Margin Lending & IB

[G-reg]

Hi Y'all,

I don't understand how the margin (Reg-T) works on IB.

Currently I have in my account $15K for trading

$11K in open positions
$ 4 K in cash

BUT
IB says that I have current available funds of $8600(AUD)
and Buying power of $28000(AUD).

does this mean I can have open orders in excess of my actual account balance ( in this case $4K AUD) ?

 

[beamstas]

Reg-T is a margin account, so yes.

 

[soren_lorensen]

Reg-T is a margin account, so yes.

Beamstas,

any idea how much interest they charge on these Reg-T accounts, wonder what the interest rate is, with NAB here its 7.8% pa?

do they charge you monthly or something like that.

is it true that they automatically use the margin for share purchases, is there a way around this, can you get it just to use your own cash?

by the way, i'm new with IB and have found it to be great compared to aussie main brokers.

 

[tech/a]

IB allows you 4:1 Margin during the day and 2:1 overnight.

So you could trade 60K during the day and sell back to $30K if holding over night.

The Beamster is correct.

Interest is charged only for the portion you use for the duration you use it.
Not sure of the rate---it doesnt concern me.

No its not true.
Your funds are used and if you go over then the portion over is margin.

 

[Pager]

Do your own research and maybe give them a call if unsure but Im pretty sure IB charge interest at the respective rate of the currency its in plus 0.5% so for Australian stocks you will pay the base rate of about 3.6% plus 0.5 so about 4.1% which is very good, you cannot get the leverage you would with a standard Margin loan during the day its about 4X your account overnight 2X, if you exceed this IB will close positions on you, you can however choose which to close first if you wish.

Interest paid is the benchmark rate minus 0.25% but minimum account balance applys about $15K for Australian dollar denominated accounts

 

[G-reg]

Great thanks everyone.

 

[etingsoon]

Btw, what is margin lending?

Oh ya, I am a newbie here.

 

[skyQuake]

Do your own research and maybe give them a call if unsure but Im pretty sure IB charge interest at the respective rate of the currency its in plus 0.5% so for Australian stocks you will pay the base rate of about 3.6% plus 0.5 so about 4.1% which is very good, you cannot get the leverage you would with a standard Margin loan during the day its about 4X your account overnight 2X, if you exceed this IB will close positions on you, you can however choose which to close first if you wish.

Interest paid is the benchmark rate minus 0.25% but minimum account balance applys about $15K for Australian dollar denominated accounts

Site says its 3.055% for margins though, is this Reg T margin rates?

 

[cutz]

Site says its 3.055% for margins though, is this Reg T margin rates?

Hi Skyquake,

It's actually 1.5% above the benchmark so it works out to be 4.567% ATM, still heaps better than what the banks here can offer (on tier one, it gets better on bigger balances).