Margin Requirements on RB/HO/Brent vs CL Spreads

Mehrali · May 4, 2011

Hi there! I have come to a dead-end with Interactive Brokers and I am hoping someone here can help me out. I recently started trading with IB on their TWS platform. So, when I construct an RBOB Crack spread by sell one lot of RB and buy one lot of CL, IB requires me to post $15,000 in initial margin. I have tried submitting both positions simultaneously, separately, a combo deal, but they still require me to post $15k per one lot of the spread.

I've spent some time with them on the phone trying to explain that although more risky than a simple calendar spread, the risk associated with a lot of Crack spread is in no way the same as the risk exposure of a long RB and a long CL position. Why should I be required to post full margin on both legs? I also explained to them that there is an RBOB Crack Spread contract (BY) traded on Clearport for which CME requires to post no more than $4k in initial/maintenance margin. I am at point of giving up and moving to another broker.

Does everyone else face the same situation? Is there a broker/platform that requires lower margins on these spreads?

You expertise is greately appreciated!

KM

etem_tezcan · May 13, 2011

for crack or calendar spreads, you should use a broker (mine is velocity) which allows buying /selling the exchange traded spread. CQG trader (free or minimal montly fee) is quite good for exchange traded spreads. You can view and trade spread in a DOM like screen. I never put on a crack spread but put on crude and NG calendar spreads. Margin required for may/sep crude calendar was 3375(int)/2500(mnt) usd

rog1111 · May 22, 2011

Hi Mehrali,

Funny but I have exactly the same issues with IB this week, I guess partly because the RB margin requirements have been increased recently. The IB combo deal has a rubbish bid-ask spread and is essentially 2 market orders with no price guarantee. Their chat person told me that IB dont allow trading of any of the the native Nymex spread contracts (eg HOCL or RBCL, which have a couple of ticks bid-ask spread in the pm session) and I blew my top. On top of which the commissions are damned high too. All of which is a great pity, as IB have lots of good features, and the API is free.

I have looked at CQG, they have different options but basically you are looking at several hundred £ a month with charts, although cheaper than TT or Stellar. They have a good API, if you are into that type of thing, which would require a major software re-write for me, but its probably worth taking the plunge.

Anyway, I just thought Id join you in a having a moan, I'll let you know what I do.

Happy trading!

Brgds,
rog1111

Mehrali said:
Hi there! I have come to a dead-end with Interactive Brokers and I am hoping someone here can help me out. I recently started trading with IB on their TWS platform. So, when I construct an RBOB Crack spread by sell one lot of RB and buy one lot of CL, IB requires me to post $15,000 in initial margin. I have tried submitting both positions simultaneously, separately, a combo deal, but they still require me to post $15k per one lot of the spread.

I've spent some time with them on the phone trying to explain that although more risky than a simple calendar spread, the risk associated with a lot of Crack spread is in no way the same as the risk exposure of a long RB and a long CL position. Why should I be required to post full margin on both legs? I also explained to them that there is an RBOB Crack Spread contract (BY) traded on Clearport for which CME requires to post no more than $4k in initial/maintenance margin. I am at point of giving up and moving to another broker.

Does everyone else face the same situation? Is there a broker/platform that requires lower margins on these spreads?

You expertise is greately appreciated!

KM

Margin Requirements on RB/HO/Brent vs CL Spreads

Mehrali

Newbie

etem_tezcan

Junior member

rog1111

Established member

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