Margin requirements for LLC brokerage accounts

A

ajensen

Do brokers impose higher margin requirements on brokerage accounts that are traded through a limited liability corporation? I especially want to know the answer for Interactive Brokers.
 
ajensen said:
Do brokers impose higher margin requirements on brokerage accounts that are traded through a limited liability corporation? I especially want to know the answer for Interactive Brokers.
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Not in general. For retail accounts no. A retail account will always be treated like that is all the capital available to meet losses. With some institutional accounts on the futures side, a large balance sheet for the LLC will help risk allowance. A personal guarantee which is implied with an account in your name, provides more comfort if you have assets outside the account.

For an account at IB, no.
 
1245 said:
Not in general. For retail accounts no. A retail account will always be treated like that is all the capital available to meet losses. With some institutional accounts on the futures side, a large balance sheet for the LLC will help risk allowance. A personal guarantee which is implied with an account in your name, provides more comfort if you have assets outside the account.

For an account at IB, no.
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Thanks to you and the others who replied. I emailed IB, where I already have an account, and they confirmed what you wrote.
 
However, they do hose your LLC on exchange data fees.
But I believe it's either FINRA or the SEC that imposes those onerous fees which can be 5x that of a retail trader.
They have made the assumption that all LLC's have professional status.....which should really be only for RIA's or Series 7 holders. A very poor definition indeed.
 
Exchange MD fees are determined by the exchanges not the regulatory bodies. And you're not being hosed. They are providing a discount to small retail traders and charging more to professionals. Would you rather they just charged everybody the higher rate? They have to get their revenues from somewhere. if they don't get it from market data, they will charge more for executions or clearing.
 
Thanks for that 1245...but I do think I'm getting hosed with my LLC....
and how can the exchanges make the exact determination on the rate differential ? 5x, 10x, 50x ?
So, bottomline, who's regulating the exchanges ?
 
The SEC. Unfortunately, these are for-profit businesses and market data is a profit center. Nobody likes to pay fees, including me. If you want to see who's really getting hosed, take a look at the fees for nondisplay data. In January 2015, some participants went from paying $500-$1000/month to around $13,000/month.
 

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1245 said:
The SEC. Unfortunately, these are for-profit businesses and market data is a profit center. Nobody likes to pay fees, including me. If you want to see who's really getting hosed, take a look at the fees for nondisplay data. In January 2015, some participants went from paying $500-$1000/month to around $13,000/month.
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Unbelievable !!! I hope Trump abolishes the SEC.
 
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