IBKR Margin

C

cschrop

Hello all,

New user here.

I have a question about margin charged at IBKR.

I am short 250k govt t note. Long 250k t bill. Cash balance is still positive.

My margin debit balance is 245k, my long position minus my total settled cash.

This seems strange to me. I thought I should only be charged on my negative cash balance. Why is IBKR charging me on my long position when the cash from it is coming from the short?

FYI my short borrow fee is 0. I paid commission on the long and shorts at trade fill. I am currently meeting all of my initial and/or maintenance margin requirements with a healthy buffer.
 
Quanto said:
What does IB support say?
More...
IB support says that the short credit cash balance is kept segregated from the rest of the account. I found that I am earning a "securities lending" rate on this, basically 1- 85% = 15% of the normal daily cash interest rate at IBKR.

I did a bit more research on this, and most brokers seem to do this, whereby they keep the short balance segregated from the rest of the account and do not do any netting on the main cash balance for purposes of determining margin loan debit or credit. This is for purposes of posting the "cash" as collateral to the lender/custodian/counterparty. In actual practice, it appears many (if not all) of the brokers purchase treasury securities on their own account with the cash and post that as the collateral with little to no haircut. This is where they are earning a lot of their interest income on their income statements.

For purposes of this trade, this effectively makes the trade unprofitable for me on the retail side, or for most other types of relative value bond trading (going long and short on various bonds based on their relative value). This is fairly strange to me given the increase in publishing of books on bond relative value trading, which implies to me that these trades should be relatively accessible to those in the general public.

If anybody knows of any broker where I can purchase Treasuries or potentially other securities with short balances, I would greatly appreciate that information or direction!
 
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