non-base currencies

[indextrader]

Dear IB Trader:

As of Monday, November 18th, non-base currencies will become part of the list of assets considered for liquidation when there is a margin deficiency. IB recommends that traders with multiple currencies review the margin requirements for currency assets. This modification will in no way affect traders who only trade in their base currency.


A haircut is applied to the total net liquidation value in any non-base currency that has negative value. The haircut amount is added to the total margin requirement in that currency. The following haircut rates are applied by IB.

US Dollar 5%
Euro 5%
Hong Kong Dollar 10%
All Others 8%

Example

Universal Account with USD base currency.

Haircut rates for an account with USD as the base currency:

CHF = 8%
EUR = 5%

Net liquidation values (NLV):

USD = 10,000
EUR = -5,000
CHF = 1,000

Step 1) Apply Haircuts

NLV CHF is positive, no haircut is applied.
NLV EUR is negative, EUR haircut = -5000 * 0.05 = 250 EUR
Step 2) Add the 250 EUR haircut to the EUR margin requirement.