# Margin Call At IB



## Park (Sep 11, 2010)

A few weeks ago, I got a call from IB (Interactive Brokers) informing me that the margin requirement of two of my ETFs was changing to 50%. Since IB has a 50% overnight margin requirement, it was not a significant change.

I came home Thursday evening, and there was IB email. Four of my ETFs, including the two previously mentioned, were being changed to 100% margin requirements effective the start of the trading day on Monday. In other words, these ETFs would no longer have loan value. 

The reason given was "a result of a US regulatory restriction on small market capitalization and / or low liquidity stocks...The affected securities are defined as those non-US securities which do not meet the criteria required to be deemed as having a "Ready Market"."

All four ETFs had shown positive returns. To prevent a margin call on Monday morning, I sold 3 ETFs in a manner designed to minimize capital gains.

What lessons have I learned?

1)Use margin modestly. What defines modestly is in the eye of the beholder.

2)Have a preference for investing in large market cap, high liquidity stocks. This can be a problem for Canadian ETF investors, as Canadian ETFs often do not meet these criteria. Consider their US counterparts, for which this tends to be less of a problem.

3)There may be hidden costs associated with margin lending. Although IB probably has the lowest margin rates of any brokerage, the capital gains tax that I will pay must be added to the cost of the loan.

4)Anyone using margin lending must have a plan to deal with a margin call. One must be able to execute that plan within one trading day.

5)If you use IB, and possibly other Canadian branches of American brokerages, you are exposed to US regulations. I am a Canadian citizen/resident, with no ties to the USA. All four ETFs were Canadian domiciled. I invested through Interactive Brokers Canada. Despite this, I was subject to US regulations. This makes me consider domestic brokerages in a more favorable light.

6)When you use margin lending, it becomes more difficult to leave a brokerage. This is obvious, but I hadn't thought about it, until this occurred. One solution to my problem was to transfer the affected ETFs to a brokerage that had less than a 100% margin requirement for them. However, when you have a margin loan with a brokerage, security transfer becomes problematic.

7)Don't take the security of a margin loan for granted. On an internet discussion board, an options trader stated that one advantage of using options for leverage, over margin lending, was that options were more secure. I now appreciate what he was saying. The market cap and liquidity of these stocks drove the decision to change the margin requirements. But market cap and liquidity tend to be lowest during bear markets. What if this happened during a bear market? If one can ride out a bear market, losses are reversible. But if one gets a margin call during a bear market, the losses may become permanent.


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## james4beach (Nov 15, 2012)

Yes this is that warning I posted yesterday in this thread
http://canadianmoneyforum.com/showthread.php/16208-Margin-warning-from-Interactive-Brokers

Thanks for posting your real example because it is a good message for others to see. Margin rules at the broker can change on very short notice. Risk management when you use margin is very tricky.

Even if a stock is liquid large cap, it's still possible for its marginability to change quickly.

IB does have very cheap margin lending rates but they're also known for their brutal automatic liquidation in case of margin calls. Sounds like that didn't happen to you, but if you had waited a day longer it likely would have.


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## Park (Sep 11, 2010)

Anyone using margin at IB should keep the following in mind. 

http://ibkb.interactivebrokers.com/node/2045

Margin eligibility, of nonUS stocks at IB, appears to be based on the above document. A stock is eligible, if it's part of the FTSE World Index. I found the following about the FTSE World Index:

"The FTSE All-World Index Series is the Large/Mid Cap aggregate of 2,800 stocks from the FTSE Global Equity Index Series. It covers 90-95% of the investable market capitalisation"

A stock can also be included, if certain criteria mentioned in the above link are met. Market cap must be at least $500 million. Median daily trading volume must be at least $500,000 or 100,000 shares. 


When it comes to margin loans, the brokerage is in the driver's seat. Brokerages make it very clear that they can change the rules at any time for any reason with zero notice. You have to trust that the brokerage will treat you well. The best predictor of future behavior is past behavior. My nightmare scenario is a change in margin eligibility during a market downturn, resulting in permanent loss. I've been a good customer for IB; I'm not certain that that's been reciprocated. I'm not certain that I trust IB anymore.

IMO, anyone using margin must be prepared for a 50% market downturn. Since there have been 2 of those in the last 13 years, I would consider 50% a minimum. With that in mind, a market cap of at least $1 billion is needed.

A minimum market cap of $1 billion excludes a lot of Canadian stocks.

My guess is that if one uses a domestic broker, instead of IB, margin eligibility would be much less of a problem.




When it comes to margin loans, the brokerage is in the driver's seat. Brokerages make it very clear that they can change the rules at any time for any reason with zero notice. You have to trust that the brokerage will treat you well. The best predictor of future behavior is past behavior. My nightmare scenario is a change in margin eligibility during a market downturn, resulting in permanent loss. I've been a good customer for IB; I'm not certain that that's been reciprocated. I'm not certain that I trust IB anymore.


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## MrMatt (Dec 21, 2011)

Park said:


> When it comes to margin loans, the brokerage is in the driver's seat. Brokerages make it very clear that they can change the rules at any time for any reason with zero notice. You have to trust that the brokerage will treat you well. The best predictor of future behavior is past behavior. My nightmare scenario is a change in margin eligibility during a market downturn, resulting in permanent loss. I've been a good customer for IB; I'm not certain that that's been reciprocated. I'm not certain that I trust IB anymore.


Just to play devils advocate, IB didn't change the rules, the SEC did.

What do you think the brokerage should do when a margin call happens? Put themselves into non-compliance?


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## Park (Sep 11, 2010)

MrMatt said:


> Just to play devils advocate, IB didn't change the rules, the SEC did.
> 
> What do you think the brokerage should do when a margin call happens? Put themselves into non-compliance?


http://ibkb.interactivebrokers.com/node/2045

Please see the link above. The SEC made this ruling in November 2012. IB sent me an email in September 2013 giving me effectively one day of notice of the change.

If I'd been at TDW, this thread would not exist.


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## james4beach (Nov 15, 2012)

True, there was very little notice.

I hold XFR in my account (not on margin) but it would have been nearly impossible to act on this 'margin call' warning. Luckily I had excess cash in my account but if I didn't, it would have been impossible to transfer in more cash before the Monday deadline with the 3+ days needed for an electronic funds transfer.

IB gave such short notice that peoples' only option would have been to liquidate shares, that's pretty ugly.

For me it's a reminder to not use margin...


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## Park (Sep 11, 2010)

When I phoned IB about this, they said the decision regarding margin changes had been made Sept 3. But the SEC ruling was November 2012. Let's assume that IB Canada is subject to SEC rules. IB Canada decides to comply with an SEC ruling 10 months after it was issued? Something doesn't add up.


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## Islenska (May 4, 2011)

Phoned ActionDirect (Royal Bank) a few years ago-----how do they process a margin call.

First an e-mail, then if no response a letter by snail mail, then sell some securities. It didn't seem like a quick strike.

I always have ~25% of my equity on margin, never go over 30% though.


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## james4beach (Nov 15, 2012)

Large brokers and the bank brokers give more leeway on margin calls.

IB is known for its brutal margin calls and immediate liquidation action. That's part of the deal ... you get incredibly low borrowing rates, far lower than the banks, but you'd better manage your risk perfectly to avoid margin calls with them.


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## Park (Sep 11, 2010)

So IB Canada is subject to SEC rulings? Are Vanguard Canada and iShares.ca also subject to such rulings?


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## james4beach (Nov 15, 2012)

Perhaps IB did this to try and demonstrate (or set up a case) for what they need to "separate" their operations from the US parent company. Remember just shortly before this they sent around that memo announcing a major structural change with IB Canada, to separate it from the parent IB.

http://canadianmoneyforum.com/showthread.php/16154-Interactive-Brokers-Canada-(IB-Canada)


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## Park (Sep 11, 2010)

IB Canada had 10 months notice, and in turn, gave its clients 1 day notice.


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## james4beach (Nov 15, 2012)

They must not want that margin lending business... I don't know who could comfortably keep a margin loan with IB when this kind of thing happens to them


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## Park (Sep 11, 2010)

http://ibkb.interactivebrokers.com/node/2045

From the link above, which lists the criteria for margin eligibility. 

"1. The security is listed on a foreign exchange located within a FTSE World Index recognized country, where the security has been trading on the exchange for at least 90 days;

2. Daily bid, ask and last quotations for the security as provided by the foreign listing exchange are made continuously available to the U.S. broker through an electronic quote system;

3. The median daily trading volume calculated over the preceding 20 business day period of the security on its listing exchange is either at least 100,000 shares or $500,000 (excluding shares purchased by the computing broker);

4. The aggregate unrestricted market capitalization in shares of the security exceed $500 million over each of the preceding 10 business days.

Note: if a security previously meeting the above conditions no longer does so, the broker is provided with a 5 business day window after which time the security will no longer be deemed readily marketable and must be treated as non-marginable."

If market cap goes less than $US500 million in any day in the last 2 weeks or has a median trading volume of less than $US500,000 (or 100,000 shares) in the last 4 weeks, then that stock becomes non-marginable, and the broker has a 5 business day window.

Assume a 50% market decline, with an associated decrease in trading volume. Assume that the Canadian dollar has declined from its present level. A lot of Canadian stocks would become ineligible for margin at IB, and the warning of ineligibility would be swift. You are forced to sell, at exactly the time that you don't want to.

ZCN, BMO's Canadian stock index ETF, has a market cap of $CAN970 million and an average daily trading volume of $CAN811,000. Right now, the $CAN isn't doing badly compared to the $US. But I remember when $1CAN was worth $US0.62. 

XCS is iShares' Canadian small cap ETF. Based on the the $US500 million market cap requirement, 118 of the 220 stocks in XCS are not eligible for margin at IB. With a market decline and/or decline in the $CAN, many of the rest would become ineligible.


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## andrewf (Mar 1, 2010)

Does this mean that IB Canada no longer follows IIROC guidelines for reduced margin? Their site does not seem to be updated to reflect this:

https://www.interactivebrokers.ca/en/index.php?f=marginCA&p=stk


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## james4beach (Nov 15, 2012)

Hey that's a good point. I hold XFR which is on that list of eligible for reduced margin.

Yet IB now says the margin requirement is 100%. That means the loan value went from 70% to 0% in just a couple days... ouch.


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## Park (Sep 11, 2010)

Based on the margin eligibility rules of IB, I'd be reluctant to assume that any Canadian stock/ETF with a market cap of less than $CAN2.0 billion has loan value at IB. This assumes a worse case scenario, where the market declines 60% and the Canadian dollar trades at $US0.62. With appropriate risk management, I think I can prevent a margin call. But risk management when it comes to changes in margin eligiblity is more difficult, especially when you may only have one day notice to deal with it. The only way I can think of dealing with changes in margin eligibility is setting a market cap considerably higher than $US500 million.


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## andrewf (Mar 1, 2010)

Isn't there only one or two Canadian ETFs with AUM of >$2 billion?


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## Park (Sep 11, 2010)

I don't have information on that, but you are probably correct. When it comes to Canadian stock exposure, XIU would be one ($CAN 11.44 billion market cap).

Based on IB Canada giving me one day's notice, I'm not 100% confident that having a minimum market cap of $CAN 2 billion is sufficient risk management.


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## Fain (Oct 11, 2009)

Park said:


> IB Canada had 10 months notice, and in turn, gave its clients 1 day notice.


IB had 10 months notice and so did you. The SEC notified everyone publicly. Your account is a self-directed account. These are one of the dangers of overconcentration. I've been burnt too.


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## Park (Sep 11, 2010)

Fain said:


> IB had 10 months notice and so did you. The SEC notified everyone publicly. Your account is a self-directed account. These are one of the dangers of overconcentration. I've been burnt too.


If IB had 10 months notice, I think that that IB should have given its clients more than 1 day's notice. If you disagree with that, we'll have to agree to disagree.


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## andrewf (Mar 1, 2010)

Is there a list of marginable securities now that they no longer follow the IIROC list?


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## james4beach (Nov 15, 2012)

This weekend I have been seriously contemplating closing down my IB account... the two big reasons would that organizational change (raising questions about access to liquidity) and now this sudden margin call / throwing away the IIROC list may have pushed me over the edge. The trading fees are wonderfully low but I'm not sure it's worth keeping.


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## avrex (Nov 14, 2010)

@james4beach. Are you saying that you consider the solvency risk increasing at IB Canada? 
ie. I'm assuming that you're analyzing the risk versus other financial institutions.

If you outright hold (i.e. not on margin) a security such as XFR, I'm assuming that your position is 'reasonably' secure, in the event of IB failure.


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## Park (Sep 11, 2010)

For Canadian retail investors using margin, I'm not sure that IB, despite its low margin rates, makes sense anymore.


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## james4beach (Nov 15, 2012)

avrex said:


> @james4beach. Are you saying that you consider the solvency risk increasing at IB Canada?
> ie. I'm assuming that you're analyzing the risk versus other financial institutions.
> 
> If you outright hold (i.e. not on margin) a security such as XFR, I'm assuming that your position is 'reasonably' secure, in the event of IB failure.


It has to do with this announcement IB made recently about separating from the US parent. I don't know exactly what to make of it but it sounds to me like they may lose some of the links to the parent
http://canadianmoneyforum.com/showthread.php/16154-Interactive-Brokers-Canada-(IB-Canada)

I'm not worried about my specific position but the sudden margin change without notice was pretty shocking, as are the inconsistencies about the IIROC list. When I add up all of this the brokerage just doesn't look that attractive to me any more


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## james4beach (Nov 15, 2012)

Park said:


> For Canadian retail investors using margin, I'm not sure that IB, despite its low margin rates, makes sense anymore.


I've had my Interactive Brokers account since 2005 ... it's been open for 8 years, until today.

Today I used the online account management function to close the account. Under 'reason' I wrote:



> *On very short notice, some TSX stocks become unmarginable. But these stocks (eg XFR) are still on your own published list of stocks eligible for reduced margin, per IIROC. Confusing and scary. Because I used IB for TSX margin, I can't do this comfortably any more.
> *


I didn't actually get a margin call myself or forced liquidation, because I'm careful with margin management. But this change they made was too sudden and I lost all confidence that I could use IB for my margin-related TSX activities.


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## Fain (Oct 11, 2009)

Park said:


> If IB had 10 months notice, I think that that IB should have given its clients more than 1 day's notice. If you disagree with that, we'll have to agree to disagree.


These are self directed accounts. The Trader should keep on top on changes in law/legislation/regulation etc.


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## Eclectic12 (Oct 20, 2010)

Fain said:


> These are self directed accounts. The Trader should keep on top on changes in law/legislation/regulation etc.


In principle, I agree. 

At the same time, one day notice suggests at best communication issues. Since apparently the same investment that the notice says is not marginable is listed as available for reduced margin - it's a strange situation that suggests more issues (including the possibility that it's a company policy instead of a legal requirement).


Cheers


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## Fain (Oct 11, 2009)

Eclectic12 said:


> In principle, I agree.
> 
> At the same time, one day notice suggests at best communication issues. Since apparently the same investment that the notice says is not marginable is listed as available for reduced margin - it's a strange situation that suggests more issues (including the possibility that it's a company policy instead of a legal requirement).
> 
> ...


I agree with the communication issue. I just have a bit of sympathy for the brokerage side because I used to do margin calls for a bit when I was first starting out in the brokerage industry.

If you give me the exact symbols I can see whether it was company policy or legal/regulatory requirement.

Cheers


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## Eclectic12 (Oct 20, 2010)

Fain said:


> I agree with the communication issue. I just have a bit of sympathy for the brokerage side because I used to do margin calls for a bit when I was first starting out in the brokerage industry.


If the claim was there was notice by the brokerage that the investors were ignoring, then I could be more sympathetic. 

I'm not seeing anyone counter post that "you must have missed the communication" or challenging the time frame. It is probably a small sample size though.




Fain said:


> If you give me the exact symbols I can see whether it was company policy or legal/regulatory requirement.


Not being a customer - I don't have a list at hand but those interested and quoting the process the broker supposedly is using are listing XFR and XCS in particular, where ZCN is assessed to be okay at the moment but potentially at risk in the situation of a drastic drop of the CAD versus the USD.


Cheers


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## andrewf (Mar 1, 2010)

james had a problem with XFR, as far as I know.


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## james4beach (Nov 15, 2012)

Yes XFR was the problem in my account. Mind you, I didn't wait to get a forced liquidation so I don't know if their warning was accurate.

Given that TD Waterhouse allows 50% loan value on XFR (as of today), this tells me it's not a legal requirement but something that IB themselves has imposed.

Either way, I'm gone from IB. I can't deal with a place that gives me one business day notice as my security drops from 70% loan value down to 0%, assuming any of this is even accurate (since it conflicts with the IIROC list on their web site). Either way, I lost trust in IB's handling of margin and other brokers just became more competitive.


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## liquidfinance (Jan 28, 2011)

What was the idea behind XFR? Just to gain from the spread of the margin rate and what xfr paid out?


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## james4beach (Nov 15, 2012)

It was just to park cash, since there's no HISA at IB and as a policy I don't let cash sit around (even though the broker pays some interest for it)

But the IB policy issue - this is not specific to XFR obviously


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## SpendLessEarnMore (Aug 7, 2013)

I just got approved for IB margin account. Haven't funded it yet but now sort of hesitant to trade/invest with IB. I don't plan to go heavy on the margin side but man just 1 day notice is harsh. I will be 12 hour time zone difference away and may be sleeping when the margin calls come in and not have enough time to cover the margin calls.


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## humble_pie (Jun 7, 2009)

SpendLessEarnMore said:


> I just got approved for IB margin account. Haven't funded it yet but now sort of hesitant to trade/invest with IB. I don't plan to go heavy on the margin side but man just 1 day notice is harsh. I will be 12 hour time zone difference away and may be sleeping when the margin calls come in and not have enough time to cover the margin calls.



spendless perhaps you might want to check w IB? i believe the above XFR situation resulted from a special new ranking?

meanwhile it is said that regular margin calls at IB occur with 10 minutes' notice, therefore there is no opportunity for the client to make their accounts good by additional deposit.

it is said that, at 3:50 pm, IB automatically sells enough stock out of all the accounts that will have margin debt that night, with the effect that such accounts have no margin debt. Next day, repeat if necessary. 

it is said that all clients agree to this when opening an account.

it's also said that clients usually get a big shock the first time this happens; but afterwards they grow to like the arrangement. It means they never have to worry about margin calls.

i think that perhaps james4 is fear-mongering on this issue.


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## james4beach (Nov 15, 2012)

Geez, I tell you guys that IB gave me one business days notice and humble_pie calls that fear mongering too. Humble_pie I didn't get a margin call, I got a notice that the margin policies were being dramatically overhauled on Canadian stocks - with one business day notice.

SpendLessEarnMore: the issue that affected me may not necessarily affect you, especially if you are only trading US stocks. The only thing to worry about is how Interactive Brokers could change their _policy_ on you with short notice. You should also worry about whether the information about Canadian margin you read on their web site is accurate. I'm telling you, it's inaccurate. Humble - is that fear mongering too, or do you not understand the problem when a brokerage says one thing in writing and then does another?

The issue that affected me was something specific. Due to IB being an American broker holding foreign (Canadian) stocks it has imposed certain new restrictions described here. Among those restrictions is one that the market cap must be over $500 million for a stock to be eligible for any margin. Apparently ETFs have the same constraints so this probably affects many popular Canadian ETFs like XFR, ZRE, ZDV, ZUT, many others that are under $500 million net asset value.

So that's an issue that affects TSX listed stocks with certain low-volume or low-market cap characteristics. Since I almost exclusively trade on the TSX, this was a big deal for me. Maybe it won't affect you at all.

For me, IB doesn't make sense because many of the securities I'm interested in are not eligible for margin. At other Canadian brokerages, they are eligible for margin. The other brokers like TD Waterhouse are Canadian based and don't have the same restrictions that IB is subject to.


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## SpendLessEarnMore (Aug 7, 2013)

thanks James for that insight. At the moment I only trade TSX listed stocks. I like their low margin interest rate but will have to be more attentive of any news happening with IB than other brokerages I trade with like TD. Because of this I'm hesitant to go margin heavy.


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## humble_pie (Jun 7, 2009)

james4 other people have already remarked on your fear-mongering. That is the word they used. A moderator introduced it. Another member called the fear-mongering "relentless."

i for one don't see any value in publicly pummeling IB over a small margin issue & one wonders why you are doing it. The firm is well established in canada, offers excellent value & services to many clients.

furthermore, you have always said your portfolio is 90% fixed income, only 10% equity. It's somewhat difficult to see how a small number of margin adjustments can make much difference to a slender 10% equity allocation.


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## james4beach (Nov 15, 2012)

It's not a small margin issue. They stopped considering any TSX stock below $500 million market cap / net asset value eligible for margin, which also makes many ETFs (liquid ones too) ineligible for market

And I'm sick and tired of your confidence-mongering, it's getting tiring. It's like you just want to have blind faith without looking at the realities


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## andrewf (Mar 1, 2010)

Has this even been confirmed--have they issued a list of marginable securities?


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## Park (Sep 11, 2010)

humble_pie said:


> james4 other people have already remarked on your fear-mongering. That is the word they used. A moderator introduced it. Another member called the fear-mongering "relentless."
> 
> i for one don't see any value in publicly pummeling IB over a small margin issue & one wonders why you are doing it. The firm is well established in canada, offers excellent value & services to many clients.


As I started this thread, I feel I must respond to this. IB changed the rules on loan value. Any Canadian listed stock or ETF with a market cap of less than $US500 million lost all loan value. Assume a worst case scenario for an ETF investor. There is a 60% market decline in the Canadian stock market. The Canadian dollar goes down to $US0.62. Any Canadian listed ETF with a present market cap of less than $CAN2 billion loses all loan value. How many Canadian listed ETFs have a market cap of greater than $CAN2 billion? As individual stocks tend to be more volatile than stock indices, this is more of an issue for those investing in individual Canadian listed stocks.

The new IB rules limit stocks eligible for margin and make risk management more difficult, compared to other Canadian brokerages. If you consider the above "a small margin issue", we will have to agree to disagree. 


I was given effectively one day notice of this "small margin issue". But it looks like IB was given 10 months notice of this "small margin issue".

If you consider a discrepancy between 1 day and 10 months to be an example of "excellent value and services", we will have to agree to disagree once again. 

The discrepancy between 1 day and 10 months raises questions about IB for any investor using margin. Margin loans are demand loans. The brokerage can demand that the loan be immediately paid back without giving any reason. Under such circumstances, the borrower must trust the lender. The net financial effect on my portfolio of this rule change was that I will have to pay some capital gains tax that I otherwise wouldn't have had to pay. But what if IB changes the rules in the middle of a bear market? That could result in an irreversible loss. I"m not sure that I trust IB anymore.

IB has the lowest margin rates in Canada, and the difference isn't trivial. For that and other reasons, there will be investors who will continue to use IB margin to purchase Canadian listed stocks and ETFs. But such investors should seriously think about what's been written in this thread.


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## humble_pie (Jun 7, 2009)

Park said:


> But what if IB changes the rules in the middle of a bear market?



bear markets are precisely when brokers do change their margin rates.

it's naiive for any investor to expect his broker to maintain margin rates in the face of changing circumstances.

this business about "trusting" the broker's rates as if they're written on a tablet brought down from Sinai is not realistic imho.

park you can go on & on repeating your complaints if you like - message # 43 is already at least the 2nd full monty - but the bottom line in the chuff appears to be nothing more than a capital gains tax on an obscure ETF that you might have to pay. You can easily avoid this by depositing cash to cover the margin deficit, therefore no need to sell the fund.

if you can't raise the cash then what were you doing buying on margin in the first place. Should an investor driven by greed into risk positions that he cannot manage expect sympathy when things do not work out to his precise liking? i don't think so.

in particular, clients who go to IB should know already that IB is a TS kind of broker


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## Park (Sep 11, 2010)

humble_pie said:


> bear markets are precisely when brokers do change their margin rates.
> 
> it's naiive for any investor to expect his broker to maintain margin rates in the face of changing circumstances.
> 
> ...


xx


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## humble_pie (Jun 7, 2009)

absolutely i think it's greedy to take on margin debt when the borrowing party has no capacity to manage or even respect a worst case scenario.

also, park, your first post says you had 2 full business days - 5 calendar days from thursday to monday - to get your act together. If your sole damage was an ill-timed capital gain, why didn't you use that LOC to settle the margin debt? banks always cooperate instantly in such cases. You could have had that line of credit in operation by friday.

in addition, i don't see any feedback in this thread that supports such an outpouring of kvetch about IB. No supporting feedback whatsoever. This broker has been famous since the day it arrived in canada for its hard-as-steel policies. In return they render excellent services at unbelievably low prices. It's a clean exchange. There are plenty of grownup investors who like it.

one more thing. Do stop shouting in bold print. It's childish.


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## andrewf (Mar 1, 2010)

I've asked them if they have a list of marginable securities. I have to wonder whether them splitting off their Canadian operations is an attempt to avoid being subjected to SEC rules like other Canadian brokers.


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## Park (Sep 11, 2010)

humble_pie said:


> also, park, your first post says you had 2 full business days - 5 calendar days from thursday to monday - to get your act together...one more thing. Do stop shouting in bold print. It's childish.


I live on the west coast. I came home Thursday evening, and that's when I saw the email from IB. So I had one business day to act on it. My contrite apology about using Arial Black as the font in my responses. The purpose of changing font was to make it easier for readers to differentiate what you wrote from my responses. The capital gains tax I am going to pay is quite small. I could have used my LOC, but it made more sense to sell.


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## james4beach (Nov 15, 2012)

andrewf: maybe this is precisely why they wanted to split off Canadian operations. Perhaps being subject to this SEC rule is what that is all about


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## andrewf (Mar 1, 2010)

Rather than flipping out and closing my account, I requested clarification. Here is their response:



> Dear [andrewf]
> 
> IB is slowly shifting the carrying structure for IB Canada customers, once the conversion gets done (within a few weeks), we would be able to offer reduced margin for stocks listed on the published IIROC's LSERM list.
> 
> ...


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## Park (Sep 11, 2010)

So IB may be reverting to the margin rules that it formerly had and which other Canadian brokerages use. But there is still the issue of whether I trust IB anymore.


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## andrewf (Mar 1, 2010)

I think they could have done a much better job communicating what is going on.


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## james4beach (Nov 15, 2012)

Can you give examples of what's wrong in the daily statements? That's a big deal if the reports are not accurate.


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## andrewf (Mar 1, 2010)

They email statements? I get email notifications, but I have to log in to account management to view.


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## james4beach (Nov 15, 2012)

andrewf said:


> I've asked them if they have a list of marginable securities. I have to wonder whether them splitting off their Canadian operations is an attempt to avoid being subjected to SEC rules like other Canadian brokers.


Interactive Brokers continued to publish a list of marginable securities. In fact they carried the standard IIROC list on their web site at the time they made the margin call. In other words they posted a list on their web site saying that stocks X, Y, Z are eligible for reduced margin, yet they did a margin call on the same stocks and told customers they would no longer be eligible for margin.

The problem, obviously, was that they weren't following the list they published! They wrote inaccurate/misleading information. It could be that they since aligned their policies to the list they published... I don't know.

That's when I lost confidence in them and closed my account. My account is dead & closed now.


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## Fain (Oct 11, 2009)

james4beach said:


> Interactive Brokers continued to publish a list of marginable securities. In fact they carried the standard IIROC list on their web site at the time they made the margin call. In other words they posted a list on their web site saying that stocks X, Y, Z are eligible for reduced margin, yet they did a margin call on the same stocks and told customers they would no longer be eligible for margin.
> 
> The problem, obviously, was that they weren't following the list they published! They wrote inaccurate/misleading information. It could be that they since aligned their policies to the list they published... I don't know.
> 
> That's when I lost confidence in them and closed my account. My account is dead & closed now.


Which brokerage did you switch to?


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## james4beach (Nov 15, 2012)

I opened an iTrade account and transferred the money there, but it's non-margin. Just a cash settled account.

In addition to iTrade, I also have accounts with TDDI that have been open for a long time. These are my margin accounts.


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