Interactive brokers Rs.20 max brokerage?

#1
I hope I'm not breaking any forum-rules by creating this thread but it looks like Interactive Brokers has finally decided to go toe-to-toe with Indian discount-brokers & have capped their brokerage at the standard Rs.20/- max. Can anyone, who is already trading with them, confirm this? If so, this could potentially be a game-changer for a lot of Indian traders. Are their Futures margin-requirements in line with at least MIS margins offered by Indian discount brokers? The last time I'd checked (several months ago), it looked like they charged very high Future margins even for intraday trades but now, it looks like they're going to charge 50% of SPAN margin for intraday but again, it'd be great if someone, who's already trading with them, confirmed this before I consider opening an account with them (since I believe they're very paper-work intensive in their procedures & take a lot of time to open accounts).




 

lonstud

Active Member
#2
I am trading only futures and options with them and I can confirm brokerage has been reduced to Rs. 20 per order.

Also, margin requirements have indeed come down from before in addition to intraday margin relaxation. For any position initiated before 3:15, intraday margin upto 50% is applied which turns to full margin requirement at 3:15 and stays at that level from next day onwards. However, note that 50% margin requirement is minimum. For some single stock futures, they charge upto 100% of total margin requirement instead of 50% . There is very little clarity or explanation as to how these intraday margins are calculated by IB and which stock futures are given relaxation of 50% margin requirements intraday and which are not.

Full day margin requirements of few contracts:
Nifty - 95K
bankNifty - 121K
ITC - 127K
INFY - 91K
BhartiArtl - 178K
(intraday margin varies between 50% to 100% of above numbers, with no way to determine in advance)


They will not call to close out positions if you do not sufficient margin in your account at the switchover time of 3:15. You will get flash messages in TWS at the time of margin shortfall and positions are closed automatically post 3:15 until sufficient margin is restored in your account.
 
#3
I am trading only futures and options with them and I can confirm brokerage has been reduced to Rs. 20 per order.

Also, margin requirements have indeed come down from before in addition to intraday margin relaxation. For any position initiated before 3:15, intraday margin upto 50% is applied which turns to full margin requirement at 3:15 and stays at that level from next day onwards. However, note that 50% margin requirement is minimum. For some single stock futures, they charge upto 100% of total margin requirement instead of 50% . There is very little clarity or explanation as to how these intraday margins are calculated by IB and which stock futures are given relaxation of 50% margin requirements intraday and which are not.

Full day margin requirements of few contracts:
Nifty - 95K
bankNifty - 121K
ITC - 127K
INFY - 91K
BhartiArtl - 178K
(intraday margin varies between 50% to 100% of above numbers, with no way to determine in advance)


They will not call to close out positions if you do not sufficient margin in your account at the switchover time of 3:15. You will get flash messages in TWS at the time of margin shortfall and positions are closed automatically post 3:15 until sufficient margin is restored in your account.
Thanks for the confirmation with regards to Rs.20 per order. You're right, I found this page, which lists the intraday & overnight margins for all of the NSE futures tradeable with them - https://www.interactivebrokers.co.i...1|0|0|0|0|0|1|0|0|0|1|0|0|0|1|0|0|0|1|0|0|0|1 So, for Nifty & Banknifty, they're charging 48k & 60k for intraday & 95k & 121k overnight whereas margins for some stock-futures are inexplicably high, like Ajantpharm future has an intraday margin-requirement of 239k & 478k overnight, it's almost like buying the whole thing in the cash-market. :confused: I'd read somewhere on the Internet that they have weird, sophisticated algorithms to manage their own risk with respect to clients ending up owing money to them due to major losses, so they maintain higher margin-requirements for certain instruments which they believe to be likely to suddenly move big. So yes, their margins seem to be between 50% to 100% of SPAN, & even exceed SPAN on some futures, which is something they might need to reconsider if they really want to give Indian brokers a run for their money, which is what they seem to be wanting to do with this latest revision in their brokerage-structure.

Another thing that's going to be a huge problem for them to attract Indian traders is their very high net-worth requirements but here, it says that the requirements are not applicable for IB India accounts (although I don't know if that means SOME OTHER net-worth requirements are applicable for IB India accounts) - https://www.interactivebrokers.co.in/en/index.php?f=accountConfiguration&p=tradingrequirements but the last time I called them up, a few months ago, they said that one'd have to show proofs of $30,000 net-worth to trade F&O on NSE but I hope they have revised that policy as well along with their brokerage. Personally, I think minimum capital requirement of 1 lac isn't that bad if IB wants to avoid really small, high-risk traders, & I think there might be enough traders who can put in a deposit of 1 lac with IB if it means trading on a reliable & feature-rich platform like TWS but I'm not sure how many would want to put up with steep margin-requirements or show proofs of $30,000 in net-worth.

That's interesting because I'd read that their intraday cut-off time was 2:30 p.m. but I presume they have revised it to 3:15 p.m. And, another thing someone else pointed out to me was that they charge Rs.2000 for call & trade! :eek:

Anyway, thanks again for all of the information. :)
 

headstrong007

----- Full-Time ----- Day-Trader
#4
Margin requirement from IB is very high even for NF, BNF! 50% HIGHER for NRML!!!

For discount brokers, standard margin NRML for NF BNF is 8%.
MIS is minimum 50% of NRML so about 4% to total contract, which many one calls for 4X.
Whereas for most of them MIS is 40% of NRML, so 3.6% of total contract~3.6X.
With IB, even NF BNF NRML is 150% than normal discount brokers. BNF 1.20 Lakh where current NRML is below 80K with others. This is a very big DIS-Advantage. We need to increase 50% cap to maintain similar volume with NRML trades.
NF BNF NRML is nearly 12% there not 8%.

MIS requirement goes higher, this is 6% of total contract. In other words, it is 6X in IB, not 4X or 3.6X which is current standard for most of the brokers.

6X for MIS and 12X for NRML is way too high!:rolleyes:
 

lonstud

Active Member
#5
Thanks for the confirmation with regards to Rs.20 per order. You're right, I found this page, which lists the intraday & overnight margins for all of the NSE futures tradeable with them - https://www.interactivebrokers.co.i...1|0|0|0|0|0|1|0|0|0|1|0|0|0|1|0|0|0|1|0|0|0|1 So, for Nifty & Banknifty, they're charging 48k & 60k for intraday & 95k & 121k overnight whereas margins for some stock-futures are inexplicably high, like Ajantpharm future has an intraday margin-requirement of 239k & 478k overnight, it's almost like buying the whole thing in the cash-market. :confused: I'd read somewhere on the Internet that they have weird, sophisticated algorithms to manage their own risk with respect to clients ending up owing money to them due to major losses, so they maintain higher margin-requirements for certain instruments which they believe to be likely to suddenly move big. So yes, their margins seem to be between 50% to 100% of SPAN, & even exceed SPAN on some futures, which is something they might need to reconsider if they really want to give Indian brokers a run for their money, which is what they seem to be wanting to do with this latest revision in their brokerage-structure.

Another thing that's going to be a huge problem for them to attract Indian traders is their very high net-worth requirements but here, it says that the requirements are not applicable for IB India accounts (although I don't know if that means SOME OTHER net-worth requirements are applicable for IB India accounts) - https://www.interactivebrokers.co.in/en/index.php?f=accountConfiguration&p=tradingrequirements but the last time I called them up, a few months ago, they said that one'd have to show proofs of $30,000 net-worth to trade F&O on NSE but I hope they have revised that policy as well along with their brokerage. Personally, I think minimum capital requirement of 1 lac isn't that bad if IB wants to avoid really small, high-risk traders, & I think there might be enough traders who can put in a deposit of 1 lac with IB if it means trading on a reliable & feature-rich platform like TWS but I'm not sure how many would want to put up with steep margin-requirements or show proofs of $30,000 in net-worth.

That's interesting because I'd read that their intraday cut-off time was 2:30 p.m. but I presume they have revised it to 3:15 p.m. And, another thing someone else pointed out to me was that they charge Rs.2000 for call & trade! :eek:

Anyway, thanks again for all of the information. :)

Intraday cut-off timing is still at 2:30 pm. But that intraday cut-off relates to shorting stocks.(I have not used IB to short stocks, but as per my understanding thats the cut-off time before you need to cover your shorts in equity stocks). The cut-off at 3:15 relates to intraday margin requirements.

The webpage listed by you usually give the ballpark estimates of margin requirements. But at times of volatility, those numbers go out of window and new numbers are shown in their trading software. Also, those margin numbers on webpage are sometimes stale. Upon contacting their customer care last year, they informed that margin shown in their software is accurate and margins shown on webpage are for reference purpose only. Regarding high margin requirements for other stocks, I have noted the same in other post in this forum. Before this latest change to SPAN margins, they had margin requirements which were higher than notional value of futures contract for some contracts. Pharma stocks were usually the culprits. After current change to SPAN margins, the situation has somewhat improved but still remains high for some futures contract.

When I first opened my account with them in 2013, they wanted me show bank balance of Rs. 20 lakhs. This was relaxed for my wife in 2015 and they opened by showing bank balance of Rs. 6 lakhs. But when I opened HUF account in 2016, the requirement went upto Rs. 15 lakhs. So, I guess there is some leeway but they will require bank statement showing significant balance. Also, if you have less than Rs. 2 lakhs in your trading account, their software will not allow you to place orders for futures and options.

Call and trade charges are indeed listed as Rs. 2000. I have been trading with them for over 4 years now and their systems are robust enough to not require you to use call and trade facility. They have fully functional mobile app to place orders if you are not at your desk. Over the past 4 years, there were two instances when I was not able to trade due to technical issues as their backend had lost connectivity with the exchange and I had to carry positions overnight. I am satisfied with those numbers. Also, given my personal experience with their customer service, if I had used call and trade facility when they were having troubles with their connectivity and still able to carry out trades over phone, they would have waived those charges.
 
#6
Intraday cut-off timing is still at 2:30 pm. But that intraday cut-off relates to shorting stocks.(I have not used IB to short stocks, but as per my understanding thats the cut-off time before you need to cover your shorts in equity stocks). The cut-off at 3:15 relates to intraday margin requirements.

The webpage listed by you usually give the ballpark estimates of margin requirements. But at times of volatility, those numbers go out of window and new numbers are shown in their trading software. Also, those margin numbers on webpage are sometimes stale. Upon contacting their customer care last year, they informed that margin shown in their software is accurate and margins shown on webpage are for reference purpose only. Regarding high margin requirements for other stocks, I have noted the same in other post in this forum. Before this latest change to SPAN margins, they had margin requirements which were higher than notional value of futures contract for some contracts. Pharma stocks were usually the culprits. After current change to SPAN margins, the situation has somewhat improved but still remains high for some futures contract.

When I first opened my account with them in 2013, they wanted me show bank balance of Rs. 20 lakhs. This was relaxed for my wife in 2015 and they opened by showing bank balance of Rs. 6 lakhs. But when I opened HUF account in 2016, the requirement went upto Rs. 15 lakhs. So, I guess there is some leeway but they will require bank statement showing significant balance. Also, if you have less than Rs. 2 lakhs in your trading account, their software will not allow you to place orders for futures and options.

Call and trade charges are indeed listed as Rs. 2000. I have been trading with them for over 4 years now and their systems are robust enough to not require you to use call and trade facility. They have fully functional mobile app to place orders if you are not at your desk. Over the past 4 years, there were two instances when I was not able to trade due to technical issues as their backend had lost connectivity with the exchange and I had to carry positions overnight. I am satisfied with those numbers. Also, given my personal experience with their customer service, if I had used call and trade facility when they were having troubles with their connectivity and still able to carry out trades over phone, they would have waived those charges.
Right, that's what I figured after giving it a thought. Right, so F&O traders would be in the clear in that respect.

Right. Right, they do mention that. Right. Right, understood. Right, I've seen that thread of yours. My brain can't even process that, it makes no sense to charge more than the notional value of a futures contract. Right, it looks like they don't have a particularly good outlook on the Indian pharma stocks. Right, that looks to be case.

Right, those numbers look around about the numbers that were quoted to me several months ago, they said that I've to show proof of net-worth of $10,000 for trading stocks & $30,000 for F&O; my family advised me against it, so I decided to respect their wishes but this latest revision in IB's brokerage-plan has gotten me interested again. That's good to know, I wonder if they have mentioned it somewhere on their India-website. By the way, I read somewhere that you have to have a spare margin of at least 1 lac AT ALL TIMES; for instance, if you have 2 lacs in the account & 1 lac gets blocked for open positions then you can't take any more positions. Is this true?

Right. That sounds very good. Right. Ok. Right, definitely better than most brokers I guess. Right, it's very good to know that they mayn't charge us if we'd to use call & trade on account of issues occurring at their end.

Thanks again for sharing all of this information. You've been very generous. Cheers.
 

lonstud

Active Member
#7
One need not keep spare margin of 1 lac at all times to initiate positions. Your account should have balance of atleast 2 lacs to initiate f&o position. But that 2 lacs need not been in cash. If you have stocks worth 1 lac and cash worth 1 lac in your account, then you can initiate position in f&o instruments as long as initial margin requirement is less than 1 lac.
 
#8
I called them recently and they said that the net worth requirement is 10 lacs. I'm pretty sure that includes F&O trading as well.

Are you trading fully automated using IB? Do they provide this feature?
 

lonstud

Active Member
#9
They provide barebone API framework which can be used to connect to their trading software. They do not restrict how this framework may be used by their customers. One can request realtime data using their api and place/manage orders using their api. Anything in between needs to be done by the customer. They do not have any predefined libraries to do the middle steps. Having said that, one can indeed develop a system to trade using api with IB
 
#10
Thanks for your helpful response. So if I am interpreting it correctly, you are saying that a *fully* automated trading system without any human intervention can be developed using IB APIs? I don't require any help with trading logic - I can do that on my own.

Also do they provide historical tick data via their APIs (including for F&O)? And are there separate charges for historical data and live data feeds?
 

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