Brokerage/platforms terrible in Oz

alphaman said:

I could not log in to TWS and WebTrader this Sunday afternoon, is it just me?

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This has been discussed earlier in this thread and it appears that TWS is closed each weekend. Suggest you do a search in this thread to find other posts on the subject

sails said:

This has been discussed earlier in this thread and it appears that TWS is closed each weekend. Suggest you do a search in this thread to find other posts on the subject

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Thanks sails. I did read through every single post in this thread before I opened my IB account. I guess at the time I only focused on the account opening aspects of IB. About time to re-read the thread anyway

alphaman said:

Thanks sails. I did read through every single post in this thread before I opened my IB account. I guess at the time I only focused on the account opening aspects of IB. About time to re-read the thread anyway

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Yep - it's a long thread! Not sure if you are aware that you can search an individual thread - it can be found towards the upper right called "Search this thread" - click on that and try typing in something like "weekend" ...

Boggo said:

Folks, is it just me or does anyone else think that there seems to be way too many unresolved issues associated with IB setting up here.

Don't get me wrong, I would love to open an account through IB but all of these 19 pages seem to highlight deficiencies and poor planning on their introduction to the ASX which scares me off. I dont have the time or patience for so many problematic issues that should'nt exist.

I know that I will probably get shot down here but really, it can't be that hard.

Mike

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Above is an extract from my post on page 19 on Oct 5th, we are now on page 25 and still going.
Does IB have these issues in the US or just here in AUS, if it is just here in AUS then why are people signing up and having all these problems to save 10 bucks per trade. I also have some serious concerns with this whole chess issue.

My

Mike

Re: Interactive Brokers questions

originally posted by xtanda:
Re: Interactive Brokers Questions
I did not realize that my trading account had something to do with IB until I saw the heading of the monthly report. I think there is no minimum trading requirement ( I could be wrong since I did make average about 10 trades per months for the last 6 months). The brokerage is $10 (Aus stock, $US10 for US stock).. not bad..

My point is: you don't need to involve directly with IB, you can deal with one of their reseller.... My broker is www.spectrumlive.com - subsidiary of tricom.
...
Mod Note- this immediate discussion is from another thread which was merged with this thread as they cover the same issues, see p16 of the current thread (post #301 onwards) for background info and more details about spectrumlive.

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Spectrum live do charge for ASX data (as the ASX charge them).

IB has most advantages regarding facilities and cost.

Spectrum live has the advantage of CFD's.

Matt

Am I the only one who finds it unusual that TWS has to close down for 36 hours of the weekend? That's a long time for system maintenance.

Boggo said:

Above is an extract from my post on page 19 on Oct 5th, we are now on page 25 and still going.
Does IB have these issues in the US or just here in AUS, if it is just here in AUS then why are people signing up and having all these problems to save 10 bucks per trade. I also have some serious concerns with this whole chess issue.

My

Mike

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I think anyone that has opened an IB account and trades often soon realises that what we have been offered in Oz till now is just rubbish. It is just not because of cheap brokerage.

Some of the complexity comes from their HUGE range of products available and the sophistication of their TWS. What other broker will let you suck there data out for use in other programs as well as the ability to execute trades from endless number of third party suppliers. They should be congratulated on giving their customers what they want rather than setting up the bare minimum infrastructure like commsec/etrade etc. The ability to trade just about any market from one account IMO is magnificent.

I have been reading the post in this thread for some months and I got to say a lot of the problems have been the fault of the person setting up. I mean we have had people wanting to use out of date identification, asking if they have to make $10,000 worth of brokerage per month, people signing up for a margin account without knowing how they work!, and mostly very simple Q's that are answered on their web site. And could you imagine a etrade rep coming on here to answer questions? Never.

I have set up 5 different accounts with them and all have gone smooth.

Has anyone considered the Capital Gains Tax implications of transferring stock to IB? The arrangement, as I understand it, is that IB takes title to the stock and Fortis Clearing sponsors the stock into CHESS on IB's behalf (IB in turn ascribes the stock to our/client's ac).

I would assume that a transfer of stock to IB via Fortis would trigger a CGT event due to the change in ownership (from us, the client, to IB). Yet another factor to consider.
NB This has little to with IB's trading systems or platforms, which appear to be very versatile as TremblingHand points out, but rather to do with risks and non-brokerage costs to Australian traders.

If we were merely to transfer CHESS sponsorship to another Aussie broker (who is a CHESS participant) then there would be no CGT event, from what I understand of CGT (I'm not an accountant or lawyer), as there is no change in ownership/title.

IB has taken the anomalous position of requiring transfer of title as well. I note that there is no warning of this nature anywhere else in this thread or on IB's website- it is certainly a material consideration imo.

RichKid said:

Has anyone considered the Capital Gains Tax implications of transferring stock to IB? The arrangement, as I understand it, is that IB takes title to the stock and Fortis Clearing sponsors the stock into CHESS on IB's behalf (IB in turn ascribes the stock to our/client's ac).

I would assume that a transfer of stock to IB via Fortis would trigger a CGT event due to the change in ownership (from us, the client, to IB). Yet another factor to consider.
NB This has little to with IB's trading systems or platforms, which appear to be very versatile as TremblingHand points out, but rather to do with risks and non-brokerage costs to Australian traders.

If we were merely to transfer CHESS sponsorship to another Aussie broker (who is a CHESS participant) then there would be no CGT event, from what I understand of CGT (I'm not an accountant or lawyer), as there is no change in ownership/title.

IB has taken the anomalous position of requiring transfer of title as well. I note that there is no warning of this nature anywhere else in this thread or on IB's website- it is certainly a material consideration imo.

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Richkid,

hmm thats a good point you raised.

I don't think the transer would trigger a CGT event as beneficial ownership remains with you.

E.g. when you exercise an instalment warrant, it does not an CGT event notwithstanding that legal title has transferred from the issuer's trust to yourself.

Thats just my opinion, I will attempt to find a more definitive answer...


Hyperion

I dont believe ownership of the shares goes from the client to IB, because it was never in the client`s name in the first place.
the shares go from the seller to IB, who keeps them for their customers at Fortis.

I also dont believe a CGT event takes place, `cos the client is not selling to IB or is anybody making a profit selling to IB?

I do believe there is a lot of scare mongering going on here.

In the ultimate case of IB going bankrupt, both your cash and your shares are covered by an insurance policy.

so what`s the big deal?????

yonnie said:

I dont believe ownership of the shares goes from the client to IB, because it was never in the client`s name in the first place.
the shares go from the seller to IB, who keeps them for their customers at Fortis.

I also dont believe a CGT event takes place, `cos the client is not selling to IB or is anybody making a profit selling to IB?

I do believe there is a lot of scare mongering going on here.

In the ultimate case of IB going bankrupt, both your cash and your shares are covered by an insurance policy.

so what`s the big deal?????

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Yep agree

In the ultimate case of IB going bankrupt, both your cash and your shares are covered by an insurance policy.

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I hope you're right yonnie.

But Jim Sinclair (www.jsminesite.com) who is someone i highly respect and have been reading for years makes the salient point that if a number of brokers go down the drain a the same time there is little likelihood of a cash payout - the collapse would be just too big.

Also our shares may be held in unsegregated accounts that mix IB assests with that of its customers, which means if IB hits the fan it will take years to get your shares back from a US Bankruptcy judge. Everything will get frozen untill they work their way through the mess.

Hope i'm wrong on all counts.

yonnie said:

I dont believe ownership of the shares goes from the client to IB, because it was never in the client`s name in the first place.
the shares go from the seller to IB, who keeps them for their customers at Fortis.

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If I hold shares they are in my name, I receive CHESS holding statements from the ASX to that effect and GST invoices from CommSec showing that I paid for the stock through my account. May I suggest you read the CHESS documentation on the ASX website for your edification. If IB will only allow me to trade those shares if I transfer title to them then there has been a change of some interest, the question is whether that is deemed under statute to be a capital gain or loss, as it is not income according to ordinary concepts in my view, at the very least.

I also dont believe a CGT event takes place, `cos the client is not selling to IB or is anybody making a profit selling to IB?

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This is not as simple as you make it out to be- tax is complex and the legislation is voluminous. Consumers are entitled to seek clarification about the legal holding structure of the stock as this has tax implications.

I do believe there is a lot of scare mongering going on here.

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Please refrain from making unsubstantiated accusations in this manner- that phrase is best left to politicians and election campaigns. I am not a competing broker so I have no interest in scaring anyone and have clearly stated my reasons for concern. This thread has many posts by consumers who raise valid points about how IB will operate in the local market. Forums are for open discussion, I am happy to be proven wrong. I'm still enthusiastic about IB.

In the ultimate case of IB going bankrupt, both your cash and your shares are covered by an insurance policy.

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So if IB crashes I get all my money back plus my shares in no time, like magic....if only insurance was like that.

so what`s the big deal?????

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If it's not a big deal to your relationship with IB or to your interests generally, then it may be best that you continue as you have in your state of bliss rather than obstructing those who try to resolve a material issue on a public forum by interacting with predominantly helpful individuals.

So are you saying that I can trade with IB as much as I want and not get CGT? And I will get taxed only when I take my money out of IB?

juw177 said:

So are you saying that I can trade with IB as much as I want and not get CGT? And I will get taxed only when I take my money out of IB?

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No that is not what was said. The effective ownership of the shares when transferring them to IB as the broker stays the same so there was not a CGT event. I would suggest that if you are concerned you should contact IB and get something in writing if you still have doubts contact ATO. you can do it on line and get the facts from the Top.

There seems to be a great deal of scaremongering here. Remember futures accounts and CFD accounts also do not have a CHESS equivalent. In fact, we are one of the few firms globally that link securities and futures accounts, so that you can benefit from the insurance on the securities accounts.

Just to clarify the CHESS situation. We are unlikely to sponsor clients for CHESS. Effectively we are acting as your custodian. In Australia, the stock is kept in the Chess account for Fortis, on behalf of IB Segregated Client account, on behalf of our clients. So you still have claim on the stock, there is also insurance carried on all accounts, details below. We also have an AFSL. The stock still belongs to you, you haven’t sold the stock.

When it comes to corporate actions – it’s easier. We process it all for you. If it’s an elective corporate action, you just tell us, and we process all the forms.

In most parts of the world when you buy a stock, the name that appears on the stock is the brokers name. This stock is referred to as being held “in street name”. Generally stock is held in street name for convenience purposes as it facilitates efficient transfer of ownership and settlement of trades. It also allows the broker to offer a number of advantages to clients, including margin facilities, increased short availability, cross-margins, etc. In the institutional world most funds have a prime broker or custodian. Australia’s CHESS holding is quite unique as it enables the stock to be held in the investors name directly. In Hong Kong there is a similar set-up, but it is rarely used by local investors who usually hold their stock in street name.

We will not be all things to all people. We offer a multi-asset global trading platform. It’s a professional execution platform with almost all the functionality for managing orders that you will require – whether it be a complex order type that you wish to automate, or pulling data into your own trading and charting system. Basket trading, algorithmic trading, and volatility trading tools are all in the platform and while mostly used by financial institutions are made available to all clients.

Through an IB account, you can deposit your Australian stocks, and automatically use the margin generated to buy stocks or futures worldwide. You can also manage your currency risk and do currency conversions at institutional interbank rates – rates that your local bank will not get anywhere near.

Our commissions are low, and this is a result of the combination of our large trading volumes (700,000 trades per day), and the fact that we are extremely automated (another reason for us not offering CHESS sponsorship). Our low commissions are ideally suited to frequent traders where commissions often take up a big chunk of their expense. For clients who trade rarely or buy a portfolio of stocks and sit and hold it for years, then we are probably not the right solution.

What we will do is set-up a solution whereby clients can easily transfer their stock out of IB and into their CHESS account elsewhere if they wish to do so. For those that are worried about the stability of their broker then feel free to do your research. Part of the group is listed on NASDAQ, under the symbol IBKR, and we do have an investor relations site with detailed financial information. Our current share price, values the group at over US$12 billion. Within the last few days we have also recently had our S&P investment grade rating renewed, and this report is also made available to customers.

Regarding the group itself here’s some details from our website:

Strength and Security Facts
• Interactive Brokers Group currently holds US$3.3 billion in equity capital.
• The affiliates of Interactive Brokers Group execute 14% of the world's equity options and 19.2% of US options.
• Group affiliates execute over 700,000 trades per day.
• Group affiliates hold memberships on over 70 exchanges, market centers, and clearing corporations around the world.
• Interactive Brokers Group has been in the trading business for 30 years.
• Interactive Brokers Group has always been at the forefront of trading innovation, starting with the invention of the first floor-based handheld computer in 1983.
• Interactive Brokers Group is rated Investment Grade by S&P. http://institutions.interactivebrokers.com/download/sp_rating.pdf
• Interactive Brokers customers are protected by $30 million in securities account protection.
Investment Policy
Interactive Brokers does not hold any Subprime/CDO Exposure. As a regulated broker, IB is subject to SEC and CFTC regulations on investment of customer funds. Permissible investment vehicles include bank deposits and a variety of top-rated government securities and related instruments. IB’s effective investment policy is more stringent than this, reflecting our risk-averse philosophy. We only invest customer funds in government securities and repos, cash deposits in bank accounts at the largest banks and the triple A-rated JP Morgan Prime Fund (in which we invest less than 1% of customer assets).
Additionally, we limit customer exposure through the following credit policies:
• Keeping investments in highly liquid, short-term instruments
• Distributing client funds among a variety of banks and counterparties to avoid concentrated exposure to any single counterparty
• Rigorous analysis by our Credit Committee of Counterparty Financial Conditions as well as review of risk factors prior to permitting investment activity with or via any counterparty
IB’s investment policy is very conservative. Our strict policies when investing client money minimizes our and your exposure in uncertain credit environments.

Thanks for that Steve.
Got a felling though that still isn't going to be enough

Hi Steve-IB,

Is it the case that I can use Tradestation plus a 3rd party API to set up automated forex trading through IB? I'm reasonably certain this is the case but would like a clear, definitive answer.

Cheers,

MS+T.

MS+Tradesim said:

Hi Steve-IB,

Is it the case that I can use Tradestation plus a 3rd party API to set up automated forex trading through IB? I'm reasonably certain this is the case but would like a clear, definitive answer.

Cheers,

MS+T.

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Yes you can. We offer an open API which lets almost any kind of trading or charting software to connect to us. Some companies have developed the connection to us directly, such as E-signal and others. For platforms which haven't developed the connection themselves, such as Tradestation, you can build your own or there are a number of 3rd party products which can be used to connect Tradestation to IB.

On our website, under Software >> Partner Programs we list a number of these solutions.

I don't understand the fuss about the CGT issue. Presumably, if you are interested in IB, you aren't going to be someone who has CGT as a factor in their trading anyway. And if you do want to hold things for lengthy periods of time, just transfer the stock to commsec or whatever.

But I wouldn't recommend transferring shares to IB anyway. My experience was horrible to say the least. Total incompetence. Just sell them in your original account and fund the account with cash.