How can I change my account type between margin and cash, and what are the implications?

REQUEST DOWNGRADE TO CASH ACCOUNT

Changing your account type between margin and cash can have significant implications for your trading capabilities. Here is a comprehensive guide on how to make these changes and what to expect:

1. Changing from Margin to Cash Account:

Use the button above or follow the below procedure to request a downgrade from a Margin account to a Cash account type:

1. Log in to Client Portal
2. Click the User menu (head and shoulders icon in the top right corner) followed by Settings
3. Under Account Settings find the Account Configuration section
4. Click Account Type to request a downgrade to Cash
5. Click on Continue and complete the steps presented.

Important considerations:

• Your account will be reviewed for possible post-downgrade violations before the request is processed.
• You may need to make adjustments to your account, such as:
  • Liquidating positions or depositing more cash to address negative excess liquidity
  • Closing positions not allowed in a Cash account (e.g., open short positions)
  • Purchasing currency in FOREX markets or liquidating positions in that currency to address negative currency violations
• The downgrade is processed overnight and will not override any 5 day Pattern Day Trader (PDT) restriction.
• Downgrading to a cash account can help avoid unintended margin usage and associated interest charges.
• Some trading permissions (e.g., options level 4) require a margin account and will be lost upon downgrade.

2. Changing from Cash to Margin Account:

To upgrade from a cash account to a margin account:

1. Log in to Client Portal
2. Click the User menu (head and shoulders icon) in the top right corner, then select Settings
3. Under Account Settings, find the Account Configuration section
4. Click on Account Type and follow the prompts to request an upgrade from Cash to Margin
5. Complete the steps presented to submit your request

Important considerations:

• Your request will be reviewed by the Risk and Compliance teams.
• The approval process typically takes 24 to 48 hours.
• You may need to complete a questionnaire for margin account eligibility.

3. Key Differences Between Cash and Margin Accounts:

Cash Accounts:

• Purchase assets based on the settled cash value in your account
• Cannot borrow money from Interactive Brokers to purchase assets
• No interest charges for lack of funds
• Lower risk as you can only use the money you have deposited
• Not subject to Pattern Day Trading (PDT) restrictions

Margin Accounts:

• Can purchase assets based on the unsettled cash value in your account
• Allow borrowing money from Interactive Brokers to purchase assets
• May incur interest if there is insufficient balance in a specific currency to cover trades in that currency
• Offers more flexibility in trading
• Comes with higher risk due to potential debt
• Subject to Pattern Day Trading (PDT) restrictions

4. Waiting Period for Account Type Changes:

• After downgrading from Margin to Cash, market regulations require a waiting period of 30 days before your account becomes eligible for Margin again.
• You can initiate a request to upgrade for margin capabilities after this 30-day period has passed.

Remember to carefully consider your trading needs and risk tolerance before changing your account type, as it can significantly impact your trading capabilities and potential risks.

Additional Information

• Can I change my free trial account from a Margin type account to a Cash type account?
• How do I downgrade from a Portfolio Margin type account to a Reg T Margin type account?