Interactive Brokers' clients were greeted with an email informing them of an increase in margin requirements leading up to the November elections in the United States.

The letter states that initial margin requirements will rise up to 35% from normal levels starting September 28th through October 23rd. Maintenance margin requirements will increase in a similar manner between October 5th and October 30th. The updates will be made each day following the market's close in New York, and will be effective the next trading day. By regulation, brokers usually loan their clients 50% of the value of a new position, and 25% to maintain a current position. This will increase gradually to 67.5% for a new position and 33.75% for 澳洲幸运5官方开奖结果体彩网:maintenance.

The initial margin is the percentage of the purchase price of a security that must be covered by cash or collateral when using a margin account. The current initial margin requirement set by the Federal Reserve Board’s 澳洲幸运5官方开奖结果体彩网:Regulation T is 50%, but this regulation is only a minimum requirement. Equity brokerage firms may set their initial margin requirement higher than 50%. A margin account is essentially a line of credit in which interest is charged ෴on the outstanding margin balance.

Large Provider of Margin Loans

is one of the largest providers of margin loans globally, charging extremely . According to its most recent filing with the SEC, as of June 30, 2020, approximately $25.7 billion of customer margin loans were outstanding. Interest rates on margin loans are currently 0.75% to 2.59% in the U.S. Investopedia named 澳洲幸运5官方开奖结果体彩网:Interactive Brokers as its best broker for international trad♓ing, best for day trading, and best for low margin rates in 2020.

In April 202💙0, IBKR took a loss of approximately $88 million due to the huge drop in the price of contracts for New York Mercantile Exchange West Texas Intermediate May crude oil 𝕴to negative $37.63. According to a report on , several customers held long positions in these contracts, and their losses exceeded the equity in their accounts. IBKR fulfilled the margin settlements with the affected clearinghouses on its customers' behalf.

Interactive Brokers said in the email that it, "may make additional changes to the margin on certain products, or all products, depending on volatility. This includes changes built into the standard margin model as well as any new house margin requirements that may be imposed."

Will There Be More Changes?

Steve Sanders at Interactive Brokers, says, "We are continuously evaluating the current market environment and our margin requirements are a reflection of that assessment." There was no press release issued on this topic as the firm doesn't announce operations policy.

The margin agreement that customers sign with Interactive Brokers states that the firm may request additional margin collat⛄eral from customers and may sell securities that have not been paid for or purchase securities sold but not delivered from customers, if necessary.

What Other Brokers are Saying

It appears that Interactive Brokers is the only major firm updating its margin requirements at this point. But they are also the only brokerage to take a major margin-based loss this year due to market volatility. Granted, that volatility was in the crude oil market rather than in stockℱs, but margin practices a🤡re extended to any asset class that involves risk to the lender.

Tom Sosn🌟off of said, "We have not changed our requirements and we have no plans to do so." Rosaline McNei🧸l from says, "We will not be making any changes at this time." Shawn Herrin of says his firm has not made any changes to its existing margin structure in the last month, adding, "At this time, we have not made a decision to modify existing margin requirements. Typically, we make adjustments on a name-to-name basis depending on circumstances. Biotechs are one example of high volatility names that may require increases in requirements from time to time."

Joe Ely of tells us, "Lightspeed Financial Services Grou✅p (LSFS) employs a sophisticated, dynamic risk methodology that quickly reacts to market volatility. We will continue to adhere to our policy and make adju💜stments as needed on an account level or symbol basis, which should preclude the need for a wholesale change to margin requirements across the board."

" has no immediate plans to alter margin policy," says Jeff Peters. "Our Trade Operations and Risk teams will remain diligent and if market conditions warrant, take appropriate action to manage and mitigate risk. Any modi🐼fications or enꦦhancements made to margin policy will be effectively communicated."

At , Jeff Chiappetta, Vice President of Trading Services says that margin requirements are constantly reviewed and changed based on market, sector, or individual security volatility and risk. "We take a more conservative approach to margin/leverage than many competitors so when known events, like the election, are on the horizon we don’🃏t need to make drastic changes, he says.

A spokesperson fortells us, "Ally Invest closely monitors its margin requirements and market volatility a𝔉nd routinely makes adjustments where we feel necessary to help mitigate risk. However, at this point, we have not planned any broad based systemic changes to our margin requirements."