FAQs: Securities subject to Special Requirements
We are seeing unprecedented volatility in GME, AMC, BB, EXPR, KOSS and a small number of other U.S. securities that has forced us reduce the leverage previously offered to these securities and, at times, limit trading to risk reducing transactions. Outlined below are a series of FAQs relating to these actions.
Q: Are there any current restrictions on my ability to trade GME and the other US securities that have been subject to the recent heightened volatility?
A: We are currently not restricting clients from trading shares of AMC, GME, BB, EXPR, KOSS or the other stocks that have been the subject of extreme market volatility. That includes orders to open new positions or close existing ones.
Like many brokers, we place limits on opening new positions in certain of these securities for a period of time. Those restrictions have since been lifted.
We have not restricted clients’ ability to close existing positions and does not plan to do so.
Q: Can I use margin in trading stocks, options or other derivatives on these products?
A: We have increased its margin requirements for securities in GME and the other US securities subject to the recent volatility, including up to 100% margin required for long positions and 300% margin on the short side. You can see these margin requirements in your trading platform prior to submitting an order.
Q: Why did we place these restrictions on my ability to open new positions in certain securities?
A: We took these actions for risk management purposes, to protect the firm and its clients from incurring outsized losses due to wild swings in prices in a volatile and unstable marketplace.
We remain concerned about the effect of this unnatural volatility on the clearinghouses, brokers and market participants.
Q: Do we or our affiliates have positions in these products that it was protecting by placing these restrictions?
A: No. Us ourselves has no proprietary positions in any of the securities.
Q: What allowed us to place those restrictions?
A: Pursuant to its client agreement, we may decline to accept any client's order at our discretion.
We also has the right to modify margin requirements for any open or new positions at any time, in its sole discretion. After all, we are the one whose money is being loaned in a margin trade.
Q: Did those restrictions apply to all or just some of our clients?
A: All restrictions – all limits on opening new positions and margin increases – applied to all clients. They were placed based on the security, not based on the client
Q: Is my money at risk? Have we suffered material losses?
A: We did not incur substantial losses. Through its prudent risk management, we have navigated this market volatility well. In any event, on a consolidated basis, IBG LLC exceeds $9 billion in equity capital, over $6 billion in excess of regulatory requirements.
Q: What will we do going forward? How will I know?
A: We will continue to monitor developments in the market, and will make decisions based on market conditions. For current information, please continue to visit our website.