Note
Clients with IBLLC accounts or IB UK accounts carried by IBLLC, and Fully Disclosed Broker Clients must be Eligible Contract Participants to be eligible to trade Cash Forex. An Eligible Contract Participant is generally an individual or organization with assets of over $10 MM (or $5 MM if trades are hedging). The complete definition is located in Section 1a(18) of the Commodity Exchange Act. For more information about the Commodity Exchange Act, see the U.S. Commodity Futures Trading Commission website, or read the complete definition here.
Forex are global products and not connected to a specific country or region. The margin requirements are outlined in the section below, but may be subject to change depending on the rules of local regulators.
All assets in each currency are combined to determine a single net asset value in that currency. Separate margin requirement calculations are used when determining the amount of funds available for withdrawal and the amount of funds available for trading. When determining the amount of funds available for withdrawal, the margin for non-base currency assets is determined by taking the margin rate tables below times the net asset value in the currency. There is no margin for base currency assets.
The following margin rates generally apply to all customers. In various jurisdictions, local regulators require different and/or higher margin rates. If the local margin rates are higher than our margin rates, then the margin rates required by local regulators will apply. Otherwise, our margin rates listed below apply.
Separate margin requirements are used when determining the amount of funds available for withdrawal and the amount of funds available for trading. For more information, see Knowledge Base articles KB970 - Currency Margin Calculation and KB971 - Currency Margin Calculation (Withdrawals). Margin requirement for FX balances will be the greater of the calculation in KB970 or Margin for Cash Forex Positions shown below.
| Currency | Initial Margin | Maintenance Margin | NFA Margin on Cash Forex Position Only 1 |
|---|
Margin for Cash Forex positions is calculated as follows:
The following exchange rates and margin rates are used in the examples below. The rates are intended for illustrative purposed only and do not represent actual margin rates.
| Currency | Exchange rate to USD | Our Margin Rate | NFA Margin Rate |
|---|---|---|---|
| HKD | 0.125 | 3% | 5% |
| USD | 1 | 2.5% | N/A |
| EUR | 1.25 | 2.5% | N/A |
| NZD | 0.8 | 10% | N/A |
| Currency | Cash Value | Other Asset Value | Total Asset Value | Cash Forex Balance | Cash Forex Balance (USD) |
|---|---|---|---|---|---|
| HKD | -120.000 | 0 | –120,000 | –80,000 | –10,000 |
| USD | 20,000 | 0 | N/A | N/A | N/A |
Cash Forex position is -80,000 HKD vs 10,000 USD.
Margin is 10,000 USD * 5% = 500 USD.
| Currency | Cash Value | Other Asset Value | Total Asset Value | Cash Forex Balance | Cash Forex Balance (USD) |
|---|---|---|---|---|---|
| HKD | -120.000 | 40,000 | –80,000 | –40,000 | –5,000 |
| USD | 35,000 | –20,000 | N/A | N/A | 0 |
Cash Forex position is -40,000 HKD vs 5,000 USD.
Margin is 5,000 USD * 5% = 250 USD.
| Currency | Cash Value | Other Asset Value | Total Asset Value | Cash Forex Balance | Cash Forex Balance (USD) |
|---|---|---|---|---|---|
| HKD | 120.000 | 240,000 | 0 | 0 | 0 |
| USD | –10,000 | 0 | 0 | 0 | 0 |
–120,000 HKD cash is offset by 120,000 HKD non-cash asset value.
–10,000 USD cash is offset by 80,000 HKD non-cash asset value.
There is no Cash Forex position.
Margin = 0.
| Currency | Cash Value | Other Asset Value | Total Asset Value | Cash Forex Balance | Cash Forex Balance (USD) |
|---|---|---|---|---|---|
| HKD | 120.000 | 0 | –120,000 | –80,000 | –10,000 |
| USD | –10,000 | 0 | –10,000 | –10,000 | –10,000 |
| EUR | 10,000 | 0 | N/A | N/A | N/A |
| NZD | 21.875 | 0 | N/A | N/A | N/A |
Short balances in USD and HKD are paired up with long balances in EUR and NZD to form FX positions as follows:
Total Margin = 1125 USD. Note that net liquidation value is used once to offset HKD, but not used to offset USD.
A risk based margin system evaluates your portfolio to set your margin requirements. The risk valuations of your positions are created using simulated market movements that anticipate possible outcomes. As a result, a more accurate margin model is created, allowing the investor to increase their leverage.
Within a group of positions with the same underlying, 100% of the gain at any one valuation point is allowed to offset another positions loss at the same valuation point.
Example: An account holds a long stock position in stock ABC and a long put option contract in ABC. If a theoretical worst case scenario causes the underlying asset to drop 15%, then the loss that on the long stock position would be offset by the gain on the long put position.
Eligibility requirements vary according to the investor's personal information, region, and exchange.
All positions in margin equity securities (including foreign equity securities and options on foreign equity securities, listed options on an equity security or index of equity securities, security futures products, unlisted derivatives on an equity security or index of equity securities, warrants on an equity security or index of equity securities, broad-based index futures, and options on broad-based index futures.
For Residents of Europe:
Use the following links to view other margin requirements:
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