Last month, Interactive Brokers1 announced a change to the algorithm used to calculate a portfolio’s concentration risk. Shortly after the announcement, a decision was made to temporarily postpone the algorithm change.

On Friday, November 19, 2020, Interactive Brokers will begin phasing in a new methodology to calculate a portfolio’s concentration risk.

New Methodology

1. Interactive Brokers will calculate the potential loss for each stock and its derivatives by subjecting them to a stress test which simulates, at a minimum, a price change in the underlying stock of +/- 30%.
2. 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.

How will the new change impact my portfolio?

To evaluate the full impact of this change on your portfolio so that your account may remain margin compliant, please see KB Article 2957: Risk Navigator: Alternative Margin Calculator and from the margin mode setting in Risk Navigator, select “Margin 20201119”.

Accounts that are unable to carry a position under this new margin requirement are subject to liquidations to bring the account into margin compliance.

1Euro Pacific Trader is offered by Euro Pacific Securities Inc. (“Euro Pacific Securities”), as an Introducing Broker to Interactive Brokers LLC. Interactive Brokers LLC is the custodian, technology provider, and clearing broker to all transactions executed through Euro Pacific Trader and thus the rates, conditions, and examples shown on this site may be subject to change and differ from what is displayed on Euro Pacific Trader. The rates, conditions, and examples on this site are provided on a best-efforts basis and should not be taken as final.

Euro Pacific Securities will not be held responsible for pricing and conditional discrepancies that may arise in the normal course of offering Euro Pacific Trader. Customers should always review and rely on the conditions that are shown directly on Euro Pacific Trader, and it is the responsibility of all customers to carefully review the conditions of every action before approving execution on Euro Pacific Trader.

Interactive Brokers LLC is a registered Broker-Dealer, Futures Commission Merchant and Forex Dealer Member, regulated by the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), and is a member of the Financial Industry Regulatory Authority (FINRA) and several other self-regulatory organizations. Interactive Brokers LLC does not endorse or recommend any introducing brokers, third-party financial advisors or hedge funds, including Euro Pacific Securities. Interactive Brokers LLC provides execution and clearing services to customers. None of the information contained herein constitutes a recommendation, offer, or solicitation of an offer by Interactive Brokers LLC to buy, sell or hold any security, financial product or instrument or to engage in any specific investment strategy. Interactive Brokers LLC makes no representation, and assumes no liability to the accuracy or completeness of the information provided on this website.

For more information regarding Interactive Brokers, please visit www.interactivebrokers.com.

Interactive Brokers1 will begin phasing in a new methodology to calculate a portfolio’s concentration risk, effective Friday, October 23, 2020.

New Methodology

1. 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%.
2. 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.

Our brokerage custodian, Interactive Brokers1, is preparing for potential elevated volatility associated with the upcoming United States presidential election on November 3rd, 2020.

What will change?

Soft Edge Margining (SEM) will change temporarily, effective Monday, October 26, 2020. SEM will end 30 minutes prior to a product’s respective close. Currently, SEM ends only 15 minutes prior to a product’s respective close.

What is Soft Edge Margining?

In general, your account is subject to automated liquidation once its equity value falls below the minimum margin requirement. However, Interactive Brokers allows you some leniency prior to a liquidation.

During the trading day, if your margin deficiency is less than 10% of your account’s Net Liquidation Value, it will not be automatically liquidated. In other words, your account will only be liquidated if it falls below the Soft Edge Margin.

This allows your account to be in margin violation for a short period of time. Once your account falls below SEM however, it is then required to meet full maintenance margin and your account will be subject to automatic liquidation to bring it back to margin compliance.

Please note that Interactive Brokers reserves the right to restrict Soft Edge access on any given day and she may eliminate SEM completely in times of heightened volatility. Second, Soft Edge Margin is not displayed in your Euro Pacific Trader.

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.

Our brokerage custodian, Interactive Brokers1, is preparing for elevated volatility before and after the 2020 United States presidential election in November. As a result, margin requirements2 on Futures & Derivatives will increase by as much as 35% above normal requirements, starting September 28, 2020.

What instruments are impacted?

Interactive Brokers plans to increase Equity Index Futures & Derivatives margins by the aforementioned 35%. For example, ES futures and similar products based on the S&P 500 index would go from a scanning range of approximately 7% to 9.6%.

These instruments will NOT be impacted, as their margin rates already exceed their futures equivalents:

• Stocks
• ETFs
• Commodities
• Forex
• Bonds

Other instruments not mentioned above may also not be affected.

Schedule of Changes

1. Initial margin requirements: Gradual daily increases from normal levels starting September 28th to a rate that will be 35% higher by October 23rd.
2. Maintenance margin requirements: Gradual daily increases in a similar manner between October 5th and October 30th.

These new requirements will be implemented daily after the market closes in New York, and will be effective the next trading day.

Based on these new changes, accounts that are unable to meet the new margin requirements will be subject to automated liquidations3 in order to bring the account into margin compliance. Accounts subject to risk based margin will have their scanning ranges increased in a similar manner.

Example

Consider a Reg. T margin account with stock XYZ having an Initial Margin requirement of 50% and a Maintenance Margin requirement of 25%. With the increase fully implemented, the new requirements would be 67.5% Initial and 33.75% Maintenance.

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.

2 Information on Interactive Broker’s margin rules can be reviewed in this article. To monitor your Euro Pacific Trader available margin balance, please read this guide.

3 Interactive Brokers (IB) will liquidate your positions without prior notice until your account complies with margin requirements. IB automatic liquidation of under-margined accounts is designed to protect customers and to protect IB in times of market turmoil.

Interactive Brokers1 will begin to incorporate the following changes to their margin methodology2 calculations for HKFE and SEHK products3, effective Friday, September 18, 2020.

Methodology Update

1. Risk Scenarios: The Risk Scenarios will be computed based upon Interactive Brokers’ intraday mark price of the underlying stock, instead of previous end-of-day data.
2. Price Scans: Scanning ranges, which apply to stock or derivative products, will reflect the margin requirement percentage of the underlying stock. For example, if the underlying stock has a margin requirement of 40%, then the price scanning will also reflect 40%.
3. Volatility Scanning Range: Interactive Brokers will introduce implied volatility scans (at all price levels) in which the volatility is increased/decreased by 15%, 75% for broad-based indexes, and 150% for all remaining classes. Additionally, Interactive Brokers will recognize a given stock-specific implied volatility surface to predict the rate of change for implied volatility under each price scenario. For example, a stock with a daily volatility of 5% is unlikely to see much increase in the implied volatility of its options if the stock drops 10% because it is within its normal range of moves. However, a 10% drop for a stock with a daily volatility of 0.5% will probably experience a ten-fold increase in implied volatility as the volatility increases to 5%. Additionally, Interactive Brokers will apply a stock-specific implied volatility surface to predict the rate of change for implied volatility under each price scenario.

How will these changes impact my portfolio?

The increase will be phased in over a series of daily increments beginning, after the New York close on September 17, 2020 and continuing through trade date September 24, 2020.

To evaluate the full impact of this change on your portfolio so that your account may remain margin compliant, please see this related article and, from the margin mode setting in Risk Navigator, select “Margin 20200924.”

Based on these new changes, accounts that are unable to carry the positions under these new margin requirements are subject to automated liquidations in order to bring the account into margin compliance.

1Euro Pacific Trader is offered by Euro Pacific Securities Inc. (“Euro Pacific Securities”), as an Introducing Broker to Interactive Brokers LLC. Interactive Brokers LLC is the custodian, technology provider, and clearing broker to all transactions executed through Euro Pacific Trader and thus the rates, conditions, and examples shown on this site may be subject to change and differ from what is displayed on Euro Pacific Trader. The rates, conditions, and examples on this site are provided on a best-efforts basis and should not be taken as final.

Euro Pacific Securities will not be held responsible for pricing and conditional discrepancies that may arise in the normal course of offering Euro Pacific Trader. Customers should always review and rely on the conditions that are shown directly on Euro Pacific Trader, and it is the responsibility of all customers to carefully review the conditions of every action before approving execution on Euro Pacific Trader.

Interactive Brokers LLC is a registered Broker-Dealer, Futures Commission Merchant and Forex Dealer Member, regulated by the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), and is a member of the Financial Industry Regulatory Authority (FINRA) and several other self-regulatory organizations. Interactive Brokers LLC does not endorse or recommend any introducing brokers, third-party financial advisors or hedge funds, including Euro Pacific Securities. Interactive Brokers LLC provides execution and clearing services to customers. None of the information contained herein constitutes a recommendation, offer, or solicitation of an offer by Interactive Brokers LLC to buy, sell or hold any security, financial product or instrument or to engage in any specific investment strategy. Interactive Brokers LLC makes no representation, and assumes no liability to the accuracy or completeness of the information provided on this website.

For more information regarding Interactive Brokers, please visit www.interactivebrokers.com.

2 Risk-based margin methodology calculates margin requirements by analyzing the potential worst-case loss a portfolio can suffer over a given period (typically one day). The methodology uses a series of hypothetical market scenarios that reflect changes to underlying price moves and, in the case of options, time decay and changes to implied volatility. However, the market scenarios are static and based upon the previous end-of-day data (Source: Interactive Brokers).

3 HKFE: Hong Kong Futures Exchange; SEHK: Hong Kong Stock Exchange.

Tax Reporting

Form 1042-S reports to the IRS any US Source Income earned by non-US persons and entities subject to US withholding tax, which includes interest, dividends, and other fees/payments on your account for the year. You may receive multiple 1042-S forms reporting different types of income.

Learn more about US Source Income here.

Where to Access

Currently, the primary tax form available for viewing is Form 1042-S. To access and print your tax forms, log in to your Euro Pacific Trader Client Portal, and then click Reports > Tax > Tax Forms inside the Menu.

The purpose of this article is to assist you transfer positions from your Euro Pacific Trader brokerage account to another broker of your choice.

Disclaimer

• Only equities (stocks, ETFs, and bonds) are eligible for transfer
• Your receiving brokerage account’s account name must match your account name with us, i.e. first party
• We cannot guarantee that your receiving broker supports all of your securities
• A standard transfer fee will be applied

Transfer Process

1. Gather your transfer details

We will need:

• Receiving broker’s name
• Account name at receiving broker
• Account number at receiving broker
• Receiving Broker’s email address
• Assets to be transferred (Name, Symbol, Quantity)

2. Submit your request

After gathering the information above, please create a case inside your eBanking stating your request and include/attach your information compliance pre-approval.

3. Transfer initiated with your broker

Interactive Brokers1, our brokerage custodian, will initiate contact with your receiving broker. Transfer times vary greatly, depending on how responsive your receiving broker’s transfer department can communicate with Interactive Brokers. The average transfer takes 1-2 weeks.

4. Check the status of your transfer

Interactive Brokers may or may not notify us when the transfer is complete, so we recommend that you check your receiving brokerage account periodically for the securities.

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.

Due to the current high volatility in energy products, as well as the recent decision by certain exchanges to support negative pricing for a number of energy contracts, Euro Pacific Securities, Inc. has made the following policy changes to its expiration / near-expiration risk policies, effectively immediately.

Two Day Closeout Policy

Cash-settled contracts will be subject to the same liquidation schedules as the physical delivery contracts against which they are indexed.

By example, this will mean that both physical delivery contracts such as [email protected] (physically settled) and [email protected] (cash settled) will both be subject to mandatory closeout commencing the beginning of the regular trading session 2 days ahead of their respective expirations.

Note: The commencement of expiration risk and position reduction policies varies slightly based on the contractual details of the specific underlying commodity product , but is always referential to the earlier of:

• Last trading date
• Expiration date
• First notice date

Five Day Risk Reduction Policy

Starting 5 business days ahead of expiration, only risk-reducing orders in expiring month contracts will be accepted.

Orders that open or increase positions, as well as increase the expiration month risk will not be accepted. Position closing orders and margin reducing will always be accepted.

Applicable Products

This list is subject to change.

Monitor your margin requirements in real-time. The margin monitor tool helps you view the margin impact of orders and positions, as well as set up margin alerts to track your margin usage. The location of the margin monitor tool depends on which platform you are accessing it from.

• Client Portal
• TraderPro

Your Portfolio Details screen displays key account information and allows you to monitor the market value of your account, margin requirements, cash balances and current position information.

In your Client Portal, go your menu and click on Portfolio > Details.

Your Account window displays key account information and allows you to monitor the market value of your account, margin requirements, cash balances and current position information. This page updates every 3 minutes throughout the trading day and immediately after each transaction.

 

To monitor the margin impact of a new order:

• In TraderPro’s Mosaic layout, use the Advanced button in the Order Entry window then select Check Margin.
• In TraderPro’s Classic layout, right click on the order row and select Check Margin from the drop-down menu. Also available in WebTrader.

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.