Margin and forced liquidation - please help

[rts232]

Hello all!

I'm in a bit of a puzzled state. I received a message by IBKR notifying me about a margin increase for a certain stock I own. I do have a margin account (not portfolio margin account), but

1. The only asset I hold is said stock;
2. The position was paid to 100% by my own funds (aka I did not use any kind of margin for this).

Since I am new to IBKR and the whole margin topic, I contacted support just to be sure about, what that means for me right now.

I was told that my available margin will decrease with this newly announced margin increase for said stock and that this is what is left before any kind of liquidation will take place. The customer service agent didn't reply to any of my questions beyond that, sadly. [CS is a total disaster, but this is another topic.] Now I am somewhat alarmed and therefore wanted to ask you guys for help:

Am I right to assume that whatever happens, IBKR cannot liquidate a stock position paid to 100% by my own money at all? [Assuming, of course, I do not use margin in any other way.]

 

[zdreg]

IBKR is not a broker for people who need elementary hand holding.
The answer to your? you will not be liquidated.

 

[rts232]

Such was my initial understanding, but CS didn't make it sound like that and it didn't exactly help that he wasn't responding to further questions. Thanks for the reply, but, you know, everyone starts small and I'll rather ask to be sure, than run into things blindly.

 

[zdreg]

At what time was your chat?
How long was your chat?

 

[luisHK]

Not sure why you think you might be liquidated, IB sends routinely increase margin advice. They didn t telk you u would be in margin deficit did they ?

 

[rts232]

@zdreg: Wed, 06 May 2020 starting at 11:50:59 GMT, I closed the chat about 27-28 minutes later, because I wasn't replied to after some 15 minutes.

@luisHK: "Not sure why you think you might be liquidated" - Like I said, I was very sure the whole thing wouldn't affect me at all. On the other hand I reasoned why would they alarm me about this then anyway? So I thought it might be better to ask, what's going on and thereby make sure, I wouldn't miss anything.

"They didn t telk you u would be in margin deficit did they?" - He was literally saying, that the margin requirement for stock X is changing and I should take care looking for my account, so I wouldn't face forced liquidation. I immediately assumed this to be the default answer to the question he might have been asked hundred times before, so I was asking again and explained that in my case things for sure wouldn't apply, because my equity position was bought to 100% with my own cash. He went on to explain it wouldn't matter, because with a margin account it would be irrelevant if I bought anything to 100% with own money, because I would always trade with margin requirements. Didn't make any sense to me, especially because my main question wasn't answered. I then asked numerous times for nearly a quarter of an hour, but didn't receive any reply. This really, really is CS disaster.

 

[luisHK]

This email is sent to every trader holding stocks to which it applies afaik, it doesn t mean you will be in any kind of deficit. Looks like you re fine. There are probably 100s of testimonies of how a rep was useless at IB and several other brokers.
If you start selling options or sell short or buy on margin u need to follow ur acct closely with IB but that doesn t appear to be ur case

 

[ajacobson]

An unusual concentration?

 

[zdreg]

There are probably 100s of testimonies of how a rep was useless at IB and several other brokers.

Your remark is correct with a major but. You can believe that a lot of customers are incapable to comprehend or simply refuse to believe what the CS is telling them, The CS was correct that even if you are fully paid up the margin required can vary with changing circumstance but a fully paid client cannot be liquidated or receive margin call if he is fully paid up. What he is saying that how much margin you can use can vary over time even if you are fully paid up. Unfortunately in your case it was information overload since I assume you made it clear that you have intent to be only fully paid up.There may be exceptions if the stock becomes/is non-marginable and value of account drops drops below 2k.

 

[rts232]

The CS was correct that even if you are fully paid up the margin required can vary with changing circumstance

No question about that and this was my believe in the first place.

but a fully paid client cannot be liquidated or receive margin call if he is fully paid up.

...and exactly THIS is what he totally failed to deliver. A very simple, yet important information.

Unfortunately in your case it was information overload since I assume you made it clear that you have intent to be only fully paid up.

I believe, I made myself clear. Communication was clearly weak on the CS side. I mean, come on, he neither was replying at some point nor did he care to answer my main question.