Understanding IB Margin Webinar Notes | Interactive Brokers LLC

Margin Methodologies

The methodology or model used to calculate the margin prerequisite for a given side is determined by :

  • The product type;
  • The rules of the exchange on which that product trades; and
  • IB’s house requirements.

There are by and large two types of margin methodologies : rule-based and risk-based.

  • Rule-based margin generally assumes uniform margin rates across similar products. A common example of a rule-based methodology is the U.S. Reg. T requirement.
  • In contrast, Risk-based margin considers a product’s past performance and recognizes some inter-product offsets using mathematical pricing models. Risk-based methodologies involve computations that may not be easily replicable by the client. Examples of risk based methodologies include Portfolio Margin (for securities) and SPAN (margin for futures & futures options).

At IB, we have account types based on the rule-based Reg T and the risk-based Portfolio Margin. I ‘ll talk about these in a few minutes .

House Margin Requirements

Regardless of whether the methodology is rule-based or risk-based, IB may set special theater requirements on certain securities. For case, IB may reduce the collateral rate ( marginability ) of certain securities for a variety of reasons, including :

  • Small market capitalization or small issue size;
  • Low liquidity in the collective primary/secondary exchanges;
  • Involvement in tenders and other corporate actions.

Rule-Based Margin

In the US, the Federal Reserve Board is responsible for maintaining the stability of the fiscal system and containing systemic risk that may arise in fiscal markets. It does this, in part, by governing the amount of citation that broker-dealers may extend to customers who borrow money to buy securities on allowance .
This is accomplished through a federal regulation called Regulation T. Reg T, as it is normally called, imposes initial margin requirements, alimony margin requirements and requital rules on certain securities transactions .

Initial Margin Requirement

initial allowance is the percentage of the purchase price of securities that you must pay for with your own cash and/or marginable securities .
Reg T presently lets you borrow up to 50 percentage of the price of the securities to be purchased. so on stock purchases, Reg. T requires an initial allowance deposit of 50 % of the buy measure, which in twist allows the broker to extend credit or finance the remaining 50 % .
For model, if you are purchasing $ 1,000 worth of securities, under Reg T, you are required to deposit $ 500 and allowed to borrow $ 500 to hold those securities .

Maintenance Margin Requirement

Maintenance Margin is the amount of equity that you must maintain in your bill to continue holding a position .
During active market hours, IB clients can take advantage of reduced intraday gross profit for securities – generally 25 % of the long stock value. In order to hold a situation overnight, gross profit requirement reverts to the Reg T necessity of 50 % of stock value .
note that allowance may not be extended for certain securities such as Pink Sheet, OTCBB and low capitalization .

Risk-Based Margin

There are two risk-based margin methods that I want to discuss today : Portfolio Margin and SPAN .

Portfolio Margin

Portfolio Margin is a risk-based methodology that uses a exemplary called TIMS, which stands for Theoretical Intermarket Margin System. TIMS was created by the Options Clearing Corporation and computes the respect of a portfolio given a serial of conjectural market scenarios where price changes are assumed and positions revalued. IB besides considers a number of sign of the zodiac scenarios to capture extra risks such as extreme market moves, concentrated positions and shifts in option imply volatilities. Portfolio Margin tends to more accurately model hazard and broadly offers greater leverage than rule-based margin methodologies .
Portfolio margin requirements are by and large more favorable in portfolios which contain a highly diversify group of moo excitability stocks and tend to employ option hedges .
Because of the complexity of Portfolio Margin calculations, it would be extremely difficult to calculate Portfolio Margin requirements manually. If you’re matter to in Portfolio Margin, we recommend that you use our TWS Portfolio Margin Demo to understand the impact of Portfolio Margin requirements under different scenarios .

Standardized Portfolio Analysis of Risk (SPAN)

Minimum allowance requirements for futures and futures options are determined by the commute where they are listed. The exchanges use a risk-based margin methodology called Standard Portfolio Analysis of Risk or SPAN. SPAN computes how a detail contract will gain or lose value under respective market conditions using algorithm and conjectural market scenarios to determine the electric potential bad possible case loss a future and all the options that deliver that future might reasonably incur over a specify prison term period ( typically one trade day ). You can view SPAN requirements on our web site or in the contract description window available in TWS .
In addition to the exchange-determined requirements, IB considers extreme up and down moves in the underlying products and may require margin over and above the exchange-mandated futures allowance .
An overview of the SPAN margining system is provided in KB563 .

IB Account Types

synergistic Brokers offers respective explanation types that you select in your account application, including a cash report and two types of gross profit accounts – Reg T Margin and Portfolio Margin .

Cash Account

  • Cash accounts, by definition, may not use borrowed funds to purchase securities and must pay in full for cost of the transaction plus commissions. No shorting of stock is allowed. Limited purchase and sale of options. Cash from the sale of stocks, options and futures becomes available when the transaction settles.
  • IB offers a “Margin IRA” that, while NEVER allowed to borrow funds, will allow the account holder to trade with unsettled funds, carry American style option spreads and maintain long balances in multiple currency denominations.

Reg T Margin Account

Reg T Margin accounts are rule-based. That is, the margin requirements for securities in a Reg T Margin explanation are calculated based on the Reg T margin rules we learned about earlier. The Reg. T rules apply to margin for securities products including : U.S. stocks, index options, equity options, individual stock futures, common funds and bonds .
You will recall that allowance requirements for futures and futures options are set by the exchanges based on the SPAN margin methodology .

Portfolio Margin Account

Portfolio Margin accounts are risk-based. As the mention implies, allowance requirements in a Portfolio Margin report are calculated based on the Portfolio Margin ( and TIMS ) risk-based methodology. Positions eligible for Portfolio allowance treatment include U.S. stocks, ETFs, options, one breed futures and non-U.S. stocks and options .
Given its ability for enhance leverage and that the requirements fluctuate and may react quickly to changing market conditions, Portfolio Margin accounts are intended for sophisticate traders, and require minimum equity of $ 110,000 to initiate and $ 100,000 to maintain .
One significant thing to remember is this – if your Portfolio Margin history equity drops below 100,000 USD, you will be restricted from doing any margin-increasing trades. therefore if you do not intend to maintain at least USD 100,000 in your history, you should not apply for a Portfolio Margin score .

Upgrading Your Account Type

If you have a Cash bill, which does not let you trade on margin, you can upgrade to a Reg T Margin history .
If you have a Reg T Margin account, you can upgrade to a Portfolio margin if you meet the minimum report equity prerequisite and you are approved to trade options .
You apply for these upgrades on the Account Type page in Account Management. The menu path is Manage Account > Settings > Configure Account > Account Type .

IB Integrated Investment Account

IB manages your account as a Integrated Investment Account which allows you to trade all products from a single filmdom. Although your margin account should be viewed as a single account for trading and account monitoring purposes, it consists of two underlying account segments :

  • Securities – The securities segment or your account is governed by rules of the U.S. Securities and Exchange Commission.

    Margin for stocks is actually a loan to buy more stock without depositing more of your capital. In stock purchases, the margin acts as a down payment. Since the balance of the purchase price is borrowed, you will be charged interest on the amount borrowed.

    Reg. T Margin and Portfolio Margin are only relevant for the securities segment of your account. Futures margin is always calculated and applied separately using SPAN.

  • Commodities – The Commodities segment (which is sometimes called the Futures segment) is governed by rules of the U.S. Commodity Futures Trading Commission.

    Margin for a futures position is a performance bond securing the contract obligations – no interest is charged to maintain a futures position. Margin for futures is a cash or cash equivalent deposit that can earn interest while it works for you.

Excess Funds Sweep

As partially of the IB Integrated Investment Account service, IB is authorized to automatically transfer funds as necessary between your IB securities and commodities account segments to satisfy margin requirements in either report .
You can configure how you want IB to handle the transfer of excess funds using a feature of speech called Excess Funds Sweep in our Account Management system. This feature lets you choose to sweep funds to the securities account, to the commodities account, or you can choose not to sweep excess funds at all. If you choose not to sweep overindulgence funds, funds will not be swept except to meet margin requirements .

Exploring Margin on the IB Website

There is a set of detailed information about gross profit on our web site. The margin pages are available by clicking Products > Margin on our web site and they include :

  • Margin calculations in a Reg T Margin account;
  • Margin requirements, including initial and maintenance margin, for all types of assets;
  • Information about Portfolio Margin and Pattern Day Trading

Margin Calculations

  • Overview page
  • Calculations for Securities page – real-time margining system means we apply margin calculations to securities throughout the day in a Reg T Margin account. Review them quickly.
  • Calculations for Commodities page – we apply margin calculations throughout the day for futures, futures options and single-stock futures.
  • Examples page

IB Reg T Margin Calculations

In a Reg T Margin account, IB applies Margin Calculations at the adopt times :

  • At the time of a trade;
  • In real-time throughout the trading day;
  • At the end of the trading day;
  • Overnight.

Calculations work differently at different times. The margin necessity at the time of deal may differ from the allowance prerequisite for holding the same asset overnight .
note that all of the values used in these calculations are displayed in the TWS Account Window, which you will get to see in action former in this webinar .

Time of Trade Margin Calculations

When you submit an orderliness, we do a see against your real-time available funds. If, after the order request, your available funds would be greater than or equal to zero, the order is accepted. If available funds would be veto, the regulate is rejected .

Time of Trade Leverage Check

IB besides checks the leverage cap for establishing new positions at the time of trade. The leverage hood helps to prevent situations in which there is little or no apparent commercialize risk in holding very large positions but there may be excessive colony risk .

Margin Calculations Throughout the Day

IB besides performs real-time margin calculations throughout the day, including sustenance margin calculations, leverage checks, decreased marginability calculations and real fourth dimension SMA calculations .

Maintenance Margin Calculations

IB performs sustenance margin calculations throughout the day for securities and commodities in a Reg. T Margin explanation. Basically, your excess equity must be greater than or equal to zero, or your score is considered to be in margin trespass and is capable to having positions liquidated .

Leverage Checks

IB besides checks performs two leverage checks throughout the sidereal day : a real-time megascopic position leverage check and a real-time cash leverage check .
The side leverage check is a house gross profit necessity that limits the hazard associated with the close-out of large positions held on margin while the cash leverage check looks at FX settlement risk .

Decreased Marginability

IB reduces the marginability of stocks for accounts holding concentrated positions relative to the shares outstanding ( SHO ) of a company. In Reg. T Margin accounts, this increases the margin prerequisite for stock positions exceeding 1 % of the published shares outstanding from its default to 100 % ( in other words, decreases the come of money that can be borrowed against a breed military position toward zero ). At 5 % assiduity, positions have a 100 % gross profit requirement .

End of Day SMA

On a real-time basis, we calculate a special Regulation T-required credit limit called SMA that can augment clients ‘ buying might .
SMA refers to the particular Memorandum Account, which represents neither fairness nor cash, but preferably a note of credit created when the market value of securities in a Reg. T margin account increase in value. Its aim is to preserve the buy ability that unfulfilled gains provide towards subsequent purchases .
You ‘ll see SMA when we show you how to monitor your allowance in TWS a bite former in this webinar .


Futures have extra overnight gross profit requirements which are set by the exchanges. I ‘ll show you where to find these requirements in just a minute. note that IB may maintain rigorous requirements than the substitution minimum gross profit .

Soft-Edge Margin

IB will mechanically liquidate positions in an account when the history equity falls below the minimum care gross profit prerequisite. however, we calculate what we call soft Edge Margin ( SEM ) during the trade sidereal day which helps you manage margin risk to avoid elimination .
To summarize Soft Edge margin : If your account falls below the minimum maintenance margin, it will not be automatically liquidated until it falls below the Soft Edge Margin. This allows your account to be in a small margin insufficiency for a short circuit period of prison term. once your account falls below SEM however, it is then required to meet full moon alimony gross profit .

Margin Requirements

  • Tabbed pages display margin requirements each asset type
  • Multiple pages under each tab, often organized by region
  • Demonstrate menu use on stocks and options pages

Additional Margin Pages

  • Overview > Portfolio Margin page
  • Day Trading pages


In this share of the webinar, I ‘m going to introduce you to a couple of reports related to margin that you may find utilitarian. They are :

  • Margin Report
  • Stress Test Report

These reports like all our reports are available from within Account Management .

Margin Report

allowance reports show your margin requirements for individual and combination positions, and display both available and overindulgence liquidity a well as other values important in IB margin calculations. Each day at 16:15 ET we record your gross profit and equity information across all asset classes and exchanges .
note that because information on your statements is displayed “ as of ” the cut-off time for each individual commute, the information in your margin report may be different from that displayed on your statements .
Access margin reports by clicking Reports > Risk > Margin Report in Account Management .
here is an case of a margin report :
Understanding IB Margin To learn more about what ‘s in a margin composition, take a look at the Report Reference department in our Reporting Guide, which is available along with all of our early users ‘ guides at Traders ‘ University on our web site .

Stress Test Report

Another report card that may be of pastime to you is the Stress Test Report ( sometimes known as the Stress Test Summary Report ). This report card lets you see the change in the profit and passing of your positions if the underlying monetary value of each of your positions declines by 3 %, 5 %, 10 %, 20 % and 30 % and independently increases by 3 %, 5 %, 10 %, 20 % and 30 %. The results are based on theoretical price models and do not take into account coincident changes in volatility or early variables that affect derived function prices .
The report shows :

  • The Net Liquidation Value (NLV) of your account on the close, in your base currency.
  • The cash balance of your account.
  • Equity of all stock and derivatives, equity index derivatives and mutual funds, with P&L (displayed as “PNL” in the report).
  • Exposure, which is defined as the amount of money your portfolio will lose in that scenario in excess of the portfolio’s Net Liquidation Value on the close of the report date.

Understanding IB Margin

Monitoring Tools

so far, I ‘ve introduced you to the basic concepts of margin and margin accounts here at IB, and how we do n’t have margin calls at IB but we do have real-time liquidation of positions if you do n’t meet your allowance requirements.

Do n’t panic, however. Our real-time margin system besides gives you many tools to with which monitor your gross profit requirements. Always use the margin monitoring tools to gauge your margin position. These tools help you to see the allowance affect of positions and of trades before you enter orders ; and set up margin alerts that help you keep tabs on margin when you are trading and can besides be monitored on mobile devices .
And now I ‘d like to pass the host duties over to my colleague Cynthia Tomain, who will demonstrate how to monitor your margin in Trader Workstation .

Preview Order / Check Margin

The TWS Check Margin feature of speech isolates the margin impact of the proposed order and besides displays the fresh gross profit necessity on the assumption the order is executed. Key allowance balances including the Initial and Maintenance Requirements are reported as is the Equity With Loan Value .

  • In Mosaic use the Advanced button in the Order Entry window then select Check Margin.
  • In Classic TWS right click on the order row and select Check Margin from the drop-down menu. Also available in WebTrader.

Understanding IB Margin

  • Margin Impact for Option Combinations can be viewed before you submit the a combination order in the Options Strategy Builder, Probability Lab and Option Strategy Lab. The Margin Impact field displays in the Order Entry panel and updates when you modify any legs of the combination order.

Understanding IB Margin

Account Window

The Account window displays cardinal bill information and allows you to monitor the market value of your report, gross profit requirements, cash balances and stream status information. This page updates every 3 minutes throughout the deal day and immediately after each transaction .
Understanding IB Margin

Real-time Balances

Shows your account balances for the securities segment, commodities segment and for the history in full .

  • Net Liquidation Value – the total of all assets (position value and cash deposited with IB) marked to market – the amount of cash you would get by liquidating all positions, now.
  • Equity with Loan Value – your Collateral – the cash balance combined with position market value. Note: Option market value is not used for the purpose of borrowing funds.

Margin Requirements

All accounts are checked throughout the day to be certain certain margin thresholds are met, arsenic well as after each murder or cash transaction posted .
It’s important to note that the calculation of a margin necessity does not imply that the report is borrowing funds, employing leverage or incurring interest charges. IB will entirely generate a margin loan in the event that the account does not have sufficient settled funds to support the purchase of extra securities or holding of existing securities. In situations where there is no allowance lend, the report of a margin prerequisite on the deal platform is intended for monitoring the account ‘s fiscal capacity to sustain a margin lend .
The margin Requirements section provides real-time gross profit requirements based on your entire portfolio .

  • Current Initial and Maintenance Margin, plus Overnight requirements (Reg T 50% overnight, Cash settled contracts 100% overnight)
  • Look Ahead margin shows the change in margin values based on the next period change (End of trading session, start of trading session)
  • Post-Expiry Margin @ Open (predicted) & Post-Excess (predicted) provides projected “at expiration” values based on the soon-to-expire contracts in your portfolio.

    These fields display values at expiration and are highlighted in red. All other times the value is “0”. The projected values in these fields include the anticipated account value including the expiring contract. To see just the projected margin and excess liquidity values for the expiring contract, double click the entry in the Account window.

Understanding IB Margin

Try Portfolio Margin

Portfolio Margin calculations are complex, specific to your account holdings – so if you are curious to see if Portfolio Margin can benefit you – use the TRY PM button in the TWS Account window for your current portfolio or try our TWS Portfolio Margin Demo to understand the impact of Portfolio Margin under different scenarios .
Read more about Portfolio Margining .

Available for Trading

  • Available Funds – (Equity with Loan Value less Initial margin) lets you know if funds are available to put on a new trade.
  • Excess Liquidity – (Equity with Loan Value less Maintenance margin) Lets you know if you are approaching liquidations
  • Buying Power – value of securities you can purchase without depositing additional funds. In cash accounts this is the settled cash. In a margin account, buying power is increased through the use of leverage using cash and the value of held stock as collateral. The amount of leverage depends upon whether you have a Reg. T Margin or Portfolio Margin account. Active traders can take advantage of reduced intraday margin for securities – generally 25% of the long stock value. But keep in mind this requirement reverts to the Reg T 50% of stock value to hold overnight.
  • Special Memorandum Account (SMA) represents neither equity nor cash but rather a line of credit created when the market value of securities held in a Reg. T margin account increase in value. Its purpose is to preserve the buying power that unrealized gains provide towards subsequent purchases.

    Transactions which serve to increase SMA include cash deposits, interest income or dividends received on a dollar for dollar basis – or when you sell a marginable security 50% of the net proceeds. For example $2,000 increase in securities market value would create SMA of $1,000 (at 50% margin rate).

    SMA must remain positive or positions are subject to liquidation.

    Please refer to the IB Knowledge Base for more information on what is SMA and how does it work?

  • Day Trades left – US securities regulations limit the amount of trading that can be done in accounts with less than $25,000 in equity. While Pattern Day Trading (PDT) is not technically a margin issue, it can cause an account to go into violation. (Note that the day trading rules only apply to securities positions and not commodity futures, options on futures or spot forex transactions.)

A day trade is when a security position is open and closed in the same day. A trader who executes more than 4 day trades in a 5 sidereal day period exhibits a ‘pattern ‘ of day trading and is thereafter topic to the PDT restrictions .
If an account has less than $ 25,000 in equity it is limited to 3 day trades within a 5 day period. If the score goes over this limit it is prevented from opening any new positions for 90 days. The IB system is programmed to protect the accounts that might “ potentially ” be flagged as day trade accounts by not allowing the 4th open transaction within 5 days if the account has less than $ 25,000 .
margin accounts with balances greater than $ 25,000 have no restriction on the number of day trades placed. But trades executed when the account is above the 25K level can hush cause a limitation should the net Liquidation fall below that tied subjecting those accounts to the 90 day trade restriction .
The restrictions can be lifted by increasing the equity in the report or following the handout procedure described in the Day Trading FAQ section of the Margin pages on our web site .
note that an option exercise or grant will count towards day trading activeness as if the underlie had been traded directly .


The Portfolio incision displays all your positions ( besides available in TWS on the Portfolio pill ). This section besides allows you to see the estimate margin for each position and provides a last to Liquidate feature ( right cluck ) to for you to specify the positions that you would prefer IB liquidate final in the event of a margin deficit. While IB will attempt on a best efforts basis to honor those requests, account positions and marketplace conditions may make doing sol impractical. IB therefore reserves the good to liquidate in the sequence deemed most optimum .
correct Click on each position and Show Margin Impact to assess the effect close that position would have on your allowance requirements .
Understanding IB Margin If you find yourself in a position where you’re about to see place extermination, you can quickly close positions from the Account Window. Right-click on a position in the Portfolio section, blue-ribbon Tradeand stipulate :

  • Close Position – Creates the closing order which can be transmitted form either th Mosaic or the Classic Portfolio tab.e out the position.
  • Close All Positions – will close out ALL positions in your portfolio.
  • Close Portion of Positions – the percentage you enter will be applied to ALL of your positions

Margin Warnings

gross profit requirements are computed in real-time and if there ‘s a lack IB will automatically liquidate positions when your report falls below the minimum care margin necessity. To minimize this scenario, we provide a series of pop fly warn messages and color-coding in the TWS Account Window to let you know that you are approaching a allowance lack .
The popup warnings are color-coded as a presentment to you to take legal action such as entering margin-reducing trades to avoid liquidations. The Account screen conveys the stick to data at a glance :
IB will generate a message when the margin shock absorber in an account reaches 5 % and a margin lack is consequently approaching .
Understanding IB Margin

  • Yellow: Your cushion is at 5%. THIS is when you should take steps to prevent liquidation.
  • Orange: Your cushion is zero you have a short time to enter margin reducing trades before IB begins to liquidate positions to meet margin requirements.
  • Red: Your margin cushion is depleted and IB begins to liquidate positions to bring your margin back to an acceptable level.


In addition to the pre-set warnings that IB provides, you can besides create your own margin alerts based on the state of your margin cushion. The alert when triggered, can generate an electronic mail or text message sent to your smart telephone, or evening submit a margin-reducing trade .
Understanding IB Margin

Option Exercise

While the purchase of an choice generally requires no margin since the status is paid in entire, once exercised the score holder is obligated to either pay for or finance the ensuing stock stead. Just prior to termination IB will simulate the effect of practice or appointment for each expiring position to determine whether the account, post-expiration, is projected to be margin compliant. IB may liquidate positions in the account to resolve the plan allowance lack for Accounts which do not have sufficient equity on hired hand prior to exercise .
Risks of assignment
termination Related Liquidations
Use the Option Exercise window to deliver instructions contrary to the clearinghouse automatic pistol action for options. This includes instructions not to exercise options that would normally be exercised mechanically for any stock option 0.01 or more in-the-money. If the resulting stock position causes a margin deficit, your account would become submit to liquidation .
Open the Option Exercise windowpane from the Account menu ( authoritative TWS toolbar Trade menu ). The window displays actionable long positions at the circus tent, and non-actionable Short positions at the penetrate .
Understanding IB Margin Use the Scheduled Action field to set up the teaching to either exercise or lapse the abridge. ( Click on an option and the Details side cable car opens to show all positions you have for the implicit in. )

  • Exercise – select to exercise your entire position in that contract.
  • Partial – lets you identify a portion of the position to exercise or lapse.
  • Lapse – only available on the last trade date.

Your direction is displayed like an order quarrel. Click “ T ” to transmit the instruction, or properly click to Discard without submitting .
Note : future Options ( FOP ) exercises must be submitted via world wide web ticket in Account Management. The ticket should include the words “ Option Exercise Request ” in the subject channel and all pertinent details including option symbol, account number and accurate measure to be exercised .

Account Management Reports

Reports in Account Management can easily be accessed from the TWS Account menu .
Understanding IB Margin

Account Info in WebTrader and mobileTWS

Of naturally, our early trade platforms, WebTrader and mobileTWS, besides show you your bill data, including your margin requirements. Let ‘s go bet on to our slides for a minute to see precisely where you can find your account data in those platforms .


In WebTrader, our browser-based trade platform, your account information is easy to find. After you log into WebTrader, plainly click the Account pill. There you will see several sections, the most authoritative ones being Balances and margin Requirements. All of the important values, including your initial and care margin, overindulgence liquidity and net liquidation prize, that you want to monitor are in those two sections .


On mobileTWS for your phone, touch Account on the independent menu. You ‘ll see that the Account information on mobileTWS is divided into several sections, including Balances, margin and Funds. All of the significant values, including your initial and alimony margin, excess liquid and final liquidation value, that you want to monitor are in those sections. Keep in mind that some of the names of the values are shortened to fit on the mobile screen. For example, Current Excess Liquidity is shorted to Current Excess. You plainly touch one of the buttons at the bottom of the sieve to view each section .
On mobileTWS for an iPad or Android pad, tap the Account agile access push button. Your account information is divided into sections barely like on mobileTWS for your phone .

Frequently Asked Questions

How can I tell if I am borrowing funds from IB?

If the aggregate cash libra in an account is negative, then funds are being borrowed and the loanword is national to interest charges .
A loan may distillery exist, however, even if the aggregate cash balance is positive, as a result of symmetry web or time differences. The most common examples of this include :

  • Long vs. Short Currency Balances – accounts holders may borrow cash denominated in one currency if it can be secured by a credit balance in another. As each currency is subject to a unique funding and reinvestment arrangement, the short balance would be subject to financing costs based upon its benchmark rate and tier. This cost may be offset by any interest earned on the long balance based upon its benchmark rate and tier.
  • Gross Balances by Segment – IB’s Integrated Investment Account contains multiple segments, each of which holds positions and collateral which, for regulatory and customer protection purposes, may not be commingled. This separation does not allow for netting of balances across segments and a credit in one segment may therefore not offset a debit in another. Take, for example, an IB LLC account holding both securities and commodities positions with the securities segment maintaining a debit cash balance of USD 3,000 and the commodities segment a credit cash balance of USD 8,000. While the account holds an overall net credit balance of USD 5,000, the short balance would be subject to an interest charge which may be partially offset by any interest earned on the long balance.
  • Short Sales – a short sale is a margin transaction in which the account holder is borrowing stock rather than cash. While the proceeds from the short sale are credited to the cash balance of the account, these funds must be posted with the lender of the shares as collateral to secure their return. As a result, and in recognition of the fact that the loan transaction is subject to its own financing terms, the cash collateralizing the loan is excluded for the purpose of determining whether a margin loan exists.
  • Unsettled Funds – borrowings are determined based upon settled funds and the timeframe by which payment is due or received for a given transaction is product specific (e.g., stocks generally settle in three business days, spot currencies two and derivatives one). For statement and trading platform purposes, cash balances are reported on a trade date rather than settlement date basis, as if settlement has completed.

    As a result, an account reporting a credit cash balance may, in fact, still be carrying a margin loan if that balance includes proceeds from the sale of stock purchased with borrowed funds awaiting settlement. Similarly, an account may report a trade date based debit balance, but not yet incurring a margin loan and interest charges, as the trade has not yet settled.

    For additional information about interest calculations, refer to the Knowledge Base article How Interest is Calculated.

I am not borrowing money so why do I have margin requirements?

The calculation of a margin necessity does not imply that the history is borrowing funds. The report of allowance requirements is used for monitoring the fiscal capability of the bill to sustain a margin loanword. IB will only generate a allowance loan in the event that the account does not have sufficient settled funds to support the purchase of extra securities or holding of existing securities .

What can cause my positions to be liquidated in a Reg T Margin account?

Anything that places your explanation in a margin deficit :

  • Your Margin Cushion (Excess Liquidity) is equal to or less than zero.
  • Your SMA balance is less than zero at the end of the trading day.
  • Your Securities Gross Position Value <= 50 * (Net Liquidation Value - Futures Options Value).
  • Your Total Settlement Value of All Unsettled FX Trades <= 250 * (Net Liquidation Value).
  • An expired USD option position results in an automatic exercise and the resulting stock position causes a margin deficit in your account.
  • Your account doesn’t have enough equity to receive or deliver post-option expiration positions.

Risks of appointment
termination Related Liquidations

What can cause my positions to be liquidated in a Portfolio Margin account?

In a hedge Portfolio margin report you need to be mindful of the Expiration Related Liquidations .
Portfolio Margin requirements may be lower than the Reg T margin for hedge accounts using risk based methodology. But you must maintain at least a $100,000 balance equivalent in your account.
If your explanation is enabled for Portfolio Margining, and dips below $ 100,000 minimum symmetry necessity, your explanation will revert to Reg T requirements which generally affords less leverage than does Portfolio Margining, so a downgrade may lead to the automatic elimination of positions to comply with Reg T fixed percentages.You will be limited to entering trades which serve entirely to reduce the margin prerequisite or to close positions until :

  • The equity increases to above 100,000; or
  • The account holder requests a downgrade to Reg T style margining on the Account Type page in Account Management.

What is expiration exposure?

exhalation exposure refers to the overall exposure to options positions that will be exercised or assigned ( and are already in the money ), equally well as positions that may be exercise or assigned based on a share distance from the hit price. If the score does n’t have enough equity to receive or deliver the resulting post-expiration positions, then IB will liquidate the positions in partially or in whole .
This basically means that IB will prohibit the exercise of equity options and/or liquidate short option positions if the effect of the exercise or assignment would be to place the account in a margin deficit.
While the purchase of an choice generally requires no margin since the position is paid in full, once exercised the report holder is obligated to either pay for the ensuing long stock position in full moon or finance the long or abruptly stock certificate position. Accounts without sufficient equity on hand anterior to exercise would introduce undue risk if an adverse price change in the underlie occurs upon delivery .
To protect against these scenarios as termination nears, IB will evaluate the photograph of each account assuming stock delivery. If the exposure is deemed excessive, IB will :

  • Liquidate options prior to expiration; or
  • Alow the options to lapse; and/or
  • Allow delivery and then liquidate the underlyin. In addition, the account may be restricted from opening new positions to prevent an increase in exposure.

Account holders may monitor this exhalation related margin exposure in the TWS Account Window. The plan margin excess will be displayed as Post-Expiry Margin which, if minus and highlighted in crimson, indicates that your account may be subject to forced place liquidations. This exposure calculation is performed three days anterior to the following passing and is updated approximately every 15 minutes .

What happens if I’m assigned stock at expiration, but my account doesn’t have the funds necessary to satisfy the margin requirement? Expiration related Liquidations (IBKB Article 1767)

If an exhale USD option position results in an automatic exert ( the Options Clearing Corporation will automatically exercise any stock option which expired 0.01 or more in-the-money ), and the resulting lineage side causes a gross profit deficit in your account, your account would become submit to liquidation .
Given that the OCC processes the exercise and assignment after the exhalation Friday close, liquidations in USD equities normally occur shortly after the capable of unconstipated trading hours ( 09:30 EST ) on Monday or the following deal day .
You should be aware that any positions could be liquidated as a result of your account being in margin violation—the elimination is not confined to alone the shares that resulted from the choice position. For exercise, if your account holds currency, futures, future options positions, or any non-USD positions, such products may begin trading prior to Monday dawn and, as such, liquidation of any of these positions could occur in order to meet the allowance deficit that resulted from an options exercise .

Are there any special margin risks related to offsets between options and futures?

Yes. If you are hedging or offsetting the risk of futures contracts with choice contracts, we encourage you to pay particular attention to a potential scenario whereby a change in the fundamental price may subject your explanation to a forced elimination evening if your report remains in margin conformity. This scenario is driven by a cardinal dispute in which gains and losses are recognized in futures contracts vs. options contracts coupled with IB ‘s necessity that the commodity section of one ‘s explanation maintain a positive cash balance at all times .

What other situations could cause position liquidation?

There ‘s a foliate on our web site that lists futures contracts that are settled by actual physical manner of speaking of the underlie commodity, and IB customers may not make or receive pitch of the underlie commodity .
To avoid deliveries of expiring futures contracts angstrom well as those resulting from futures options contracts, customers must roll advancing or close out positions prior to the Start of the Close-Out Period. If a position exists at the Start of the Close-Out Period, the report becomes subject to an IB-generated extermination trade wind. The elimination craft will occur at some bespeak between the Start of the Close-Out Period and the respective Cutoff .
It is the customer ‘s duty to be mindful of the Start of the Close-Out Period. If a customer has not closed out a position in a physical manner of speaking futures shrink by that time, IB may, without extra anterior presentment, liquidate the customer ‘s position in the die futures contract .
note that liquidations will not otherwise affect working orders ; customers must ensure that open orders to close positions are adjusted for the actual real-time military position .
An Account holding broth positions that are full-paid ( i.e. no cash debit ) remains susceptible to elimination if the explanation falls into deficit and the loanword value of the stock is insufficient to cover the debit .

  • This is often the case, for example, when a margin account holds positions subject to 100% margin and minimal or no cash.
  • In the event the account is assessed a fee, such as the monthly minimum activity charge or a market data subscription fee, a negative cash balance would result. IB would not be able to extend loan value against the securities in order to support the debit balance.
  • The account would therefore be subject to liquidation of positions to cover any cash deficit. Note that the value of positions liquidated may exceed the cash required due to minimum order size considerations (e.g., no odd lots).

physically Delivered Futures

For More Information

allowance Pages on the IB Website

TWS Users ‘ Guide
Account Management Users ‘ Guide
Knowledge Base Articles

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