IBKR's exposure fee

T

tonyf

"Holding one or more highly concentrated single position(s) generally expose an account to significant risk exposure and, hence, increases the likelihood of an account being assessed an Exposure Fee. Managing risk through diversification and hedging may reduce the risk and reduce or eliminate the Exposure Fee."

Does anyone here know what is the max. safe % ownership of a single stock in a PM account below the exposure fee trigger point?

In other words, if one owns stocks A, B, C and D. How much of stock A (% of net liquidation value) can one hold before triggering that fee in a portfolio margin account?

https://www.interactivebrokers.com/en/trading/margin-requirements.php
 
JamesJ said:
i cannot answer, but found it to be neglegibly low.
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about 1% of assets per annum from what I understand. that's not insignificant and probably pays for their tail risk insurance. So I am not disputing it but just want to understand how much concentration in 1 equity triggers it.
 
tonyf said:
"Holding one or more highly concentrated single position(s) generally expose an account to significant risk exposure and, hence, increases the likelihood of an account being assessed an Exposure Fee. Managing risk through diversification and hedging may reduce the risk and reduce or eliminate the Exposure Fee."

Does anyone here know what is the max. safe % ownership of a single stock in a PM account below the exposure fee trigger point?

In other words, if one owns stocks A, B, C and D. How much of stock A (% of net liquidation value) can one hold before triggering that fee in a portfolio margin account?

https://www.interactivebrokers.com/en/trading/margin-requirements.php
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All I know is they run your position through a "proprietary" forecast model that assumes a 30% market change to see how your position value would fare and if they see the impact is large enough to your margin i.e. exposing IB to potential counterparty risk, they charge you exposure fee. Of course by that time if your position has really been subject to an adverse 30% market impact, you and possibly IB would've been subject to tens of thousands of dollars of loss potentially but they think charging you a $35 exposure fee would be sufficient to cover those potential losses. If a tail event is really going to happen, that $35 is shit in a bucket. LOL

And they do NOT take hedging into account. They say they do but they do not. I have had threats about exposure fees on my 100% cash-supported positions that would've had absolutely zero impact on their margins whatsoever. Just because they saw the position is large so they decided to pest me with this shit exposure fee until I sent them a message pointing out the ridiculousness of their policy and they decided to back off by taking me off their some kind of "exposure fee monitor list". You can do that. If you do 100% cash-supported trades that have zero impact on margins, you can ask them to take you off their exposure fee surveillance list and you won't get those pesky messages and get charged this totally useless fee.

The model is absolute crap and they know it. I have questioned them about their rationale in levying this exposure fee and they have no answer except to say "it's proprietary" bs like that. They levy this fee mainly to reduce people's positions in volatility products so they can 1) lend out more units and make money on the lending interest and 2) get a piece of your profit. Oh well, a "discount" broker is gotta do what it's gotta do to make its dough.
 
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TheDawn said:
... so they decided to pest me with this shit exposure fee until I sent them a message pointing out the ridiculousness of their policy and they decided to back off by taking me off their some kind of "exposure fee monitor list".
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Really? I did not know that they had such a list, but assumed that it applied to all customers. I was in the past confronted with such exposure fee and complained to them about it since it made no sense in my case. Ever since I complained, and explained why it didn't make sense, am I no longer receiving such exposure fee claims, even though my trading has not changed at all. So it could be that I am no longer monitored?
 
HobbyTrading said:
Really? I did not know that they had such a list, but assumed that it applied to all customers. I was in the past confronted with such exposure fee and complained to them about it since it made no sense in my case. Ever since I complained, and explained why it didn't make sense, am I no longer receiving such exposure fee claims, even though my trading has not changed at all. So it could be that I am no longer monitored?
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That's what they told me when I complained to them about the exposure fee and pointed out to them the non-applicability of this fee in my case. Ever since then, just like you, I don't get bothered by their pesky warnings and the fees anymore. It might not be a specific list but some kind of exposure surveillance.
 
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