Effective April 12, 2021, Interactive Brokers1 will begin phasing in a new margin requirement intended to identify accounts holding a concentrated position in a stock that has has dropped precipitously from recent highs.
New Methodology
- An alternative stress test will be run, subsequent to the margin calculation currently in place, with the greater of the two becoming the active requirement. Here, each stock and its derivatives will be subject to a stress test that simulates the effect of the underlying stock returning to its highest price level (as measured by its median price in any 5-day period) in the prior year.
- The greatest loss for the stock and its derivatives, resulting from the above scenarios, will be compared to what would otherwise be the aggregate portfolio margin requirement, and the greater of the two will be the margin requirement for the portfolio.
In order to allow traders to adjust the portfolio and/or capital accordingly, the margin increase will be implemented in a series of gradual steps over a 5-day period, beginning after US close on Monday, April 12,2021, and concluding after the US close on Friday, April 16, 2021.
Recommended Actions
As the margin impact is portfolio-dependent, we recommend that you review the impact to the account prior to and throughout implementation and take the necessary steps to remain margin-compliant and avoid becoming subject to forced liquidations.
To evaluate the impact of this proposed change on your margin requirements, please see KB Article 2957: Risk Navigator: Alternative Margin Calculator and utilize the margin mode setting in Risk Navigator, select “Margin 20210419”.
Accounts that are unable to carry a position under this new margin requirement are subject to liquidations to bring the account into margin compliance.
1Euro Pacific Trader is offered by Euro Pacific Securities Inc. (“Euro Pacific Securities”), as an Introducing Broker to Interactive Brokers LLC. Interactive Brokers LLC is the custodian, technology provider, and clearing broker to all transactions executed through Euro Pacific Trader and thus the rates, conditions, and examples shown on this site may be subject to change and differ from what is displayed on Euro Pacific Trader. The rates, conditions, and examples on this site are provided on a best-efforts basis and should not be taken as final.
Euro Pacific Securities will not be held responsible for pricing and conditional discrepancies that may arise in the normal course of offering Euro Pacific Trader. Customers should always review and rely on the conditions that are shown directly on Euro Pacific Trader, and it is the responsibility of all customers to carefully review the conditions of every action before approving execution on Euro Pacific Trader.
Interactive Brokers LLC is a registered Broker-Dealer, Futures Commission Merchant and Forex Dealer Member, regulated by the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), and is a member of the Financial Industry Regulatory Authority (FINRA) and several other self-regulatory organizations. Interactive Brokers LLC does not endorse or recommend any introducing brokers, third-party financial advisors or hedge funds, including Euro Pacific Securities. Interactive Brokers LLC provides execution and clearing services to customers. None of the information contained herein constitutes a recommendation, offer, or solicitation of an offer by Interactive Brokers LLC to buy, sell or hold any security, financial product or instrument or to engage in any specific investment strategy. Interactive Brokers LLC makes no representation, and assumes no liability to the accuracy or completeness of the information provided on this website.
For more information regarding Interactive Brokers, please visit www.interactivebrokers.com.