Brokerage/platforms terrible in Oz

[Hyperion]

Regarding the treatment of corporate actions by IB,

Would there be a problem if there was a limit to each investors participation/a scaleback?

E.g. A company offers a Share Purchase Plan. Each investor is allowed to subscribe up to a maximum of $5000. Investor A at IB wants to buy $5k, Investor B at IB wants to buy $5k, Investor C at IB wants to buy $5k etc.
But the company only sees IB wanting to buy $15k and only lets them buy $5k.

Also if there was a scaleback - say for an offmarket share buyback. E.g. first 100 shares tendered accepted in full and 20% of shares above that. If there were multiple clients of IB all wanting to accept that offer. Could there be problems?


Hyperion

 

[RichKid]

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.
........
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.
.......

Steve,
Thank you very much for the detailed reply. This is the type of direct reply I have been trying to get via IB customer service via help tickets and email but have not been able to till now, not to this degree of clarity anyway. No doubt the staff education for this new Aussie market is ongoing and staff will be familiar with how CHESS operates before long. There is some cultural misunderstanding as well as I wasn't aware of the common practice overseas or the unique position of CHESS (although I noted the reference on IB online to the Hong Kong system). I am aware that only Aussie stocks (& warrants) are CHESS sponsored, that was my primary concern (rather than CFD's or futures). Your point about IB's global links is reassuring in relation to other types of assets.

Scaremongering is a term which should be used carefully imo, there was no motivation to create wanton fear. On the contrary, vigilance and due diligence are what I am concerned about. All consumers are encouraged to tackle these issue front on. Best to be safe than sorry as they say. Moreover, consumers are often afraid to move from an incumbent to a new player. So fear and inertia can be pre-existing. I may merely be stating concerns which may otherwise remain unexpressed. This was your opportunity to assuage and allay those fears (without spending millions trying to assess customer concerns in the first place), I believe you have done so here.

I'm glad that you're trying to streamline IB's approach to CHESS transfers and that you have clarified the holding structure of the stock. That is much appreciated. There are bound to be some hiccups and minor problems along the way but with your proactive approach I trust they will be dealt with to your clients' satisfaction.

TremblingHand- If you were referring to me in your last post you have no cause for additional concern.

 

[BBand]

Hi Steve,
Well done.

Thank you for taking the time and making the effort to reply to our queries/concerns.

I used to think why should I move over to IB, now I ask why shouldn't I ?

bye, bye, etrade

 

[BBand]

Hi Steve,
I read somewhere that you were planning to put together an account opening guide for Aussie SMSF/T "to make it easier."

How are you progressing?

I am in the process of applying for an account for my self managed super trust, but find the terminology a bit confusing at times

i.e "is the trust a simple or complex trust", I'm almost sure its meant to be simple but --------
What is W-8?
What is a registered Settler & Grantor?

I'm stuck at this page and cannot procede

I'm sure as I progress, I'm going to have more definition problems

It obviously makes sense to some of our members are they have already successfully opened accounts for their SMSF's

However you need something a bit more simple for old codgers like me

Its no big deal for me to send a signed copy of the Trust deeds to IB

I have had accounts with three major brokers in the past and never had any problems with applications.

 

[Steve-IB]

Hi Steve,
I read somewhere that you were planning to put together an account opening guide for Aussie SMSF/T "to make it easier."

How are you progressing?

I am in the process of applying for an account for my self managed super trust, but find the terminology a bit confusing at times

i.e "is the trust a simple or complex trust", I'm almost sure its meant to be simple but --------
What is W-8?
What is a registered Settler & Grantor?

I'm stuck at this page and cannot procede

I'm sure as I progress, I'm going to have more definition problems

It obviously makes sense to some of our members are they have already successfully opened accounts for their SMSF's

However you need something a bit more simple for old codgers like me

Its no big deal for me to send a signed copy of the Trust deeds to IB

I have had accounts with three major brokers in the past and never had any problems with applications.

• Simple Trust: Trust that is required to distribute all accounting income in the year earned; has no charitable beneficiaries; and does not distribute principal in the current year.

• Complex Trust: Trust that is allowed to accumulate income, has a charitable beneficiary, or distributes principal

Settlor & Grantor - is the person who sets up the trust

W8 is a tax form from the IRS, which designates you as a non US citizen, and allows you to claim beneficial treaty tax rates on US stock dividends, and means that you don't pay tax on sale proceeds.

(re account opening guide for SMSF - I've just hired someone in Australia who will be putting one together)

 

[oldpos]

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.

Transferred from CommSec to IB back in Aug 07 and have been having second thoughts ever since. I have been attempting to transfer my shares over to IB since OCT - have given instructions to both brokers but still without success. There seems to be a real communication problem at IB between their help desk and back office. IB keep asking me to direct CommSec to hand over my shares, claiming that CommSec state they have no authority while CommSec keep telling me that my instruction should go to IB who should then apply to CommSec via CHESS. I've given both brokers my written and verbal instructions, so I believe I have done all I can.

As you can see, IB need to perform better to keep my account. I've given them another 7 days!!!

 

[Trembling Hand]

I think I have been one of the biggest fans of IB in this thread. And I am still very happy with them for 99% of my trading but I do have a new and big problem with their non CHSS sponsorship system. the following is from an inquiry I placed 3 weeks ago that I have just received I asked,

Could you please tell me how your system passes on the franking credits that are available to Australian citizen holding ASX stock. When an ASX company pays out dividends with chess sponsoring the franking credits are passed on to the chess holder and a statement is sent to them. Is this the same with IB's custodian system?

Their response being,

According to our Corporate Actions Department, IB does not allocate this. You will need to contact the Australian Tax Office for more information. They should have a description of them and how an individual can qualify.

This is just crap. Does that mean that we have to hunt dividend statements form the Company? or make our own calculations from the companies we hold or that legally we are not getting the franking credits. Or that we have to apply to the ATO. Franking credits are a big part of Aussie share ownership and this quite plainly SUCKS.

I would say if you are a long term stock holder use one of the discount brokers they suck as well but you don't get the same problems of having at a minimum extra homework for what is a simple exercise.

 

[chops_a_must]

Transferred from CommSec to IB back in Aug 07 and have been having second thoughts ever since. I have been attempting to transfer my shares over to IB since OCT - have given instructions to both brokers but still without success. There seems to be a real communication problem at IB between their help desk and back office. IB keep asking me to direct CommSec to hand over my shares, claiming that CommSec state they have no authority while CommSec keep telling me that my instruction should go to IB who should then apply to CommSec via CHESS. I've given both brokers my written and verbal instructions, so I believe I have done all I can.

As you can see, IB need to perform better to keep my account. I've given them another 7 days!!!

That is EXACTLY the problem that I had. Total incompetence to say the least.

They need to do better than that. If things aren't improved from IB in general, I'll be looking at moving.

 

[chops_a_must]

Is there any RELIABLE world wide futures broker/ data package that has an ability to plug into Amibroker?

The recent fiasco has done my head in.

 

[wayneL]

Is there any RELIABLE world wide futures broker/ data package that has an ability to plug into Amibroker?

The recent fiasco has done my head in.

www.esignal.com

But a lot more expensive than free... cost depends on what data you want etc.

 

[ithatheekret]

The AbleSys realtime data ( webIress ) is very good , so too is Reuters Equis International , both have costs involved though , no such thing as a free lunch ............

Below is a link to some data platforms .


http://www.pricepatternprediction.com/ga01014.htm

 

[Trembling Hand]

Is there any RELIABLE world wide futures broker/ data package that has an ability to plug into Amibroker?

The recent fiasco has done my head in.

What was your problem Chops?

 

[RichKid]

I think I have been one of the biggest fans of IB in this thread. And I am still very happy with them for 99% of my trading but I do have a new and big problem with their non CHSS sponsorship system. the following is from an inquiry I placed 3 weeks ago that I have just received I asked,

Could you please tell me how your system passes on the franking credits that are available to Australian citizen holding ASX stock. When an ASX company pays out dividends with chess sponsoring the franking credits are passed on to the chess holder and a statement is sent to them. Is this the same with IB's custodian system?

Their response being,

According to our Corporate Actions Department, IB does not allocate this. You will need to contact the Australian Tax Office for more information. They should have a description of them and how an individual can qualify.

This is just crap. Does that mean that we have to hunt dividend statements form the Company? or make our own calculations from the companies we hold or that legally we are not getting the franking credits. Or that we have to apply to the ATO. Franking credits are a big part of Aussie share ownership and this quite plainly SUCKS.

I would say if you are a long term stock holder use one of the discount brokers they suck as well but you don't get the same problems of having at a minimum extra homework for what is a simple exercise.

THIS IS NEWS TO ME! I didn't know that IB deprived us of franking credits, and I agree, IB's redirect to the ATO is rubbish. I never knew I'd be giving up franking credits when I signed up to IB, many large traders will be missing out on thousands of $$$ every year if IB don't transfer the credits to us, I doubt the tax office would be interested in helping us, we know we're entitled to the credits. IB should at least be calculating divs and franking credits and sending us statements- IB is meant for frequent traders, we can't be doing calculations for each and every co we trade or tracking down what was done automatically by Aussie brokers. Time for a better 'custodian' system Steve- Aussies don't like being ripped off or misinformed- there was no clear warning of this by IB....gotta lift your game, Australia is not just another market.

I get the impression that IB has not done enough research and due diligence into how our market operates and what Aussie traders expect. Cheap brokerage alone and hi-tech software alone is not going to cut it if there is this much hassle and lack of regard for local Aussie customers imho.

 

[elbee]

IB does not deprive you of your franking credits. As the beneficial owner of the shares you are still entitled to the credits.

However franking credits are not cash items and will not be credited to your IB account (unlike the dividends themselves) and as far as I am aware the existence of franking credits will not even appear as a note on the IB statement.

This means you will need to calculate the credit yourself - there are sites such as www.incomeinvestor.com.au that keep records of all dividends and franking credits paid by ASX companies.

This is certainly extra work for you or your accountant and your auditor.

I use IB only for my short term trading where the the lower commission and trading platform provides an advantage. For my longer term core SMSF holdings I continue to use Macquarie Equities.

 

[chops_a_must]

What was your problem Chops?

One of the automatic TWS updates from the web totally stuffed all of my settings in Amibroker.

After much lengthy help from AB support, I have managed to get some functionality back. However, I still can't get markets opening/ closing at the times I want, like I had before.

From the paper trading I did on Friday night (which I couldn't trade), from the info I had while I knew it was stuffing up, says I'm down a few thousand dollars because of it. As you can imagine, I'm not really happy about it.

 

[wayneL]

One of the automatic TWS updates from the web totally stuffed all of my settings in Amibroker.

After much lengthy help from AB support, I have managed to get some functionality back. However, I still can't get markets opening/ closing at the times I want, like I had before.

From the paper trading I did on Friday night (which I couldn't trade), from the info I had while I knew it was stuffing up, says I'm down a few thousand dollars because of it. As you can imagine, I'm not really happy about it.

Might be a small point, but I always have my computer clock set to NY time and have never had any problem, including the latest TWS update.

Another point is that many traders don't update TWS until they are 100% sure everything is functioning properly in the update (how they determine this I don't know).

 

[chops_a_must]

Might be a small point, but I always have my computer clock set to NY time and have never had any problem, including the latest TWS update.

Yeah, I may set my computer time to NY time. Of course then I may get the same problems for the OZ markets.

If it stays where it is now, it's workable. I'm just gonna have to suck it up and to without the pit times I think. Which isn't really a big deal anyway.

And yes, from now on I'm just going to use the standalone TWS. According to AB, every release after 879 is rooted.

 

[Trembling Hand]

Yeah, I may set my computer time to NY time. Of course then I may get the same problems for the OZ markets.

If it stays where it is now, it's workable. I'm just gonna have to suck it up and to without the pit times I think. Which isn't really a big deal anyway.

And yes, from now on I'm just going to use the standalone TWS. According to AB, every release after 879 is rooted.

I have removed the "check for updates" in start up. And only update if I really need to. Like if Ninja Trader stops working properly with an old TWS.

If you want the very best in reliability, speed and features use a broker that will give you a TT console.
http://www.tradingtechnologies.com/
Although its going to really cost you. about $900 per month. I have used one and miss it often but when I compare it to IB for free I just don't miss it that much!!

 

[oldpos]

a little negative feedback and this thread goes quiet!
still waiting for that transfer of stocks, now 57 days!

 

[RichKid]

IB does not deprive you of your franking credits. As the beneficial owner of the shares you are still entitled to the credits.

However franking credits are not cash items and will not be credited to your IB account (unlike the dividends themselves) and as far as I am aware the existence of franking credits will not even appear as a note on the IB statement.

This means you will need to calculate the credit yourself - there are sites such as www.incomeinvestor.com.au that keep records of all dividends and franking credits paid by ASX companies.

This is certainly extra work for you or your accountant and your auditor.

I use IB only for my short term trading where the the lower commission and trading platform provides an advantage. For my longer term core SMSF holdings I continue to use Macquarie Equities.

Thanks elbee, I think you're right on that one, assuming the dividends are ascribed to us accurately as well and that what Steve & IB have said to us in the past about the holding structure is accurate.

It would be a lot easier if IB were to do the math and provide a record of the franking credit in dollar terms as was the case when my stock was being held under CHESS by local brokers: IB have the details of my holdings and dividends and the franking info is freely available. You would think that it would should be much easier to have their sophisticated systems do it for us as a client service rather than put us to even more trouble.

Under the CHESS system, we would receive individualised statements sent from the company via the share registry (those end of year tax summaries and div payment summaries made tax returns so much easier- especially for foreign domiciled co's).
IB/Steve might find it useful to have a look at a copy of such a statement (ie a div payment summary) which is usually mailed to the shareholders registered address with the dividend cheque or record of direct payment.

It's really a shame that IB haven't done the trouble shooting for his local launch properly or I bet this would have been incorporated into their account reports. We seem to have to inform ourselves of the pitfalls every step of the way, I feel like a guinea pig, I wonder what's around the corner?