@essential I would imagine that - as long as you don’t have a negative cash balance (i.e. you don’t use your margin) - nothing bad should happen…
(edit) interesting article on margin, especially the last part about the regulations.
With a maintenance margin of 25% the current value of your portfolio should exceed at least 25% the money the broker has borrowed you; if it goes below you receive the margin call -> the broker ensures that the borrowed money will be recovered
Hi there
Anyone also received the following message from IBKR?
What is this all about?
Thanks and cheers,
P.
If you borrowed money against your portfolio, you might be in deep shit, because the collateral value of VWRL will be zero.
If you didn’t, then you can ignore this message.
I like how they flagged this potentially disastrous message as
Priority: NORMAL
I didn’t receive any notification so far, even if I hold a quite big position in VWRD (same as VWRL but denominated in USD) and I’m using a non negligible amount of margin…
Let’s see if I receive something in the next days… in case, I would close the position and transfer to VTI.
But imo it’s very bad news and I don’t honestly see the reason… moreover, I agree this should be a high priority message… 
I have already seen a message like that and I assumed it was because of the low trading volume of the CHF version. I guess if you did not get any warning you should be fine.
Thanks for posting the screenshot. A few days ago someone wrote about this in another thread, and since then I was wondering why they did it. So it looks like VWRL, at least the one that is traded on SIX, has too low of a trading volume to meet certain FINRA liquidity requirements. That makes sense.
That’s the difference. They do NOT set this restriction per security (or per ISIN, if you will), but per security+exchange combination.
When I log into the paper account and try to trade, it tells me the following.
Ticker / Stock Exchange / Initial Margin / Maintenance Margin:
Can someone explain me this? I tried to experiment with margin in a paper account.
Here are the margin requirements:
And here is the trade preview. I made an order to buy 10’000 shares @ $197.33.
So it tells me that my initial margin is higher than my equity.
I have two questions:
Edit: I found this:
What is concentration margin? Anybody?
That comes separately on the whole portfolio and is typically checked overnight.
That I don’t understand. Did you try to execute the trade? Will you get an error message?
I guess it is applied if your portfolio is too concentrated on few positions, like holding one volitile stock of a certain company presumably making money by producing electric vehicles.
But that would be very nasty. If it initially let’s you buy with 25%, but overnight you need 50%? Then what’s the point of having initial & maintenance margin lower than 50%? Does it only apply to the first night after purchase? This would mean an initial margin of under 50% would only make sense for day traders, who would sell before the day is over?
Yes, I get the error right away when I hit preview. It really does calculate the margin as 55% and 50%.
Yes, by googling quickly it seems to be the case. If you hold too much in a single position, your margin requirements are increased. But there is no logic specified anywhere, and these concentration margins are not displayed in the app…
BTW I tried with MSFT, it said the margins are 25% / 25%, but the effectively calculated amounts were 33% and 30% respectively.
Day trading.
No, every night. Normally you would get a 25-30% margin requirements with Portfolio margin, but in this case I don’t know what to expect.
Well, then I am somewhat relieved 
Once you have an actual position open, your margin requirement for this position as well as for the whole portfolio will be shown. I think that preview just doesn’t take into account all details properly.
If, according to Reg T, 50% is the minimum equity required every night, then why is it called initial? And what’s the point of maintenance margin at 25%? When does it kick in? Instantly at any time of day?
I don’t see how this relieves you :). It would be good to know the margin requirements a priori and have some place where you can always see the percentages for a given asset. If you make a trade and then check the margin amounts, you have no guarantee that they will remain like this.
Hi Bojack, open the app, in your positions, select the one of interest to you, right hand side select more, scroll down under Market Data, there is a section for Margin Requirements
@Dr.PI I think you’re really right on this one. This is what I found on IBKR website:
Here, a Reg. T account holding $10,000 in cash may purchase and hold overnight $20,000 in securities as Reg. T imposes an initial margin requirement of 50%, which translates to buying power of 2:1 (i.e., 1/.50). Similarly, a Reg. T account holding $10,000 in cash may purchase and hold on an intra-day basis $40,000 in securities given IB’s default intra-day maintenance margin requirement of 25%, which translates to buying power of 4:1 (i.e., 1/.25).
They really say initial margin is overnight, and maintenance margin is intra-day. And initial margin is called this way, because it fixes margin loan amount in the moment of purchase.
Hi Mr Zack. If you check the screenshot I pasted above, the margin requirements are there. But the problem is that they don’t correspond with the effective margin requirements which are applied when I make the trade. They say 40/40, but they calculate with 55/50.
I didn’t understand how you can make a trade if the margin requirements are higher than your equity.
There is no guarantee whatsoever that the margin requirements stay as they are. A broker can adjust them any time and guess what: they usually increase margin requirements when markets are doing bad
@Dr.PI can I ask you 2 more things, since you seem so well-informed?
Yes but you have reached the limits of my knowledge 
You are going to have a negative cash position at IB. You might be able to declare all IB holdings including this negative position as one account in the tax declaration. Or you might have to declare your positions and your debt separately. Some people from ZH might know how it works there.
That is a question that was extensively discussed in this forum and noone can give a definite answer. But it looks like ZH is not overreacting to such advanced investment techniques to declare people professional traders.
According to Kreisschreiben Nr. 36 “Vorprüfung”, you need to make sure that taxable income from your securities (interest, dividends) is higher than the margin interest you’re paying. If that’s the case and you also fulfill the other 4 criteria of the “Vorprüfung”, you’re guaranteed to be treated as private investor.
I.e. a small margin loan is typically not a tax issue on its own. However, if you already violate one or more of the other criteria, the use of a margin loan may increase your risk of being classified as commercial trader.
I suppose you’d put it in the debt section, as you would for example for a mortgage. You should also be able to deduct interests paid from your taxable income. If you end up asking the tax office to confirm, please write back what you find out.
Actually, last year I had a situation where my company has paid out too high of a bonus out of my current account within the company, so this account had a negative balance as per end of year. So what I did is, I reported this account as a regular current account, with a negative balance. I didn’t hear yet from the tax office about that, so can’t tell if there is any problem with that. But the boss told me to do it like this, and the tax software accepted it.
I suppose with IB it would be the same. I guess margin is like an overdraft on a money account, not like a separate debt position.
I’m still not convinced if I should buy on margin. Maybe I just wait until January. Then even if I do buy on margin, I will have until the end of year to pay it off, so it won’t even appear on the tax declaration.
