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Showing results for tags 'margin maintenance'.
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Hello all- Questions from a 'newbie', hoping someone here can help answer the following: Interactive Brokers uses the following language in their documents describing their margin process & policies: "In the interest of ensuring continued safety of it's clients, IB may modify certain margin policies to adjust for unprecedented volatility in financial markets. The changes will promote reduction of leverage in client portfolios and help ensure that client's accounts are appropriately captialized". Can anyone explain precisely what this means? I have 3 questions: I1) did follow up with them in a chat session, and, not surprisingly, was not able to learn how or what their definition of 'unprecedented volatility' means... am wondering if there is *any*measurability to this term, ie a rule of thumb percentage, at least? 2) For example: if I am leveraged at say, 4 to 1, and they decide to reduce leverage to 2 to 1, it appears they can make this decision, and sell your holdings without any notification to you, not even a margin call is required, as soon as they change their policy. GAHH! 3) What happens to your capital/the cash in your account, if, for example, the sale of your shorts was not enough to cover the margin amount originally borrowed? I'm guessing they can your cash too, but can't find that answer anywhere so far. BTW, I am only talking about shorting equities here, not futures. Thanks for any help or providing some suggestions as to where I can find this info. Hope you all are having a profitable season.
