Interactive Brokers1 will begin phasing in a new methodology to calculate a portfolio’s concentration risk, effective Friday, October 23, 2020.
New Methodology
- The potential loss for each stock and its derivatives will be calculated by subjecting them to a stress test which simulates, at a minimum, a price change in the underlying stock of +/- 30%.
- The requirement for the stock (and its derivatives) which projects the greatest loss in the above scenario will be compared to what would otherwise be the aggregate portfolio margin requirement, and the greater of the two will be the margin requirement for the portfolio.
Timeline of Change
The increase will be phased in over a series of daily increments beginning after the New York close on October 23, 2020, and continuing through trade date October 30, 2020.
How will the new change impact my portfolio?
To evaluate the full impact of this new change on your portfolio and remain margin compliant, please see KB Article 2957: Risk Navigator: Alternative Margin Calculator, and from the margin mode setting in Risk Navigator, select “Margin 20201030.”
Accounts that are unable to carry a position under this new margin requirement are subject to liquidations to bring the account into margin compliance, so we suggest you manage your risk and capital positions accordingly.
1Euro Pacific Trader is offered by Euro Pacific Securities Inc. (“Euro Pacific Securities”), as an Introducing Broker to Interactive Brokers LLC. Interactive Brokers LLC is the custodian, technology provider, and clearing broker to all transactions executed through Euro Pacific Trader and thus the rates, conditions, and examples shown on this site may be subject to change and differ from what is displayed on Euro Pacific Trader. The rates, conditions, and examples on this site are provided on a best-efforts basis and should not be taken as final.
Euro Pacific Securities will not be held responsible for pricing and conditional discrepancies that may arise in the normal course of offering Euro Pacific Trader. Customers should always review and rely on the conditions that are shown directly on Euro Pacific Trader, and it is the responsibility of all customers to carefully review the conditions of every action before approving execution on Euro Pacific Trader.
Interactive Brokers LLC is a registered Broker-Dealer, Futures Commission Merchant and Forex Dealer Member, regulated by the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), and is a member of the Financial Industry Regulatory Authority (FINRA) and several other self-regulatory organizations. Interactive Brokers LLC does not endorse or recommend any introducing brokers, third-party financial advisors or hedge funds, including Euro Pacific Securities. Interactive Brokers LLC provides execution and clearing services to customers. None of the information contained herein constitutes a recommendation, offer, or solicitation of an offer by Interactive Brokers LLC to buy, sell or hold any security, financial product or instrument or to engage in any specific investment strategy. Interactive Brokers LLC makes no representation, and assumes no liability to the accuracy or completeness of the information provided on this website.
For more information regarding Interactive Brokers, please visit www.interactivebrokers.com.