Concentrated Margin is an Interactive Brokers (IBKR) specific House margin calculation subject to frequent change that affects accounts with highly concentrated positions. This policy can significantly impact your Initial and Maintenance Margin requirements, as well as your Available Funds for new orders. Here's a detailed explanation of how Concentrated Margin works and its effects on your account:
Calculation and Application:
- IBKR calculates the aggregate projected loss of the top concentrated stocks and their derivatives.
- This calculation is compared to the standard margin requirement (either Reg T or Portfolio Margin).
- The greater of these two calculations becomes the margin requirement for all open positions in your account.
Concentrated Position Determination:
- A concentrated position is determined by the ratio of position size to outstanding shares of a stock. Concentrated positions can have a minimum of a 30% or even higher IBKR house margin applied to them.
Impact on Margin Requirements:
- Concentrated Margin can result in higher Initial and Maintenance Margin requirements because concentrated positions pose a higher risk to the account. A large adverse move in a concentrated position could have a disproportionate impact on the account's value.
Managing Concentrated Margin:
- To reduce the impact of Concentrated Margin on your account, you can:
- Reduce or close concentrated positions.
- Add positions to diversify your account.
Monitoring Concentrated Margin:
- You can monitor the impact of Concentrated Margin on your account using:
- Daily Margin Report in Account Management/Client Portal: Look for the "Equity Concentration (Initial and Maintenance)" section.
- Check margin/preview function: Use this to see the real-time impact of potential trades on your margin requirements.
Additional Information
- How concentrated positions are determined in the IBKR website.
- Check Margin Pre-Order in the user guide.