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Can individuals access that sort of margin? The best I've seen is portfolio margin at some brokers. What's the name of the "margining systems" you are referri

by Dlanv 5y ago

Can individuals access that sort of margin? The best I've seen is portfolio margin at some brokers. What's the name of the "margining systems" you are referring to?

vmception 5y ago
portfolio margining does what I describe and has a regulatory minimum of $125,000 or so net liquidation value (portfolio size), SPAN margining can as well which is what the futures and futures options market uses at any portfolio size so yes individuals can access both the primary benefits are cross margining, using other assets to fulfill or calculate margin requirements for a new position and portfolio margin requirements are easy to calculate, just take the loss at a 15% move and whatever that loss is becomes your current margin requirement, it is a 6% move for indexes (like S&P) the way to get in trouble is by confusing the margining system and hiding exposure behind synthetic positions (example, a combination of derivatives to make it look like you are long stock)
djanogo 5y ago
The closest for retail customers is IBKR, needs >110k they have lowest margin rates. They approve pretty easily. On other hand Fidelity will reject portfolio margin even if you have significantly more than 100k.
- sooheon 5y ago
  Caveat emptor: IBKR's TOS makes it clear they reserve the right to liquidate your positions at any time for basically any reason, including margin requirement changes.
  - argonaut 5y ago
    Every brokerage has those terms. Even Credit Suisse in this article had this right over Archegos's positions - they just were too scared to exercise it.
    - sooheon 5y ago
      Of course. IBKR has lower rates and approves more easily, therefore they will be much more trigger happy. CS timidly emailed about potentially discussing margin rate adjustments, IBKR can liquidate your positions for instantaneous margin violations without warning or a margin call. The assumption is your leveraged position is hedged well enough to protect against untimely margin calls, and the cost of hedging is roughly equivalent to the nominal margin rate savings they offer.
  - djanogo 5y ago
    Of course they have to put that in TOS, this whole discussion is about how CS didn't enforce changes in margin on time, and they ended up bag holding. What do you want them to do? bag hold a loosing or risky trade and pass the effects to other clients?
eru 5y ago
> Can individuals access that sort of margin? Yep, I can get lots and lots of margin from IBKR. It helps that I'm not an American.

by Dlanv 5y ago

Can individuals access that sort of margin? The best I've seen is portfolio margin at some brokers. What's the name of the "margining systems" you are referring to?

vmception 5y ago

portfolio margining does what I describe and has a regulatory minimum of $125,000 or so net liquidation value (portfolio size), SPAN margining can as well which is what the futures and futures options market uses at any portfolio size so yes individuals can access both the primary benefits are cross margining, using other assets to fulfill or calculate margin requirements for a new position and portfolio margin requirements are easy to calculate, just take the loss at a 15% move and whatever that loss is becomes your current margin requirement, it is a 6% move for indexes (like S&P) the way to get in trouble is by confusing the margining system and hiding exposure behind synthetic positions (example, a combination of derivatives to make it look like you are long stock)

djanogo 5y ago

The closest for retail customers is IBKR, needs >110k they have lowest margin rates. They approve pretty easily. On other hand Fidelity will reject portfolio margin even if you have significantly more than 100k.

sooheon 5y ago
Caveat emptor: IBKR's TOS makes it clear they reserve the right to liquidate your positions at any time for basically any reason, including margin requirement changes.
- argonaut 5y ago
  Every brokerage has those terms. Even Credit Suisse in this article had this right over Archegos's positions - they just were too scared to exercise it.
  - sooheon 5y ago
    Of course. IBKR has lower rates and approves more easily, therefore they will be much more trigger happy. CS timidly emailed about potentially discussing margin rate adjustments, IBKR can liquidate your positions for instantaneous margin violations without warning or a margin call. The assumption is your leveraged position is hedged well enough to protect against untimely margin calls, and the cost of hedging is roughly equivalent to the nominal margin rate savings they offer.
- djanogo 5y ago
  Of course they have to put that in TOS, this whole discussion is about how CS didn't enforce changes in margin on time, and they ended up bag holding. What do you want them to do? bag hold a loosing or risky trade and pass the effects to other clients?

eru 5y ago

> Can individuals access that sort of margin? Yep, I can get lots and lots of margin from IBKR. It helps that I'm not an American.