Brokerage/platforms terrible in Oz

[Steve-IB]

Question for Steve-IB
I probably missed it elsewhere, but just how are transferred shares held, and traded shares, if not as Chess?

Thanks

It's held in our custodian, Fortis Clearing Sydney's, account. So you would transfer shares to Fortis Clearing Sydney, a/c Interactive Brokers, your account Uxxxx etc

 

[Steve-IB]

also what kind of ID and documents do you need to open an account?
also somewhere on the site it states that you need to have done at least 100 trades. is this a condition or just a recommendation? will you need to see my trade records?

One proof of ID and one seperate proof of address. Passport and driving license works, or passport and bank statement.
We don't ask for your trading records, we ask the question to ensure you have enough experience to use the platform.

 

[RichKid]

Hi SteveIB,
Thanks for all the helpful replies, should encourage more people to sign up as things become clearer about IB.

Re the US$5000 initial deposit to IB's citibank ac to open- does this minimum have to be maintained or can we withdraw funds straight away?

Commsec for example only requires an initial $5k to open a CDIA (cth direct investment ac for funds to be cleared into) and then no ongoing ac min, they only pay interest above 5k balances though.

I assume the citibank ac which is used for clearing funds does not have ac keeping fees or other fees?? Wonder what their interst rate is too, I will get back to you guys if I manage to do some research on this.

Eventhough brokerage may be lower with IB there maybe hidden costs- hence the questions.

 

[Steve-IB]

Hi SteveIB,
Thanks for all the helpful replies, should encourage more people to sign up as things become clearer about IB.

Re the US$5000 initial deposit to IB's citibank ac to open- does this minimum have to be maintained or can we withdraw funds straight away?

Commsec for example only requires an initial $5k to open a CDIA (cth direct investment ac for funds to be cleared into) and then no ongoing ac min, they only pay interest above 5k balances though.

I assume the citibank ac which is used for clearing funds does not have ac keeping fees or other fees?? Wonder what their interst rate is too, I will get back to you guys if I manage to do some research on this.

Eventhough brokerage may be lower with IB there maybe hidden costs- hence the questions.

You can open with $5k and then withdraw, we would only close the account if under $100 was in it. However, we do have activity minimums. If you had under $2,000 in your account, then the activity minimum is US$20 per month, above $2,000 in the account and the actitvity minimum is US$10 per month - i.e if you have $1,000 in your account, and generate $5 commissions in June, then we will charge you $15 at the end of the month.

 

[RichKid]

You can open with $5k and then withdraw, we would only close the account if under $100 was in it. However, we do have activity minimums. If you had under $2,000 in your account, then the activity minimum is US$20 per month, above $2,000 in the account and the actitvity minimum is US$10 per month - i.e if you have $1,000 in your account, and generate $5 commissions in June, then we will charge you $15 at the end of the month.

Thanks very much Steve, I assume 'activity' refers to the fees generated.

1) Are the minimum amounts you refer to assessed at the end of each calendar month or does the fee become payable if I'm below it for even a day?

I don't plan to have tiny amounts in your ac but if I do move over it'll be little by little to test it out first so I don't want to get slugged unnecessarily.

2) If I have US$2000 in my account, is the minimum monthly fee $10? So, if I have 'activity' to the value of $10 (ie $10 worth of brokerage for that calendar month) then I assume I effectively pay nothing more than the cost of brokerage for that month.

3) Commsec pays 4.30% interest for their CDIA on the whole balance for balances over $5k (http://www.comsec.com.au/LearningCentre/InterestRates.asp) with no minimum balance or ac keeping fees as mentioned before. How does IB/Citibank compare?

 

[Steve-IB]

Thanks very much Steve, I assume 'activity' refers to the fees generated.

1) Are the minimum amounts you refer to assessed at the end of each calendar month or does the fee become payable if I'm below it for even a day?

I don't plan to have tiny amounts in your ac but if I do move over it'll be little by little to test it out first so I don't want to get slugged unnecessarily.

2) If I have US$2000 in my account is the minimum monthly fee $10? If I have 'activity' to the value of $10 (ie $10 worth of brokerage for that calendar month) then I effectively pay nothing more than the cost of brokerage.

3) Commsec pays 4.30% interest for their CDIA on the whole balance for balances over $5k (http://www.comsec.com.au/LearningCentre/InterestRates.asp) with no minimum balance or ac keeping fees as mentioned before. How does IB/Citibank compare?

1. We look at the balance at the end of the month;
2. Yes, that's correct
3. Under A$13k no interest. On the balance between $13k-$130k interest is currently 5.782%. On the balance above $130k interest is 6.032%
(which I guess compared to your example above, means that if you have a balance of over A$40k then your interest is better with us, and gets much better as your balance increases)

(For small accounts looking for interest, you could use US EFPs, which enable you to get a high effective interest rate... http://www.interactivebrokers.com/en/trading/pdfhighlights/PDF-ExchPhysical.php?ib_entity=llc)

 

[RichKid]

Thanks Steve, looking good for me if I manage things properly, might be worth doing a marketing brochure with a direct comparison to Commsec, people like me would find it useful.

 

[yonnie]

cant be that difficult to do your own research?

 

[RichKid]

cant be that difficult to do your own research?

Hi yonnie

fyi, the q&a here is part of my research, reading the fine print in the IB documentation will be part of it as well.

It would be easier for potential customers to have a summary since commsec would be the main competitor. Service and product comparisons are useful to consumers hence the prevalence of brochures, the more aggressive campaigns take on rivals front on (eg Telstra and Optus).

I will be doing my own research as well. Thank you for the reminder. ASF is a forum where we can often locate information more efficiently, especially when we have helpful people like Steve-IB.

 

[1stunnedmullet]

hey steve, couple more questions

1. do the minimum amounts pertain to value of shares held on an account or cash in the brokerage account not invested.

2. with pay anyone to fund accounts, do we just transfer funds to ib's (australian or international?) bank account with a referral like our username?

thanks heaps

 

[Steve-IB]

“It would be easier for potential customers to have a summary since commsec would be the main competitor. Service and product comparisons are useful to consumers hence the prevalence of brochures, the more aggressive campaigns take on rivals front on (eg Telstra and Optus).”
IB: Due to the rather unique breadth of products and client base that we have, we find that a competitor in one market is a often a client in another, so I’d rather avoid producing a comparison. I’m sure this forum, or some other place will soon come up with comparisons as we become more well-known in this market.

“Do the minimum amounts pertain to value of shares held on an account or cash in the brokerage account not invested.”
IB: Everything in the account is included.

“with pay anyone to fund accounts, do we just transfer funds to ib's (australian or international?) bank account with a referral like our username?”
IB: Yes, it’s important to put a referral. Account number, username, account name – all if possible, if not then put in that order of preference. If there’s no reference on a transfer then we are unable to apply the funds to the account and we will most likely return the funds back to the sending bank.

 

[professor_frink]

Evening Steve,

what happened this afternoon about 4:40pm Eastern Aust time? I was caught in a trade and couldn't close. Was it a problem with the HKFE or an IB problem?

 

[Steve-IB]

Evening Steve,

what happened this afternoon about 4:40pm Eastern Aust time? I was caught in a trade and couldn't close. Was it a problem with the HKFE or an IB problem?

Our problem with one of the hosts in HK between 4:38pm - 4:48pm. HKFE was the only exchange affected. It was fixed almost immediately, but it took time restarting some of the processes. (N.B. You can always call the desk and place trades via the phone if you run into issues such as these).

 

[professor_frink]

Our problem with one of the hosts in HK between 4:38pm - 4:48pm. HKFE was the only exchange affected. It was fixed almost immediately, but it took time restarting some of the processes. (N.B. You can always call the desk and place trades via the phone if you run into issues such as these).

Will be doing that in the future, by the time I realised I had a problem and had gotten to the phone it was fixed.

I've never had to call the desk before- what information do they need me to provide to verify who I am so I can close the trade out?

 

[1stunnedmullet]

“It would be easier for potential customers to have a summary since commsec would be the main competitor. Service and product comparisons are useful to consumers hence the prevalence of brochures, the more aggressive campaigns take on rivals front on (eg Telstra and Optus).”
IB: Due to the rather unique breadth of products and client base that we have, we find that a competitor in one market is a often a client in another, so I’d rather avoid producing a comparison. I’m sure this forum, or some other place will soon come up with comparisons as we become more well-known in this market.

“Do the minimum amounts pertain to value of shares held on an account or cash in the brokerage account not invested.”
IB: Everything in the account is included.

“with pay anyone to fund accounts, do we just transfer funds to ib's (australian or international?) bank account with a referral like our username?”
IB: Yes, it’s important to put a referral. Account number, username, account name – all if possible, if not then put in that order of preference. If there’s no reference on a transfer then we are unable to apply the funds to the account and we will most likely return the funds back to the sending bank.

that was quick! thanks again...does IB have an australian bank account we transfer funds to or international?

 

[yonnie]

that was quick! thanks again...does IB have an australian bank account we transfer funds to or international?

You're the second one that dont read previous posts

 

[1stunnedmullet]

woops..was there the entire time! $6 trades..absolutely stoked

 

[yonnie]

maybe a word of caution:

I like IB`s price
I like IB`s platform

I dont like their ways

I heard that broking accounts of a few traders were shut down because they were getting too vocal - to be fair I dont know if that is true.

My own experience was not very good to say the least:

I was trading on the Canadian market a few years ago and I had a live feed coming from the Toronto exchange through IB level I and II, costing me something like US 26.50 a month. IB charged me for this.

Turned out that the whole month the day orders or the GTC orders were not displayed so I did not have a complete view of the order book and I could not use this for my trading.

According to IB this was the exchange`s fault (although IB said IB would fix it soon) and because IB had to pay the exchange, I would have to pay IB.

I came with the reasoning that IB should take it up with the Toronto exchange and ask for non-payment because their service was faulty.
IB refused to do this.

So what can I do? Can`t really go to Consumers Affairs here in Oz, can I.

IB just took it out of my account and that was that.

so in short, IB is not known for their good customer service, but you can all make up your own mind wether to join or not.

 

[wayneL]

Customer service is a cost. In fairness, those organizations that offer better customer service than IB also charge more commish.

On the other hand, how many employees of other firms take the trouble to answer questions on a public forum?

IB works great for me, particularly as the futures exchanges go electronic. The recent addition of NYBOT softs (and NYMEX and CBOT grain markets a bit earlier) has been a boon to me.

The only contracts that are now dog crap to trade electronically are the GLOBEX livestock contracts.

However I have to trade many futures options via another broker.

Steve,

Any news about electro Grain, NYMEX, NYBOT options? That would round it off perfectly.

 

[auric]

just want to know if shares are held in custodian, at Fortis Clearing Sydney's can these be transferred to a Chess Account
not sure how having the shares in custodian for a SMSF
would be accepted by the ATO,