Margin Increase for US Securities with Market Cap < $500M

Overview: 

The following securities will have their margin requirements raised to 100% over a 2 week period, as a result of market capitalization being less than $250M.

Friday November 2th: Initial Margin - 100%

Monday November 5th: Maintenance Margin - 50%

Monday November 12th: Maintenance Margin - 75%

Friday Novemeber 16th: Mainteance Margin - 100%

Symbol Name
UNIS UNILIFE CORP
BRD BRIGUS GOLD CORP
SCMR SYCAMORE NETWORKS INC.
KITD KIT DIGITAL INC
CHTP CHELSEA THERAPEUTICS 
CERE CERES INC
DM DOLAN CO/THE
APPY ASPENBIO PHARMA INC
LLNW LIMELIGHT NETWORKS INC
VOXX VOXX INTERNATIONAL CORP
BPAX BIOSANTE PHARMACEUTICALS INC
TRGT TARGACEPT INC
FORM FORMFACTOR INC
MEIP MEI PHARMA INC
PCO PENDRELL CORPORATION
PLM POLYMET MINING CORP
JAG JAGUAR MINING INC.
IMMU IMMUNOMEDICS INC
IMN IMATION CORP
ABFS ARKANSAS BEST CORP
OPY OPPENHEIMER HOLDINGS-CL A
HSII HEIDRICK & STRUGGLES INTL
ALXA ALEXZA PHARMACEUTICALS INC
NYMX NYMOX PHARMACEUTICAL CORP
VLCCF KNIGHTSBRIDGE TANKERS LTD
AFFX AFFYMETRIX INC
INTX INTERSECTIONS INC
USLM UNITED STATES LIME & MINERAL
IDT IDT CORP-CLASS B
PRSS CAFEPRESS INC
YOD YOU ON DEMAND HOLDINGS INC
NCQ NOVACOPPER INC
IQNT NEUTRAL TANDEM INC
AXAS ABRAXAS PETROLEUM CORP
PMFG PMFG INC
BODY BODY CENTRAL CORP
RSH RADIOSHACK CORP
AMBA AMBARELLA INC
CBOU CARIBOU COFFEE CO INC
CEDC CENTRAL EURO DISTRIBUTION CP
IVAN IVANHOE ENERGY INC
WG WILLBROS GROUP INC
ELON ECHELON CORP
GSOL GLOBAL SOURCES LTD
REE RARE ELEMENT RESOURCES LTD
ART ARTIO GLOBAL INVESTORS INC
HGG HHGREGG INC
RLJE RLJ ENTERTAINMENT INC
AMSC AMERICAN SUPERCONDUCTOR CORP
CACB CASCADE BANCORP
ERB ERBA DIAGNOSTICS INC
NAFC NASH FINCH CO
MXWL MAXWELL TECHNOLOGIES INC
TNP TSAKOS ENERGY NAVIGATION LTD
ALTI ALTAIR NANOTECHNOLOGIES INC
ARQL ARQULE INC
GPRE GREEN PLAINS RENEWABLE ENERG
SYNC SYNACOR INC
IPHI INPHI CORP
QKLS QKL STORES INC
FOE FERRO CORP
THLD THRESHOLD PHARMACEUTICALS
ZAZA ZAZA ENERGY CORP
ALCS ALCO STORES INC
JRCC JAMES RIVER COAL CO
GERN GERON CORP
KERX KERYX BIOPHARMACEUTICALS
KYAK KAYAK SOFTWARE CORP
XRA EXETER RESOURCE CORPORATION
XOXO XO GROUP INC
SFBC SOUND FINANCIAL BANCORP INC
GNE GENIE ENERGY LTD-B
XRTX XYRATEX LTD
COHU COHU INC
FRO FRONTLINE LTD
YELP YELP INC
CRNT CERAGON NETWORKS LTD
CNDO CORONADO BIOSCIENCES INC
ATTU ATTUNITY LTD
EGI ENTREE GOLD INC.
USMO USA MOBILITY INC
ACW ACCURIDE CORP
LPTN LPATH INC-CLASS A
BBX BBX CAPITAL CORP-A
FSBW FS BANCORP INC
BIOD BIODEL INC
ADNC AUDIENCE INC
KFS KINGSWAY FINANCIAL SERVICES
ATSG AIR TRANSPORT SERVICES GROUP
STXS STEREOTAXIS INC
GST GASTAR EXPLORATION LTD
HZNP HORIZON PHARMA INC
ZOLT ZOLTEK COMPANIES INC
AERL ASIA ENTERTAINMENT & RESOURC
MCBK MADISON COUNTY FINANCIAL INC
STRI STR HOLDINGS INC
JMI JAVELIN MORTGAGE INVESTMENT
AVID AVID TECHNOLOGY INC
OCZ OCZ TECHNOLOGY GROUP INC
HDY HYPERDYNAMICS CORP
AXU ALEXCO RESOURCE CORP
AVHI AV HOMES INC
RBCN RUBICON TECHNOLOGY INC
KCAP KCAP FINANCIAL INC
ALC ASSISTED LIVING CONCEPTS I-A
AMRS AMYRIS INC
CARB CARBONITE INC
TNK TEEKAY TANKERS LTD-CLASS A
OSG OVERSEAS SHIPHOLDING GROUP
BLMT BSB BANCORP INC/MA
LPR LONE PINE RESOURCES INC
KEM KEMET CORP
ZLTQ ZELTIQ AESTHETICS INC
THQI THQ INC
PACB PACIFIC BIOSCIENCES OF CALIF
GNK GENCO SHIPPING & TRADING LTD
SIGM SIGMA DESIGNS INC
CECO CAREER EDUCATION CORP
CEMI CHEMBIO DIAGNOSTICS INC
CRFN CRESCENT FINANCIAL BANCSHARE
AUMN GOLDEN MINERALS CO
TWIN TWIN DISC INC
ATNY API TECHNOLOGIES CORP
XOMA XOMA CORP
RNDY ROUNDY'S INC
SIGA SIGA TECHNOLOGIES INC
APAGF APCO OIL AND GAS INTL INC
XIDE EXIDE TECHNOLOGIES
DGII DIGI INTERNATIONAL INC
TROV TROVAGENE INC
SWSH SWISHER HYGIENE INC
EGLE EAGLE BULK SHIPPING INC
STAA STAAR SURGICAL CO
TSEM TOWER SEMICONDUCTOR LTD
THM INTL TOWER HILL MINES LTD
BIOF BIOFUEL ENERGY CORP
MEET MEETME INC
ACRE ARES COMMERCIAL REAL ESTATE
LTS LADENBURG THALMANN FINANCIAL
UPIP UNWIRED PLANET INC

Excess Margin Securities

The term "excess margin securities" refers to securities held in a customer's margin account that have not been completely paid for or are being pledged by the customer as collateral to support the purchase of other securities on margin and whose market value exceeds 140% of the customer's margin balance.

Example:

A customer whose account equity consists solely of a cash balance of USD 10,000 on Day 1 purchases 400 shares of stock ABC at USD 50 per share on Day 2.

Account Balance Day 1 Day 2
Cash $10,000 ($10,000)
Stock $0 $20,000 
Total $10,000 $10,000 

On Day 2, the customer's excess margin securities total USD 6,000. This is calculated by subtracting 140% of the margin debit or loan balance from the market value of the stock position ($6,000 = $20,000 - {1.4 * $10,000}).

The term is relevant from a regulatory perspective as the SEC requires that U.S. broker dealers segregate and maintain in a good control location (e.g., DTC or bank) all customer securities which are deemed excess margin securities.  Such securities cannot be pledged or loaned to finance the activities of the firm or other customers.  The portion of the securities classified as margin securities ($20,000 - $6,000 or $14,000 in this example) are subject to a lien and may be pledged or loaned by the broker to assist in financing the loan made to the customer.

Note that securities which were excess margin at the date of acquisition may later be reclassified as margin or fully paid securities based upon the customer's subsequent trade and/or borrowing activity. For example, if the loan value of excess margin securities is subsequently used to acquire additional securities on credit, a portion of securities will then be reclassified as margin securities and subject to a lien. If the customer subsequently deposits cash or sells securities in an amount necessary to repay the margin loan, the securities will be reclassified as fully paid and are required to be segregated.

See also "fully paid securities".

Overview of IB issued Share CFDs

The following article is intended to provide a general introduction to share-based Contracts for Differences (CFDs) issued by IB.

For Information on IB Index CFDs please see IB Index CFDs - Facts and Q&A.

Topics covered are as follows:

I.    CFD Definition
II.   Comparison Between CFDs and Underlying Shares
III.  Cost and Margin Considerations
IV.  Worked Example
V.   CFD Resources
VI.  Frequently Asked Questions

 

 

I.  Share  CFD Definition

IB CFDs are OTC contracts which deliver the return of the underlying stock, including dividends and corporate actions (read more about CFD corporate actions).

Said differently, it is an agreement between the buyer (you) and IB to exchange the difference in the current value of a share, and its value at a future time. If you hold a long position and the difference is positive, IB pays you. If it is negative, you pay IB. The CFD contract is marked to market daily with gains/losses settled into your account in cash in the form of variation margin.

IB Share CFDs are traded through your margin account, and you can therefore enter long as well as short leveraged positions. The price of the CFD is the price of the exchange-quoted price of the underlying share. In fact, IB CFD quotes are identical to the Smart-routed quotes for shares that you can observe in the Trader Work Station and IB offers Direct Market Access (DMA). Similar to shares, your non-marketable (i.e., limit) orders have the underlying hedge directlty represented on the deep book of those exchanges at which it trades.  This also means that you can place orders to buy the CFD at the underlying bid and sell at the offer.

To compare IB’s transparent CFD model to others available in the market please see our Overview of CFD Market Models.

IB currently offers approximately 2400 Share CFDs covering the principal markets in the US, Europe and Asia.  The constituents of the major indexes listed below are currently available as IB Share CFDs. In many countries IB also offers trading in liquid small cap shares. These are shares with free float adjusted market capitalization of at least USD 250 million and median daily trading value of at least USD 300 thousand.  Please see CFD Product Listings for more detail. More countries will be added in the near future.

United States S&P 500, DJA, Nasdaq 100, S&P 400 (Mid Cap)
United Kingdom FTSE 350 + Liquid Small Cap (incl. IOB)
Germany Dax, MDax, TecDax + Liquid Small Cap
Switzerland Swiss portion of STOXX Europe 600 (48 shares)
France CAC Large Cap, CAC Mid Cap + Liquid Small Cap
Netherlands AEX, AMS Mid Cap + Liquid Small Cap
Belgium BEL 20, BEL Mid Cap + Liquid Small Cap
Spain IBEX 35
Sweden OMX Stockholm 30
Finland OMX Helsinki 25
Denmark OMX Copenhagen 30
Japan Nikkei 225

 

II.   Comparison Between CFDs and Underlying Shares

Depending on your trading objectives and trading style, CFDs offer a number of advantages compared to stocks, but also some disadvantages:
 
BENEFITS of IB CFDs
DRAWBACKS of IB CFDs
No stamp duty or financial transaction tax (UK, France, Belgium)
No ownership rights
Generally lower commission and margin rates than shares
Complex corporate actions may not always be exactly replicable
Tax treaty rates for dividends without need for reclaim
Taxation of gains may differ from shares (please consult your tax advisor)
Exemption from day trading rules
 

III.  Cost and Margin Considerations

IB CFDs can be an even more efficient way to trade the European stock markets than IB’s highly competitive stock offering.

Firstly, IB CFDs have low commissions compared to stocks, and the same low financing spreads:

 EUROPE
 
CFD
STOCK
Commission
GBP
0.05%
GBP 6.00 + 0.05%*
EUR
0.05%
0.10%
Financing**
Benchmark +/-
1.50%
1.50%

*per order + 0.05% of excess over GBP 50,000
**CFD financing on total position value, stock financing on borrowed amount

When you trade more, CFD commissions become even lower, as low as 0.02%. Financing rates are reduced for larger positions, to as low as 0.5%.  Please see CFD Commissions and CFD Financing Rates for more details.

Secondly, CFDs have lower margin requirements than stocks. This is because for CFDs we can apply a risk based margin rather than the regulatory formulas we must apply to stocks:

 
CFD
STOCK
 
All
Standard
Portfolio Margin
Margin Requirement*
10%
25% - 50%
15%

*Typical margin for blue-chips. Standard 25% intraday maintenance margin, 50% overnight.  Portf. Margin shown is maintenance margin (incl. overnight). More volatile issues are subject to higher requirements

Please refer to CFD Margin Requirements for more detail.


IV.  Worked Example

Let’s look at an example. Unilever’s Amsterdam listing has returned 3.2% in the past month (20 trading days to May 14th, 2012) and you believe it will continue to perform well. You want to build a EUR 200,000 exposure and hold it for 5 days. You do 10 trades to build up and 10 trades to unwind. Your direct costs would be as follows:

 
CFD
STOCK
EUR 200,000 Position
 
Standard
Portfolio Margin
Margin Requirement
20,000
100,000
30,000
Commission (round trip)
200.00
400.00
400.00
Interest Expense
41.96
23.35
36.44
Total Direct Cost
241.96
423.55
436.44
Difference
 
75%
80%

Note: Interest expense for CFDs is calculated on the entire contract position, for shares interest is calculated on the borrowed amount. The applicable rates are the same for both shares and CFDs.

 

But let’s assume you only have EUR 20,000 available to fund the margin. If Royal Dutch Shell continues to perform as it has in the past month, your potential profit would compare as follows:  

OPPORTUNITY COST
CFD
STOCK
Available Margin
20,000
20,000
20,000
Total Invested
200,000
40,000
133,333
Return*
1,576.27
312.25
1,050.84
Difference
 
 -80%
 -33%

*past month's (to May 14th, 2012) average daily return over 5 days

 

Please keep in mind that leverage works both ways, and you can potentially lose more with CFDs than with higher margin stocks, including more than your initial investment.

 


V.   CFD Resources

Below are some useful links with more detailed information on IB’s CFD offering:

CFD Product Listings

CFD Commissions

CFD Financing Rates

CFD Margin Requirements

CFD Corporate Actions

CFD Trading Access

The following video tutorials are also available:

How to Place a CFD Trade on the Trader Workstation

How to Request Trading Permissions for IB CFDs


VI.  Frequently Asked Questions

What Stocks are available as CFDs?

Large and Mid-Cap stocks in the US, Western Europe, Nordic and Japan.  Liquid Small Cap stocks are also available in many markets. Please see CFD Product Listings for more detail. More countries will be added in the near future.

 

Do you have CFDs on Stock Indices and commodities?

Yes. Please see IB Index CFDs - Facts and Q&A.

 

How do you determine your Share CFD quotes?

IB CFD quotes are identical to the Smart routed quotes for the underlying share. IB does not widen the spread or hold positions against you. To learn more please go to Overview of CFD Market Models.

 

Can I see my limit orders reflected on the exchange?

Yes. IB offers Direct market Access (DMA) whereby your non-marketable (i.e., limit) orders have the underlying hedge directly represented on the deep book of those exchanges at which it trades. This also means that you can place orders to buy the CFD at the underlying bid and sell at the offer.

 

How do you determine margins for Share CFDs?

IB establishes risk-based margin requirements based on the historical volatility of each underlying share. The minimum margin is 10%. Most IB CFDs are margined at this rate, making CFDs more margin-efficient than trading the underlying share in most cases.  There are however no portfolio off-sets between individual CFD positions or between CFDs and exposures to the underlying share. Very large positions may be subject to additional margin. Please refer to CFD Margin Requirements for more detail.

 

Are short Share CFDs subject to forced buy-in?

Yes. In the event the underlying stock becomes difficult or impossible to borrow, the holder of the short CFD position will become subject to buy-in.

 

How do you handle dividends and corporate actions?

IB will generally reflect the economic effect of the corporate action for CFD holders as if they had been holding the underlying security*. Dividends are reflected as cash adjustments, while other actions may be reflected through either cash or position adjustments, or both. For example, where the corporate action results in a change of the number of shares (e.g. stock-split, reverse stock split), the number of CFDs will be adjusted accordingly. Where the action results in a new entity with listed shares, and IB decides to offer these as CFDs, then new long or short positions will be created in the appropriate amount. For an overview please CFD Corporate Actions.

*Please note that in some cases it may not be possible to accurately adjust the CFD for a complex corporate action such as some mergers. In these cases IB may terminate the CFD prior to the ex-date.

 

Can anyone trade IB CFDs?

All clients can trade IB CFDs, except residents of the USA, Canada, Hong Kong and Australia. There are no exemptions based on investor type to the residency based exclusions. More details are available in CFD Trading Access.

 

What do I need to do to start trading CFDs with IB?

You need to set up trading permission for CFDs in Account Management, and agree to the relevant trading disclosures. IB will then set up a new account segment (identified with your existing account number plus the suffix “F”). Once the set-up is confirmed you can begin to trade. You do not need to fund the F-account separately, funds will be automatically transferred to meet CFD margin requirements from your main account. For detailed instructions please see CFD Trading Access and How to Request Trading Permissions for IB CFDs (video).

 

Are there any market data requirements?

The market data for IB Share CFDs is the market data for the underlying shares. It is therefore necessary to have market data permissions for the relevant exchanges. If you already have set up market data permissions for an exchange for trading the shares, you do not need to do anything. If you want to trade CFDs on an exchange for which you do not currently have market data permissions, you can set up the permissions in the same way as you would if you planned to trade the underlying shares.

 

How are my CFD trades and positions reflected in my statements?

Your CFD positions are held in a separate account segment identified by your primary account number with the suffix “F”. You can choose to view Activity Statements for the F-segment either separately or consolidated with your main account. You can make the choice in the statement window in Account Management.

 

Can I transfer in CFD positions from another broker?

IB will be glad to facilitate the transfer of CFD positions, subject to the agreement of the other broker. As the transfer of CFD positions is more complex than is the case for share positions, we generally require the position to be at least the equivalent of USD 100,000.

 

Are charts available for Share CFDs?

Yes.

 What account protections apply when trading CFDs with IB?

CFDs are contracts with IB UK as your counterparty, and are not traded on a regulated exchange and are not cleared on a central clearinghouse. Since IB UK is the counterparty to your CFD trades, you are exposed to the financial and business risks, including credit risk, associated with dealing with IB UK. Please note however that all client funds are always fully  segregated, including for institutional clients. IB UK is a participant in the UK Financial Services Compensation Scheme ("FSCS"). IB UK is not a member of the U.S. Securities Investor Protection Corporation (“SIPC”).Please refer to the IB UK CFD Risk Disclosure for further detail on risks associated with trading CFDs.

 

In what type of IB accounts can I trade CFDs e.g., Individual, Friends and Family, Institutional, etc.? 

All margin accounts are eligible for CFD trading. Cash or SIPP accounts are not.

 

What are the maximum a positions I can have in a specific CFD?

There is no pre-set limit. Bear in mind however that very large positions may be subject to increased margin requirements. Please refer to CFD Margin Requirements for more detail.

 

Can I trade CFDs over the phone?

No. In exceptional cases we may agree to process closing orders over the phone, but never opening orders.

Twitter (TWTR) IPO

On November 7, 2013 trading in shares of Twitter (NYSE: TWTR) in the secondary market is expected to begin. The IPO price range is projected at $23-$25 with the size of the offering listed at 70.0 million shares.  Relevant information relating to IB's handling of this security is as follows:

- Orders received prior to the start of trading in the secondary market will be held and submitted to the exchange on November 7, 2013.

- Acceptable order types prior to the start of trading include Limit and Limit-On-Open

- Acceptable time in force conditions for orders placed prior to the start of trading include Good-Till-Date and Good-Till-Canceled and Day.  A day order entered prior to the open of trading on November 7th will continue to work until the close of trading on November 7th unless executed or canceled.

-When the opening cross begins, any immediate order types (IOC, LOO, LOC) will be rejected and any non-immediate order types will be frozen, - i.e. they will be submitted but neither acknowledged by the exchange nor allowed to be canceled until continuous trading begins.  Non-immediate orders during the opening cross will neither participate in nor receive the price of the opening cross

- To ensure that an order has been properly transmitted and is working as intended, it is suggested that you closely monitor your working order(s) on the days prior to, as well as the day of, initial trading in the secondary market (Thursday November 7, 2013).  If you have any question as to whether the order is working, please contact Customer Service and from the main menu select option 1 and then 2

- The initial and maintenance margin requirement for TWTR will be set at 100%. Please note that margin requirements are subject to change and IB reserves the right to make such changes without advance notice.


Cash Sweeps

Background
Underlying the IB Universal account are two separate sub-accounts or segments, one for the securities positions and balances which are subject to the customer protection rules of the SEC and another for the commodities positions and balances which are subject to the customer protection rules of the CFTC. This Universal account structure is designed to minimize the administrative overhead that customers would otherwise be exposed to were they to maintain two distinct accounts (e.g., transferring of cash between accounts, login and order submission through separate accounts, multiple statements, etc.) while preserving the separation required by regulation.

These regulations further require that all securities transactions be effected and margined in the securities segment of the Universal account and commodities transactions in the commodities segment.1  While the regulations allow for the custody of fully-paid securities positions in the commodities segment as margin collateral, IB does not do so, thereby limiting their hypothecation to the more restrictive rules of the SEC. Given the regulations and policies which direct the decision to hold positions in one segment vs. the other, cash remains the only asset eligible to be transferred between the two and for which customer discretion is provided.

Outlined below is a discussion as to the cash sweep options offered, the process for selecting an option as well as selection considerations.

 
Cash Sweep Options
Customers are provided with 3 sweep options, descriptions for which are provided below:
 
 1. Do not sweep excess funds – under this election, excess cash does not move from one segment to another unless necessary to:
a. Eliminate/reduce a margin deficiency in the other segment;
 
b. Minimize a cash debit balance and therefore interest charges in a given segment.  Note that this is the default option and sole option for account holders having only one of securities or commodities trading permissions.
 
2. Sweep excess funds into my IB securities account – here, cash balances are only held in the commodities segment to the extent necessary to satisfy the current commodities margin requirement. Any cash in excess of the margin requirement, generated as a result of either an increase in cash (e.g., favorable variation and/or transaction related) or decrease in the margin requirement (e.g., changes in the SPAN risk arrays and/or transaction related) will be automatically transferred from the commodities segment to the securities segment. Note that the account holder must have permissions to trade securities in order to select this option.
 
3. Sweep excess funds into my IB commodities account – here, cash balances are only held in the securities segment to the extent that they, along with any other securities positions having loan value, are needed to satisfy the current securities margin requirement. Note that the account holder must have permissions to trade commodities in order to select this option. 
 
Other items of note:
-  As the Universal account allows for cash balances to be held in a variety of denominations, a hierarchy exists for the purpose of determining which particular currency to transfer first when long balances in multiple currencies exist. In these situations the procedure is to first transfer balances denominated in the Base Currency, then USD and then the remaining long currency balances in order of highest to lowest.
 
- To minimize the likelihood of one segment incurring a margin deficiency following the sweep of excess cash to the other, the full excess will not be transferred and a buffer equal to 5% of the maintenance margin requirement will be retained. Similarly, to minimize the operational overhead of transferring nominal balances, balances will only be transferred if, after giving effect to the 5% margin cushion, the excess, if any, is not less than 1% of account equity or $200.
 
- When performing the pre-trade credit check to determine whether an account maintains sufficient equity to support a new order, excess cash maintained in one segment will be considered for trades conducted in the other (although a sweep will not occur until the trade has executed and only if it then remains necessary for margin compliance).  Accounts which are designated as a Pattern Day Trader and which are subject pre-trade credit check that takes into account the prior as well as current day's equity should pay particular attention to the Selection Considerations section below.
 
 
Selecting a Sweep Option
If your Account Management version contains a series of menu options on the left-hand side, select the Account Administration and then Excess Funds Sweep menu options. If your version has menu options across the top, select the Manage Account/Settings and then the Configure Account/Excess Funds Sweep menu options. Regardless of your version, you will be presented with a screen which appears as follows:
 

You may then select the radio button alongside the option of your choice and select the Continue button. Your choice will take effect as of the next business day and will remain in effect until a different option has been selected. Note that subject to the trading permission settings noted above, there is no restriction upon when or how often you may change your sweep method. 

 

Selection Considerations
While the decision to elect one segment vs. the other for the purposes of maintaining excess cash may involve subjective decisions and preferences unique to each customer (e.g. customer maintains assets which are significant and concentrated in one segment vs. the other), outlined below are several factors warranting consideration:
 
1. Pattern Day Trading Equity - The securities buying power of accounts designated by regulation as Pattern Day Traders (i.e., 4 or more day trades within a 5 business day period) is limited by the lesser of the current or prior day’s closing equity in the securities segment. As such, an election to sweep excess funds to the commodities segment will prevent the inclusion of such funds in this calculation, thereby potentially limiting the capacity to enter new orders. To maximize the use of equity for purposes of entering securities orders, one would need to elect to sweep excess fund to the securities segment.  Note that an election to the securities segment will not impair the ability to enter commodities orders as the pattern day trading rules do not apply to such accounts.
 
2. Insurance – SIPC protection is afforded to assets in the securities segment and there is no commensurate insurance scheme in place for the commodities segment. That being said, balances in excess of the SIPC $250,000 cash sub-limit ($900,000 Lloyd’s cash sub-limit, where applicable) are not afforded coverage. Customers of IB Canada and IB UK are also subject coverage rules as specified by CIPF and the FSCS, respectively.
 
3. Interest Income – all other things being equal, customers are likely to receive the most optimal interest income on long cash balances that have not been partitioned between the securities and commodities segments as they are not aggregated for interest credit purposes (since they are subject to distinct segregation pools and reinvestment rules). This, along with the fact that credits require maintenance of a minimum cash balance and that higher balances are afforded preferential rates are factors to be considered when making a sweep election.2
 
Other Relevant Knowledge Base Articles:
A Comparison of U.S. Segregation Models
 
 
Footnotes:
1As OneChicago single stock futures are a hybrid product jointly regulated by the SEC and CFTC, they can be purchased and sold in either account type. IB, however, conducts such transactions in the securities segment of the Universal account as this is necessary to provide margin relief between the single stock future and any qualifying stock or option position.
 
2Consider, for example, an account which maintains a long USD balance of $9,000 in each of the securities and commodities segments. Depending upon the benchmark Fed Funds Effective rate, the account would be eligible to earn interest on $8,000 ($18,000 - $10,000) if the two balances were held in a single segment, but since balances below $10,000 in either of the two segments are not eligible for interest, could not earn anything without electing a sweep option. Similarly, one would be eligible to earn interest at a higher tier if as a result of a sweep election the account holder was then able to achieve a long USD cash balance above $100,000 in a given segment. For additional information regarding interest calculations including a link to current benchmark interest rates, refer to KB39.

 

Can I set a maximum dollar exposure for my account?

Unless an account holds solely long stock, bond, option or forex positions which have been paid for in full (i.e., no margin) and/or contains limited risk derivative positions such as option spreads, it is at risk of losing more than the original investment.

In the case of portfolios where the risk is indeterminable, there is no mechanism whereby the account holder can specify, at the portfolio level, a maximum dollar threshold of losses which, if reached, would limit their liability. IB does, however, provide a variety of tools and settings designed to assist account holders with managing and monitoring their exposure, including specialized order types, alerts and the Risk Navigator. A brief overview of each is provided below:

Order Types

Account holders may manage exposure on an individual trade level through several order types designed to limit risk. These order types include, but are not limited to: Stop, Adjustable Stop, Stop Limit, Trailing Stop and Trailing Stop Limit Orders. All of these order types allow you to specify an exit level for your individual positions based on your risk tolerance. For example, an account holder long 200 shares of hypothetical stock XYZ at an average price of $20.00 seeking to limit their loss to $500.00 could create a Stop Limit order having a Stop Price of $18.00 (the price at which a limit sell order is triggered) and a Limit Price of $17.50 (the lowest price at which the shares would be sold).  It's important to note, however, that while a Stop Limit eliminates the price risk associated with a Stop order where the execution price is not guaranteed, it exposes the account holder to the risk that the order may never be filled even if the Stop Price is reached.  For instructions on creating a Stop Limit order, click here.

 

Alerts

Alerts provide account holders the ability to specify events or conditions which, if met, trigger an action. The conditions can be based on time, trades that occur in the account, price levels, trade volume, or a margin cushion. For example, if the account holder wanted to be notified if their account was nearing a margin deficiency and forced liquidation, an alert could be set up to send an email if the margin cushion fell to some desired percentage, say 10% of equity. The action may consist of an email or text notification or the triggering of a risk reducing trade. For instructions on creating an Alert, click here.

Risk Navigator

The Risk Navigator is a real-time market risk management platform contained within the TraderWorkstation, which provides the account holder with the ability to create 'what-if' scenarios to measure exposure given user-defined changes to positions, prices, date and volatility variables which may impact their risk profile. For information on using an Risk Navigator, click here.

List of Chinese Stocks Subject to Increased Margin Requirements

Overview: 

As a result of elevated risk concerns, the list of stocks below are subject to an increased 'house' margin requirement of 100% (i.e. no loan value). Note that this list may be subject to periodic updates.

 

ISSUER NAME   SYMBOL   PRIMARY LISTING EXCHANGE
3SBIO INC-ADR  SSRX  NASDAQ
AAA ENERGY INC  AAV  FWB
ABRA MINING LTD AII ASX
ACORN INTERNATIONAL INC-ADR  ATV  NYSE
ACTIONS SEMICONDUCTOR CO-ADR  ACTS  NASDAQ
AGRIA CORP - ADR  GRO  NYSE
AIRMEDIA GROUP INC-ADR  AMCN  NASDAQ
AIRTAC INTERNATIONAL GROUP  1590 TAI
AMBOW EDUCATION HOLDING-ADR  AMBO  NYSE
ANDATEE CHINA MARINE FUEL SE  AF0  SWB
ANDATEE CHINA MARINE FUEL SE  AMCF  NASDAQ
APOLLO SOLAR ENERGY INC  FXA  SWB
A-POWER ENERGY GENERATION  APWR  NASDAQ
A-POWER ENERGY GENERATION  4OS  FWB
ASIAINFO-LINKAGE INC ASIA NASDAQ
ASIAINFO-LINKAGE INC  AFB  IBIS
ATA INC-ADR  ATAI  NASDAQ
BCD SEMICONDUCTOR MANUFA-ADR  BCDS  NASDAQ
BIOSTAR PHARMACEUTICALS INC  7BN  SWB
BIOSTAR PHARMACEUTICALS INC  BSPM  NASDAQ
BITAUTO HOLDINGS LTD-ADR  BITA  NYSE
BODISEN BIOTECH INC  DZ9  FWB
BOHAI PHARMACEUTICALS GROUP  3B2  SWB
BONA FILM GROUP LTD-SPON ADR  BONA  NASDAQ
BOYUAN CONSTRUCTION GROUP IN  BOY  TSE
CAMELOT INFORMATION SYS-ADS CIS NYSE
CHANGYOU.COM LTD-ADR  CYOU  NASDAQ
CHARM COMMUNICATIONS INC-ADR  CHRM  NASDAQ
CHEMSPEC INTL LTD - ADR  CPC  NYSE
CHINA 3C GROUP  GXS  SWB
CHINA BAK BATTERY INC  B6J  FWB
CHINA BAK BATTERY INC  CBAK  NASDAQ
CHINA CABLECOM HOLDINGS LTD  CCUN  IBIS
CHINA CABLECOM HOLDINGS LTD  CABL  NASDAQ
CHINA CENTURY DRAGON MEDIA I  ZDR  SWB
CHINA CERAMICS CO LTD  CCCLU  NASDAQ
CHINA CERAMICS CO LTD  C9E  SWB
CHINA CGAME INC  CA6N  IBIS
CHINA CGAME INC  CCGM  NASDAQ
CHINA DASHENG BIOTECHNOLOGY  16D  FWB
CHINA DIGITAL TV HOLDING-ADR  STV  NYSE
CHINA DISTANCE EDUCATION-ADR  DL  NYSE
CHINA ENERGY CORP  ZCE  SWB
CHINA ENERGY RECOVERY INC CNI FWB
CHINA FINANCE ONLINE CO-ADR  JRJC  NASDAQ
CHINA GENGSHENG MINERALS INC  CGS  FWB
CHINA GRENTECH CORP LTD-ADR  GRRF  NASDAQ
CHINA INDUSTRIAL WASTE MANAG GD9 TIQSSWB
CHINA KANGTAI CACTUS BIO-TEC IWN1 FWB
CHINA LINEN TEXTILE INDUSTRY C60 SWB
CHINA MASS MEDIA CORP-ADR  CMM  NYSE
CHINA MEDICAL TECH-SPON ADR  CMED  NASDAQ
CHINA MEDICINE CORP  XM2  SWB
CHINA NEPSTAR CHAIN DRUG-ADR  NPD  NYSE
CHINA NUOKANG BIO-PH-SP ADR  NKBP  NASDAQ
CHINA ORGANIC AGRICULTURE IN  4CA  FWB
CHINA POWER EQUIPMENT INC  5XP  TIQSSWB
CHINA REDSTONE GROUP INC RS0 SWB
CHINA RITAR POWER CORP  YXC  SWB
CHINA RUNJI CEMENT INC WRJ SWB
CHINA SHENGDA PACKAGING GROU  0CH  FWB
CHINA SHENGDA PACKAGING GROU  CPGI  NASDAQ
CHINA SHENGHUO PHARMACEUTICA  54C  IBIS
CHINA SHENGHUO PHARMACEUTICA  KUN  AMEX
CHINA SHUANGJI CEMENT LTD  C99N  FWB
CHINA SOLAR & CLEAN ENERGY S NCS2 FWB
CHINA SUN GROUP HIGH-TECH CO BP7 FWB
CHINA SUNERGY CO LTD-ADR  CSUN  NASDAQ
CHINA TECHFAITH WIRELESS-ADR  CNTF  NASDAQ
CHINA TMK BATTERY SYSTEMS IN T35 SWB
CHINA WATER GROUP INC  DI1  FWB
CHINA XD PLASTICS CO LTD  02Y  FWB
CHINA XINIYA FASHIO-SPON ADR  XNY  NYSE
CHINA ZENIX AUTO INTERNA-ADR  ZX  NYSE
CHINACACHE INTERNAT-SPON ADR  CCIH  NASDAQ
CHINAEDU CORP-ADR  CEDU  NASDAQ
CLEANTECH SOLUTIONS INTERNAT CLNT NASDAQ
CLEANTECH SOLUTIONS INTERNAT CWZN FWB
CNINSURE INC-ADR CISG NASDAQ
CONCORD MEDICAL - SPON ADR  CCM  NYSE
COUNTRY STYLE COOKI-SPON ADR  CCSC  NYSE
DAQO NEW ENERGY CORP-ADR  DQ  NYSE
DEHAIER MEDICAL SYSTEMS LTD  J8D  FWB
DEHAIER MEDICAL SYSTEMS LTD  DHRM  NASDAQ
DUOYUAN PRINTING INC DPT FWB
EASTERN ENVIRONMENT SOLUTION V5E SWB
E-COMMERCE CHINA-SPON ADR  DANG  NYSE
EFUTURE INFORMATION TECHNOLO  4EF  FWB
ELONG INC-SPONSORED ADR  LONG  NASDAQ
ETERNAL TECHNOLOGIES GROUP  ETO  FWB
FORLINK SOFTWARE CORP  YNO1  FWB
FUNTALK CHINA HOLDINGS LTD  FTLK  NASDAQ
FUQI INTERNATIONAL INC 3F6A IBIS
FUWEI FILMS HOLDINGS CO LTD  F4B  IBIS
GC CHINA TURBINE CORP 7GC SWB
GLG LIFE TECH CORPORATION  GLG  TSE
GLOBAL EDUCATION & TECH-ADR  GEDU  NASDAQ
GOLD HORSE INTERNATIONAL INC 0GH SWB
GUSHAN ENVIRONMENTAL ENE-ADR  GU  NYSE
HANGFENG EVERGREEN INC  HF  TSE
HARTCOURT COMPANIES INC  HCT  SWB
HIGHPOWER INTERNATIONAL INC  HKN  SWB
HIGHPOWER INTERNATIONAL INC  HPJ  NASDAQ
HISOFT TECHNOLOGY INT-ADR  HSFT  NASDAQ
HOLLYSYS AUTOMATION TECHNOLO  46H  FWB
HOLLYSYS AUTOMATION TECHNOLO  HOLI  NASDAQ
IFM INVESTMENTS LTD-ADS  CTC  NYSE
ITONIS INC  IX2  IBIS
JA SOLAR HOLDINGS CO LTD-ADR JASO NASDAQ
JADE ART GROUP INC JAC SWB
JIAYUAN.COM INTERNATIONA-ADR  DATE  NASDAQ
JINGWEI INTERNATIONAL LTD  WJI  SWB
JINKOSOLAR HOLDING CO-ADR JKS NYSE
JINPAN INTERNATIONAL LTD  3QN  FWB
JINPAN INTERNATIONAL LTD  JST  NASDAQ
KANDI TECHNOLOGIES CORP  K8A  FWB
KINGTONE WIRELESSINFO SO-ADR  KONE  NASDAQ
KU6 MEDIA CO LTD-SPN ADR  KUTV  NASDAQ
LDK SOLAR CO LTD -ADR LDK NYSE
LEGEND MEDIA INC LM2 SWB
LENTUO INTERNATI-SPON ADS  LAS  NYSE
LINKWELL CORP  LHX  SWB
LIZHAN ENVIRONMENTAL CORP  LZEN  NASDAQ
MECOX LANE LTD-ADR  MCOX  NASDAQ
MIGAO CORPORATION  MGO  TSE
MINCO SILVER CORPORATION  MSV  TSE
MINDRAY MEDICAL INTL LTD-ADR MR NYSE
NETQIN MOBILE INC - ADR  NQ  NYSE
NEW DRAGON ASIA CORP  BQ4  IBIS
NOAH EDUCATION HOLDINGS-ADR  NED  NYSE
ORIGIN AGRITECH LTD  39O  SWB
ORIGIN AGRITECH LTD  SEED  NASDAQ
ORSUS XELENT TECHNOLOGIES IN  O5X  FWB
ORSUS XELENT TECHNOLOGIES IN  ORS  AMEX
OSSEN INNOVATION CO-SPON ADR  OSN  NASDAQ
PHOENIX NEW MEDIA LTD -ADS  FENG  NYSE
PRIME ACQUISITION CORP  PACQ  NASDAQ
PRIME ACQUISITION CORP  PACQU  NASDAQ
QIAO XING MOBILE COMMUNICATI  F2A  IBIS
QIAO XING MOBILE COMMUNICATI  QXM  NYSE
QIAO XING UNIVERSAL RESOURCE  QXU  FWB
QIAO XING UNIVERSAL RESOURCE  XING  NASDAQ
RDA MICROELECTRON-SPON ADR  RDA  NASDAQ
RECON TECHNOLOGY LTD HRC FWB
RECON TECHNOLOGY LTD  RCON  NASDAQ
RENESOLA LTD-ADR SOL NYSE
SANCON RESOURCES RECOVERY IN FTVA SWB
SEARCHMEDIA HOLDINGS LTD  IDI  AMEX
SEARCHMEDIA HOLDINGS LTD-UTS  IDI U  AMEX
SGOCO GROUP LTD  SGOC  NASDAQ
SHANGPHARMA CORP-ADR  SHP  NYSE
SHENGTAI PHARMACEUTICAL INC ESZ SWB
SINA CORP  YIN  FWB
SINO GAS & ENERGY HOLDINGS L  SEH  ASX
SINO GAS INTERNATIONAL HOLDI QGS SWB
SINOBIOMED INC  G8U  FWB
SINOHUB INC  7S3  FWB
SINOTECH ENERGY LTD-SPON ADR  CTE  NASDAQ
SINOVAC BIOTECH LTD  SVQ  FWB
SINOVAC BIOTECH LTD  SVA  NASDAQ
SKY DIGITAL STORES CORP  YN3  FWB
SKY-MOBI LTD-SP ADR  MOBI  NASDAQ
SKYSTAR BIO-PHARMACEUTICAL  GNJC  FWB
SOHU.COM INC  XOU  FWB
SUNTECH POWER HOLDINGS-ADR STP NYSE
SYSWIN INC-SPON ADS  SYSW  NYSE
TAL EDUCATION GROUP- ADR  XRS  NYSE
TAOMEE HOLDINGS LTD-SP ADR TAOM NYSE
TELESTONE TECHNOLOGIES CORP  MSOA  FWB
THE9 LTD-ADR  NCTY  NASDAQ
TIANLI AGRITECH INC  7TA  FWB
TIANLI AGRITECH INC  OINK  NASDAQ
TIBET PHARMACEUTICALS INC  TXP  SWB
TIBET PHARMACEUTICALS INC  TBET  NASDAQ
TRINA SOLAR LTD-SPON ADR TSL NYSE
TRI-TECH HOLDING INC  TTW  FWB
TRI-TECH HOLDING INC  TRIT  NASDAQ
TRUNKBOW INTERNATIONAL HOLDI  TBJ  IBIS
TRUNKBOW INTERNATIONAL HOLDI  TBOW  NASDAQ
U.S. CHINA MINING GROUP INC RJ2B SWB
UTSTARCOM INC  UTS  FWB
UTSTARCOM INC  UTSI  NASDAQ
UTSTARCOM INC  UTSI  MEXI
VIMICRO INTERNATIONAL CO-ADR  VIMC  NASDAQ
VISIONCHINA MEDIA INC-ADR  VISN  NASDAQ
WSP HOLDINGS LTD-ADR  WH  NYSE
XINHUA CHINA LTD  X5R  IBIS
XINYINHAI TECHNOLOGY LTD 3XI SWB
XINYUAN REAL ESTATE CO L-ADR  XIN  NYSE
YAYI INTERNATIONAL INC  8YJ  SWB
YINGLI GREEN ENERGY HOLD-ADR YGE NYSE
YOUKU.COM INC-SPON ADR YOKU NYSE
YUCHENG TECHNOLOGIES LTD  YCT  SWB
YUCHENG TECHNOLOGIES LTD  YTEC  NASDAQ
ZHENG HE GLOBAL CAPITAL LTD  ZHE  ASX
ZHONGPIN INC  CWP  FWB
ZOOM TECHNOLOGIES INC  ZT2A  FWB
ZUOAN FASHION LTD-SPON ADR  ZA  NYSE

List of Reverse-Merger Stocks Subject to Increased Margin Requirements

The below list of securities represent companies formed via a method known as a reverse merger which, as a result of elevated risk concerns, are subject to a 100% margin requirement. Note that this list is subject to periodic revision reflecting updates to the list of securities included and/or their margin rate.
 
Symbol Company Name
ABV ADVANCED BATTERY TECHNOLOGIE
ABAT Advanced Battery Technology
FEED Agfeed Industries
4AG AGFEED INDUSTRIES INC
ALN American Lorain
A50 AMERICAN LORAIN CORP
RXZ AMERICAN ORIENTAL BIOENGINEE
AOB American Oriental Bioengineering
5CA AOXING PHARMACEUTICAL CO INC
AXN Aoxing Pharmaceuticals
AUTC Autochina International LTD
CADC China ACM
V39 CHINA ADVANCED CONSTRUCTION MA
CAGC China Agritech
4CN1 CHINA AGRITECH INC
CNAM China Armco Metals
CNAM China Armco Metals
X7C CHINA ARMCO METALS INC
CAAS China Automotive Systems
RYV CHINA AUTOMOTIVE SYSTEMS INC
CBPO China Biologic Products
0CB CHINA BIOLOGIC PRODUCTS INC
CBP China Botanic Pharmaceutical
ENF2 CHINA BOTANIC PHARMACEUTICAL I
CDM China Century Dragon Media
CCCL  China Ceramics Co.
CDII China Direct Industries
CH4A CHINA DIRECT INDUSTRIES INC
CEU China Education Alliance
FCPA CHINA EDUCATION ALLIANCE INC
FCPA CHINA EDUCATION ALLIANCE INC
ZTE CHINA ELECTRIC MOTOR INC
CELM China Electric Motors
CFSG China Fire & Security
CFG CHINA FIRE & SECURITY GROUP IN
CGA China Green Agcriculture Inc
GR0 CHINA GREEN AGRICULTURE INC
HGSH China HGS Real Estate
CHLN China Housing & Land Dev
4CL CHINA HOUSING & LAND DEVELOPME
CHC China Hydroelectric
CNIT China Information Technology
02C CHINA INFORMATION TECHNOLOGY I
CIIC China Infrastructure
C74 CHINA INFRASTRUCTURE INVESTMEN
CBEH China Integrated Energy
7C1 CHINA INTEGRATED ENERGYINC
CIL China Intelligent Lighting
4I6 CHINA INTELLIGENT LIGHTING &
CJJD China Jo-Jo Drugstores
CJJD China Jo-Jo Drugstores
04CN CHINA JO-JO DRUGSTORES INC
CMFO China Marine Food
ZMF CHINA MARINE FOOD GROUP LTD
6CE CHINA MEDIAEXPRESS HOLDINGS IN
CCME China MediaExpress Holdings Inc
CHNG China Natural Gas
C7IN CHINA NATURAL GAS INC
BORN China New Borun
NEP China North East Petroleum
53C CHINA NORTH EAST PETROLEUM H
CNGL China Nutrifruit
3NF CHINA NUTRIFRUIT GROUP LTD
G60 CHINA OPPORTUNITY ACQUISITIO
CHOP China Opportunity Acquisition
CPHI China Pharma Holdings
XQJ CHINA PHARMA HOLDINGS INC
CPSL China Precision Steel
3CP CHINA PRECISION STEEL INC
CREG China Recycling Energy
CR9 CHINA RECYCLING ENERGY CORP
C7M CHINA SECURITY & SURVEILLANC
CSR China Security & Surveillance
SHZ China Shen Zhou Mining
SZM CHINA SHEN ZHOU MINING & RESOU
CSKI China Sky One Medical
CH2 CHINA SKY ONE MEDICAL INC
CTFO China TransInfo Technology
ITC CHINA TRANSINFO TECHNOLOGY COR
CVVT China Valves Technology
ICXN CHINA VALVES TECHNOLOGY INC
CWS China Wind Systems
CWZN CHINA WIND SYSTEMS INC
CNYD China Yida Holding
8CY CHINA YIDA HOLDINGS CO
CHBT China-Biotics
D8R CHINA-BIOTICS INC
CAST ChinaCast Education
CNET ChinaNet Online
C5N CHINANET ONLINE HOLDINGS INC
6TC CLEANTECH INNOVATIONS INC
CTEK CleanTech Innovations Inc
COGO Cogo Group
3QM COGO GROUP INC
DEER Deer Consumer Products
D11 DEER CONSUMER PRODUCTS INC
DGW Duoyuan Global Water
ADY Feihe International
4AD FEIHE INTERNATIONAL INC
F4U FUSHI COPPERWELD INC
FSIN Fushi Copperweld Inc
GSI General Steel Holdings
3GL GENERAL STEEL HOLDINGS INC
GPRC Guanwei Recycling
7GF GUANWEI RECYCLING CORP
GFRE Gulf Resources
R29A GULF RESOURCES INC
HRBN Harbin Electric
X9O HARBIN ELECTRIC INC
HQS HQ Sustainable Maritime
QHP HQ SUSTAINABLE MARITIME INDU
JGBO Jiangbo Pharmaceuticals
GNY1 JIANGBO PHARMACEUTICALS INC
KEYP Keyuan Petrochemicals
KGJI Kingold Jewelry
7KJ KINGOLD JEWELRY INC
7LM L&L ENERGY INC
LLEN L&L Energy Inc
LIWA Lihua International
J7L LIHUA INTERNATIONAL INC
LPH Longwei Petroleum
3LI LONGWEI PETROLEUM INVESTMENT
LTUS Lotus Pharmaceuticals
IYM LOTUS PHARMACEUTICALS INC
NEWN New Energy Systems
C1KN NEW ENERGY SYSTEMS GROUP
63NN NF ENERGY SAVING CORP OF AMERI
NFEC NF Energy Savings
N0I NIVS INTELLIMEDIA TECHNOLOGY
NIV NIVS IntelliMedia Technology
ONP Orient Paper
UOPN ORIENT PAPER INC
PUDA Puda Coal
P631 PUDA COAL INC
QKLS QKL Stores
71Q QKL STORES INC
RINO RINO International
R28 RINO INTERNATIONAL CORP
SDTH ShengdaTech
3SG SHENGDATECH INC
VALV Shengkai Innovations
SKU SHENGKAI INNOVATIONS INC
BEST Shiner International
S80 SHINER INTERNATIONAL INC
SCEI Sino Clean Energy
SVL SINO CLEAN ENERGY INC
SCOK SinoCoking Coal
SPU SkyPeople Fruit Juice
P9F SKYPEOPLE FRUIT JUICE INC
SKBI Skystar Bio-Pharmaceutical
HEAT SmartHeat
S2T SMARTHEAT INC
SOKF SOKO Fitness & Spa
3SK SOKO FITNESS & SPA GROUP INC
SORL SORL Auto Parts
A9S SORL AUTO PARTS INC
SBAY Subaye
TQF1 SUBAYE INC
SUTR Sutor Technology
5BF SUTOR TECHONOLOGY GROUP LTD
SYUT Synutra International
ITO SYNUTRA INTERNATIONAL INC
THTI THT Heat Transfer Tech
TPI Tianyin Pharmaceutical
60T TIANYIN PHARMACEUTICAL CO INC
TBV Tiens Biotech
UTA Universal Travel Group
VOA1 UNIVERSAL TRAVEL GROUP
WWIN Winner Medical Group
3LW WINNER MEDICAL GROUP INC
WATG Wonder Auto Technology
WND WONDER AUTO TECHNOLOGY INC
WUHN Wuhan General Group
WG9 WUHAN GENERAL GROUP CHINA INC
YONG Yongye International
2YB YONGYE INTERNATIONAL INC
YUII Yuhe International
YI5 YUHE INTERNATIONAL INC
HOGS Zhongpin
ZSTN ZST Digital Networks
ZS8A ZST DIGITAL NETWORKS INC

India Intra-Day Shorting Risk Disclosure

Interactive Brokers currently offers the ability to short sell stocks before taking delivery on an intra-day basis. In accordance with IB’s intra-day shorting rules, traders are required to deliver shares sold or close short stock positions prior to the end of the trading session. 

Should traders establish a short stock position intra-day and still hold the position ten minutes prior to the end of the trading session at 15:20 IST, Interactive Brokers may, on a best efforts basis, close the position on your behalf. If the position is not closed by the end of the day and the shares are not delivered by the customer before settlement, the loss on account of auction will be borne by the customer. Please note that prices in the auction market are highly variable and typically not favorable compared to the normal market.

It is important to note, IB will not take into consideration any closing orders for short stock positions placed by the customer which may still be working. If your account holds a short position ten minutes prior to the end of the trading session and you have placed working orders to close those positions, there is the possibility your closing order will execute and that IB will act to close out your short position.  In this situation you will be responsible for both executions and will need to manage your long position accordingly.

A fee of INR 1,500 will be charged for this manual processing in addition to any external penalties in the case of short stock positions resulting in auction trades.  As such, we strongly urge customers to monitor their positions and take appropriate action themselves in order to avoid this.

Key Margin Definitions

Overview: 

Below is a listing of some of the more commonly used margin terms:

Equity with Loan Value (ELV) – Forms the basis for determining whether a client has the necessary assets to either initiate or maintain security positions. Equals cash + stock value + bond value + mutual fund value + European and Asian options value (excludes market value U.S. securities & futures options and cash maintained in futures segment). 

 
 
Available Funds (ELV – Initial Margin) – equals Equity with Loan Value less the Initial Margin Requirement.
 
 
Excess Liquidity (ELV – Maintenance Margin) – equals Equity with Loan Value less the Maintenance Margin Requirement.
 
 
Initial Margin Requirement - The minimum portion of a new security purchase that an investor must pay for in cash. For U.S. stocks this is defined by Reg. T and is currently 50% (Reg. T Initial Margin). As IB calculates margin on a real-time basis and Reg. T is enforced at the end of the day, IB performs an initial margin requirement check at the point of trade, albeit at a rate generally less than 50% (IB Initial Margin). 
 
 
Maintenance Margin Requirement – the amount of equity which must be maintained in order to continue holding a position. In the U.S., the rules of the listing exchanges specify the maintenance margin requirements on security transactions subject to SEC approval.  The exchange maintenance margin requirement for long stock positions is currently set at 25% although brokers often establish 'house margin' requirements in excess of that, particularly where the security is considered low-priced or subject to volatile price changes.  The exchange maintenance margin requirement for short stock positions is currently set at 30%.
 
 
Net Liquidating Value (NLV) – for a securities account equals total cash value + stock value + securities options value + bond value + fund value. For a commodities account equals total cash value + commodities options value. 
 
Soft Edge Margin (SEM) – if during the trading day an account’s Equity with Loan Value is equal to at least 90% of the maintenance margin requirement, it will not be subject to liquidation until 15:45 ET for U.S. stocks (i.e., the earliest of: 15 minutes before market close, 15 minutes before end of liquidation hours or start of Reg. T enforcement time) at which time the maintenance margin requirement must be met. SEM start time for U.S. stocks is 09:30 ET and for other products the later of: the market open (latest open time if multiply listed); or start of liquidation hours.  

 

Buying Power - the maximum dollar value of securities that you can buy in your account without depositing additional equity.  For a cash account this is equal to the lesser of ELV or Previous Day ELV less the Initial Margin Requirement.  For a margin account this is equal to Available Funds * 4 (reciprocal of the 25% Maintenance Margin Rate)
 
Special Memorandum Account (SMA) – represents neither equity nor cash but rather a line of credit 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.

 

Securities Gross Position Value (GPV) – Absolute value of Long Stock Value + Short Stock Value + Long Option Value + Short Option Value + Long SSF Notional Value + Short SSF Notional Value + Fund Value.

 

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