Understanding Margin Webinar Notes

Overview

IB Real-Time Margining

Margin Models

Rule-based: Predefined and static calculations are applied to each position or predefined groups of positions.

Risk-based: Exchanges consider the maximum one- day risk on all the positions in a complete portfolio, or subportfolio together.

IB Margin Accounts

Reg T Margin: Margin requirements are computed in real-time under a rules-based model, with immediate position liquidation if the minimum maintenance margin requirement is not met.

Portfolio Margin: Margin requirements are calculated based on a risk-based model. Customers must maintain account equity of USD 100,000.


Integrated Investment Account

IB Margin Calculations

IB applies margin calculations to Reg T Margin accounts as follows:

  1. At the time of a trade.
  2. In real time throughout the trading day.
  3. At the end of the trading day.
  4. Overnight.

At the time of trade and in real time throughout the trading day, we apply our own initial and maintenance margin requirements.

At the end of the trading day, IB applies the Regulation T initial margin requirement.


Time of Trade Margin Calculations

When you open a new position, we apply:


Initial Minimum Equity Requirement


IB Initial Margin Calculation


IB Initial Margin Calculation – Securities


IB Initial Margin Calculation – Securities

Initial Margin Calculation

Percentage depends on asset type. For example: IB Initial Margin for a Long Stock Position = (30% * stock value) or $2,000, whichever is greater.

*Our Margin pages list Initial and Maintenance Margins for all IB asset types.


IB Initial Margin Calculation – Commodities


IB Initial Margin Calculation – Commodities

Position Leverage Check


Position Leverage Check


Position Leverage Check

Real-Time Margin Calculations


IB Maintenance Margin Calculation – Securities


Position Leverage Check

IB Maintenance Margin Calculation – Commodities


IB Maintenance Margin Calculation – Commodities

Real-Time Position Leverage Check


Real-Time Position Leverage Check

Real-Time Cash Leverage Check


Real-Time Cash Leverage Check

Decreased Marginability Calculations

For Reg T accounts, IB increases the margin requirement for stock positions exceeding 1% of the published shares outstanding from its default margin requirement up to 100%. At 5% concentration, positions have a 100% margin requirement.


Soft Edge Margining

we calculate Soft Edge Margin (SEM) during the trading day. From the start of the trading day until 15 minutes before the close of the trading day, Soft Edge Margin allows for an account’s margin deficit to be within a specified percentage of the account’s Net Liquidation Value, currently 10%. When SEM ends, the full maintenance requirement must be met. When SEM is not applicable, the account must meet 100% of maintenance margin.

If an account falls below the miniumum maintenance margin, it will not be automatically liquidated until the it falls below the Soft Edge Margin. This allows a customer's account to be in margin violation for a short period of time. Soft Edge Margin is not displayed in Trader Workstation. Once the account falls below SEM however, it is then required to meet full maintenance margin.


SMA and End of Day Margin Calculations


SMA and End of Day Margin Calculations

“today's trades initial margin requirements” = US Reg T Initial Margin requirements


Overnight Margin Calculations

Stocks and futures have additional margin requirements when held overnight. IB applies overnight initial and maintenance requirements to futures as required by each exchange.

Additional Useful Calculations

Determine the Last Stock Price Before the Position is Liquidated


Last Stock Price Before the Position is Liquidated

How Much Stock Do We Liquidate?


Reg T Margin

Margin Reports


Margin Reports

Real-Time Monitoring

The TWS Account Window


TWS Account WIndow

TWS Account WIndow

Margin Warnings

Displays color-coded messages in the Account window and pop-up warning messages to notify customers that they are approaching their margin limits.


Soft Edge Margining

Margin What-Ifs – Order Preview Window


Order Preview Window

Tips and Tricks


Use a Paper Trading Account to Experiment with Margin


Use a Paper Trading Account to Experiment with Margin

Find IB Margin Requirements on Our Web Site


Find IB Margin Requirements on Our Web Site

Use the Trader Dashboard


Use the Trader Dashboard

Use the Trader Dashboard


What-If Margining: The Order Preview Window


Order Preview Window

Liquidate Last Setting in the Account Window


Account Window

Quickly Close a Position from the Account Window


Quickly Close a Position from the Account Window

Set Up Margin Alerts

Set up alerts based on the state of your margin cushion:


Quickly Close a Position from the Account Window

Any symbols displayed are for illustrative purposes only and do not portray a recommendation.

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