IB's Buying Power vs Excess Liquidity

tonyf · Mar 10, 2020

IB's help desk is unreasonably strained by the number of enquiries these day. I am therefore hopping for an answer from the ET community instead.

What is the difference between BP and EL and why is BP > EL in my case?

Would IB start auto liquidating when EL <=0 regardless of BP balance? (if so, what is the point of BP all together)?

Thank you

Genevian Speculator · Mar 10, 2020

BP can go up 4 times your net Liq.(day time) an goes 2 times your net liq during night. BP can be influenced by outstanding payments while net liq and exc. liq can't. Thats the biggest difference I know.

tonyf · Mar 10, 2020

Genevian Speculator said:
BP can go up 4 times your net Liq.(day time) an goes 2 times your net liq during night. BP can be influenced by outstanding payments while net liq and exc. liq can't. Thats the biggest difference I know.

Thanks - if BP can go up 4x EL, wouldn't that trigger auto liquidation algo?

Genevian Speculator · Mar 10, 2020

If BP is 0 Algo is triggered as BP is defined by (EL + outstanding payments) *2 when night, *4 when day

tonyf · Mar 10, 2020

Genevian Speculator said:
If BP is 0 Algo is triggered as BP is defined by (EL + outstanding payments) *2 when night, *4 when day

Got you. So BP triggers liquidation algo and not EL then.

danielc1 · Mar 10, 2020

The answer on the question is not complete. There are also other factors that comes in to play for auto liquidation. Such as the instruments where you are invested in, volatility, and wich kind of margin you are using. T or Portfolio for example.

tonyf · Mar 10, 2020

danielc1 said:
The answer on the question is not complete. There are also other factors that comes in to play for auto liquidation. Such as the instruments where you are invested in, volatility, and wich kind of margin you are using. T or Portfolio for example.

Illiquid instruments, Portfolio.

tommcginnis · Mar 10, 2020

BP is a poor term; it is a gift that may be taken away at any time.
EL (or better, Net Liq.) is a responsibility, and must be paid heed 100% of the time.

IB (and all the other platforms) have 10,000 different ways to cut this subject, but the only one that matters is Net Liq. -- pay it due heed, or ..... :wtf:

tonyf · Mar 10, 2020

tommcginnis said:
BP is a poor term; it is a gift that may be taken away at any time.
EL (or better, Net Liq.) is a responsibility, and must be paid heed 100% of the time.

IB (and all the other platforms) have 10,000 different ways to cut this subject, but the only one that matters is Net Liq. -- pay it due heed, or .....

Ok look at my Account:
Securities Gross Position Val > Net Liq Val
Net Liq Val = Equity with Loan Val
Cash = Net liq val - Securities Gross Position Val and is negative.

Current Excess Liquidity = 4.2x Buying Power (since yesterday)

When you say Net Liq. which figure are you referring to?