IB Rules To Strict?

[dont]

Quote from Kalparker:

I know most people watch their margin levels, but i have found they are unnecessarily strict. Any opinions?

No I like it that IB is so strict, rather not have a Refco on my hands.

 

[jimrockford]

Quote from Surdo:

Ever hear of S.I.P.C.?

News flash.

SIPC insurance does not cover margin deposited on futures or futures options trades.

 

[loufah]

People believe that automating margin calls like this helps hold IB's costs down.

I use IB for futures and options - low price, great execution - but when I trade volatile stocks that brokers are likely to change to 100% margin, such as FRE and FNM, I do it at Schwab and Fidelity, which have offices everywhere. If I need to, I can stop by an office the following morning and drop off a check.

 

[Nasdaq5048]

Quote from jimrockford:

News flash.

SIPC insurance does not cover margin deposited on futures or futures options trades.

Margin deposit on futures will not disappear no matter what happens to IB since it is in the hand of the clearinghouses, which is AAA? is that correct?

 

[jeb9999]

Quote from Nasdaq5048:

Margin deposit on futures will not disappear no matter what happens to IB since it is in the hand of the clearinghouses, which is AAA? is that correct?

You don't have to worry about futures margin cash at IB for 3 reasons: IB is well capitalized, vast majority of cash and assets are on the securites side and aggressive risk management of futures positions.

You have to worry at a pure futures brokers that a big loss from other customers will wipe out the firm's capital and consume some of the solvent customers cash. The fact that the margin is held by the clearing house doesn't matter if the losses exceed the firm's capital.

 

[zdreg]

zdreg


Registered: Oct 2003
Posts: 2941


07-13-08 06:27 PM

Quote from vikana:

IB documents how/when they liquidate. There are even settings in TWS where you get to determine what to liquidate first.

I like the fact that they work to ensure that margin calls don't spread beyond the accounts they happen in.

If you don't like it, there are many other good brokers who give you 3 days to transfer additional funds.



in a crisis watch that 3 day privilege disappear.

 

[Quark]

Quote from Nasdaq5048: Margin deposit on futures will not disappear no matter what happens to IB since it is in the hand of the clearinghouses, which is AAA? is that correct?

Considering what's happening in the financial markets, are you saying you have faith in RATINGS?!

 

[Free Thinker]

Quote from Kalparker:

I'm finding IB'S margin requirements are strictly enforced more than necessary. If you have a margin call IB will liquidate the account very quickly. They do not have the three day limit, like most brokers do. Should the market open badly say a 500 point drop you would be liquidated in the morning, and should the market rally in the afternoon, you would have lost most of your buying power and stocks. I know most people watch their margin levels, but i have found they are unnecessarily strict. Any opinions?

you have no business trading in a way that any size drop will take you out. as a customer of ib i want them to look out for situations like yours and take measures to protect the other customers.