overnight
NQ $4000 initial $3200 overnight
Not all brokers were being this conservative. IB is VERY conservative.
Jack
$1,750 per contract is current 40 to 1 leverage. Why do you need anywhere near 40 to 1 leverage? Most people should be trading 1 ES contract for every $15,000 to $20,000 in equity so the inevitable draw downs does not drive one insane. Using 40 to 1 leverage is insane, unless you like blowing up.
Quote from ActiveTrader07:
$1,750 per contract is current 40 to 1 leverage. Why do you need anywhere near 40 to 1 leverage? Most people should be trading 1 ES contract for every $15,000 to $20,000 in equity so the inevitable draw downs does not drive one insane. Using 40 to 1 leverage is insane, unless you like blowing up.
Maybe if you're trading like 1 contract. In this environment, I would keep as little of my money in an uninsured futures account as I can. But that's just me, and I know the broker has a far greater risk of blowing up than I do.
I didn't see an announcement, but the CME performance bond requirements for equity products have been lowered. IB probably adjusted their intraday margin to reflect the lower CME margin requirement.
Still, IB's intraday margin is nowhere close to competitive, especially the way IB handles margin on reversal orders.
I would never consider for one moment any futures broker that doesn't offer at the most $500 intraday margin eminis / $1,000 intraday margin CL and 6E.
Any broker whose risk management software cannot handle that type of structure is not even on the playing field in today's competitive world for brokers.
We are in agreement. IB is not competitive for intraday trading of index products as well as others.
IB is good for accounts of family members that I trade as a second user, although I think requiring $10,000 to open an account is just plain arrogance.
I've had an account for over 13 years at IB and will keep it in case I add the KOSPI. I make a few trades in it every month to generate some commissions to avoid the fees. For intraday trading, IB lost my business some time ago.