Exceptional Circumstances

Volatile markets and their impact on your portfolio

In this article we are explaining how to proceed a more intense portfolio monitoring, where you could find further information and potential impacts on your portfolio.

How do I see if a product is blocked?

For an investor it is indispensable to have an overview of the situation and to see at short notice whether the products in his portfolio are still tradable in order to be able to act immediately. Whether a product has been blocked by the responsible broker or the respective exchange can be determined on the basis of various indications.

In the following we will show you how to check if products have been blocked due to unpredictable events (also referred to as Black Swan Event).
The examples are based on LYNX+ and the Trader Workstation:

Alternatively, you can obtain information about the tradability of the products from the websites of Interactive Brokers or other external sources. In principle, the websites of Interactive Brokers, the respective stock exchanges or the websites of authorized financial authorities are suitable for obtaining trustworthy information. You will read more about this in the following part.

Stay informed

As an investor, staying on top of the financial markets is crucial. You can find certain and reliable information about market restrictions as well as restrictions concerning certain stocks on the respective website of the exchange. We also recommend using external sources for more insights.

How do extreme markets influence my portfolio?

Extreme markets are markets that are experiencing high volatility movements due to internal or external events. Those markets movements have many consequences such as amongst others:

Increase in Volatility

Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security. Volatility is often measured as either the standard deviation or variance between returns from that same security or market index.

In the securities markets, volatility is often associated with big swings in either direction. For example, when the stock market rises and falls more than one percent over a sustained period, it is called a “volatile” market. An asset’s volatility is a key factor when pricing options contracts.

Change in IBKR Margin Policies

As a LYNX client, you open a trading account held at Interactive Brokers (or “IB”). The trading account can be a cash account or a margin account. In the case of a margin account, IB has a very strict margin requirement, the terms and conditions of which can be found by clicking here: Margin Requirements | interactivebrokers.com

LYNX has no influence on the operation of this margin, this is the sole responsibility of IB. To ensure the safety of its clients in all circumstances, Interactive Brokers may change certain measures relating to margin requirements in the event of unprecedented volatility in the financial markets at any time and also fully at their own discretion. When this occurs, the changes encourage the reduction of leverage in client portfolios and thereby ensure that client accounts are properly funded.
Interactive Brokers are committed to a forward-looking, prudent, and realistic approach to risk management.

Change in Exchange/Statutory

Exchanges may restrict or halt certain securities from trading with or without notice.
Brokers will follow all regulations related to restrictions or halts which impact the transmission of orders.

This may result in the following events:

• New positions not being able to be opened.

• Current positions may not be closed anymore.

• Transfers of targeted assets may be unavailable.