IB Blasts Preemptive Margin Hike Warning

Tyler Durden's picture

The brokers are getting pissy again - it must be that time of the month again....when vol is about to surge. In a blast to all exchange members, Interactive Brokers has just warned of imminent margin hikes due to "the recent spike in volatility of various commodity products." Of course, expecting vol (just like inflation), one can argue, is more important than even experiencing it. And it promptly becomes a self-fulfilling prophecy. In other words, should other brokers and/or exchanges follow suit with this preemptive margin hike warning, it may be time to step to the sidelines. Then again, in centrally planned, manipulated stock (and now all other) markets, this is easily the best decision regardless...

Full IB email:

To:CDE,CFE,DTB,ECBOT,ELX,FTA,GLOBEX,HKFE,IDEM,IPE,KSE,LIFFE,MATIF,MEFFR,V,

MEXDER,MONEP,NSE,NYBOT,NYMEX,NYSELIFFE,OMS,OSE.JPN,SNFE,SGX,SOFFEX, TSEJ traders:
Tue May 24 13:52:36 2011 EST

Please be advised that, in light of the recent spike in volatility of various commodity products, and in an effort to more accurately reflect price risk for such contracts, we will be enhancing the methodology used to identify and price this risk. As a result, the house required margin may be greater than the Exchange-required margin in specific, high volatility products. In order to minimize the impact of this enhancement, any margin increases will be implemented gradually, beginning with today's intra-day parameter refresh. Please monitor and manage your risk accordingly.

h/t London Dude Trader