Investing.com -- Interactive Brokers (NASDAQ:IBKR) is said to be taking steps to significantly reduce its risk exposure to MicroStrategy by gradually increasing margin requirements. The brokerage firm has reportedly informed its clients about this move in a recent letter.
Interactive Brokers stated, "In light of the current trading environment, IBKR will increase the margin requirement for all MicroStrategy Inc (NASDAQ:MSTR). products (Stock, Equity, Options, etc.)." The firm warned clients that the maintenance margin requirement for MicroStrategy Inc. positions will increase to a minimum of 50%, a rise from the current level.
The increase will be implemented in daily increments, starting after the New York close on January 8, 2025, and continuing through the trade date of January 13, 2025. This means that clients holding a position in MicroStrategy Inc. should prepare for the higher margin requirements.
MicroStrategy has emerged as a derivative play on the surge in Bitcoin. The company had accumulated 447,470 bitcoins by the end of 2024, which has contributed to its increased risk profile.
On Friday, MicroStrategy announced its plan to raise up to $2 billion capital through one or more public underwritten offerings of perpetual preferred stock, which will be senior to the company's class A common stock. The purpose of this capital raise is to strengthen MicroStrategy's balance sheet and enable the company to acquire more bitcoin.
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