Daily Management Review

Interactive Brokers Group Raises Requirements Margin For Betting On Tesla


The instable share performance of Tesla pushes the Interactive Brokers to seek collateral damage control.

Following the volatility recently observed in Tesla’s shares, the Interactive Brokers Group informed that the requirements margin will be increased for the clients who bet on the EV company.
A memo was released to that effect to the clients informing them of the margin raise to “30 percent for regular accounts”, which usually have 25% margin besides 20% on margin accounts which usually have a 15% requirement.
The changes are scheduled to be made effective after the market closes on Tuesday, July 31, 2018. As per the changes, after the mentioned date, clients will need to have “more cash in their accounts” for collateral damage control, before betting on Tesla through “shares, options, futures or other means”.
According to Reuters’ information:
“Roughly 35.4 million Tesla shares, or 27.95 percent of its float, are currently sold short and the cost of borrowing Tesla shares has risen to 2.6 percent this year from less than 1 percent last year, according to financial analytics firm S3 Partners”.
S3 reported that the short sellers of Tesla are falling short of “$469 million” till date in this year, even though they saw a “$1.23 billion” gain in July on a “mark to market basis”.