Is this true about portfolio margin?

E

enochian

"Because the maximum time limit for meeting a margin deficiency is shorter than in a standard margin account, there is increased risk that a client’s portfolio margin account will be liquidated involuntarily, possibly causing losses to the client."
 
Yes, a PM call requires you to add funds or reduce faster. A Reg-T call has more time. I can't speak to each brokers liquidation policy. In most cases, you have more room with increased leverage overnight with PM, so it is not a fair comparison. You will breach REG-T much faster.
 
Robert Morse said:
Yes, a PM call requires you to add funds or reduce faster. A Reg-T call has more time. I can't speak to each brokers liquidation policy. In most cases, you have more room with increased leverage overnight with PM, so it is not a fair comparison. You will breach REG-T much faster.
More...


What if you are doing extremely mild margin with just Index ETFs?

I would assume Reg-T would be better.
 
It seems PM is mostly for books with offsetting positions? Like long CL and short NG? Or long NASDAQ and Short S&P ETF?

For my trading account, I do not see the difference of PM vs regular margin. So for simple trading book, probably PM does not matter much.
 
RedSun said:
It seems PM is mostly for books with offsetting positions? Like long CL and short NG? Or long NASDAQ and Short S&P ETF?

For my trading account, I do not see the difference of PM vs regular margin. So for simple trading book, probably PM does not matter much.
More...

With IB, the BP is 6 times net liquidation value. The value is far lower with Reg-T margin.
 
d08 said:
With IB, the BP is 6 times net liquidation value. The value is far lower with Reg-T margin.
More...

But for commodity, it probably does not make any difference.

Before IB had the intra-day margins. But I think that and high BPs are actually harmful for most traders. When brokers offer low margins and high BPs, traders take more risks than they should.
 
RedSun said:
But for commodity, it probably does not make any difference.

Before IB had the intra-day margins. But I think that and high BPs are actually harmful for most traders. When brokers offer low margins and high BPs, traders take more risks than they should.
More...

PM is for traders who know what they're doing. That means being diversified and uncorrelated. It also makes a difference for commodities of course.
Reg-T has intraday and interday that are different. For PM, there is no difference.
 
d08 said:
PM is for traders who know what they're doing. That means being diversified and uncorrelated. It also makes a difference for commodities of course.
Reg-T has intraday and interday that are different. For PM, there is no difference.
More...

What you said is not accurate.

For IB reg-T margin, I do not see intra-day margins any longer. At least for the contracts I trade, the intra-day and overnights margins are the same.

It is such a strong statement that PM is for traders who know what they are doing. So the traders who use Reg-T margins do not know what they are doing?

For the stuff I do, PM does not make any difference. I have different books that hold different markets. So I can keep things simple. I do not even want high BPs. High BPs and low margins are not even for most traders.
 
RedSun said:
What you said is not accurate.

For IB reg-T margin, I do not see intra-day margins any longer. At least for the contracts I trade, the intra-day and overnights margins are the same.

It is such a strong statement that PM is for traders who know what they are doing. So the traders who use Reg-T margins do not know what they are doing?

For the stuff I do, PM does not make any difference. I have different books that hold different markets. So I can keep things simple. I do not even want high BPs. High BPs and low margins are not even for most traders.
More...

You said "when brokers offer low margins and high BPs, traders take more risks than they should.".
Traders who are experienced know that they don't have to use all the BP and those who do use it, are diversified and the higher leverage actually improves the risk metrics. It's not complicated. Forcing someone to use lower leverage implies they cannot control their risk themselves.

I don't know of any serious traders using Reg T. By default Reg T offers 2:1 leverage interday and 4:1 intraday. This is true for most brokers but you might be using something that isn't regulated the same.
 
You must log in or register to reply here.
Back
Top