Margin increase for US securities with market cap < $500M

Overview:

Please be advised that we have increased the initial margin rates to 100% on low capitalization stocks (currently defined as companies with less than $250 million in market capitalization). The maintenance margin increases will occur in stages starting with an increase to 50% beginning after the EU market close on Friday, January 25th, 2013 and will be implemented as follows:…

Money Market Fund shares are non-marginable and have a 100% requirement for the first 30 Days. Money Market Funds held less than 30 days can be used to meet margin requirement, but they cannot be used to extend credit. To comply with this requirement, IBKR will reject a Money Market Fund Buy order that would result in a negative cash balance since you can't buy Money Market Fund shares on credit. Once a Money Market Fund position has been established and is held past 30 days, IBKR does not restrict purchases of other securities if those purchases result in a negative cash balance. The purchases of other securities will be allowed, but IBKR will then liquidate part of the Money Market Fund shares to cover the negative cash balance. This is done once a day, one minute before the deadline for submitting mutual fund orders. Once the Money Market Fund shares are held more than 30 days they will have a 5% margin requirement. …

IBKR does not directly use stock price as factor for determining margin requirements but does consider at a number of other factors including market capitalization which is a function of the stock price. Here, any security with a market capitalization of USD 250 million or below will be subject to a 100% margin requirement. In addition, we do not extend margin loans on securities based upon their listing, including Pink Sheet, OTC Bulletin Board and the Venture exchange…

SMA, or Special Memorandum Account, represents a line of credit that is created when the market value of securities in a Reg. T margin account increase in value. While an increase in market value over original cost creates SMA, a subsequent decline in market value has no effect on SMA. SMA will only decline if used to purchase securities or withdraw cash, and the only restriction with respect to its use is that the additional purchases or withdrawals do not bring the account below the maintenance margin requirement. SMA will also increase on a dollar for dollar basis in the event of cash deposits or dividends…