Interactive Brokers - No Margin for Aussies

[OoieGooie]

Hi Everyone,

After much searching and bugging IB Support it seems I won't be able to trade USD from Australia.

It seems Aussies are not allowed a Margin account. My goal was to do basic trading on low price stocks with the 30k cash I saved. I read their requirements but didn't find the "no margin for international users" rule.

If you have any advice I would be very grateful such as another Broker (eTrade?). I'm also going to contact some American and Aussie friends for advice.

Cheers,

Mark

 

[VSntchr]

Hi Everyone,

After much searching and bugging IB Support it seems I won't be able to trade USD from Australia.

It seems Aussies are not allowed a Margin account. My goal was to do basic trading on low price stocks with the 30k cash I saved. I read their requirements but didn't find the "no margin for international users" rule.

If you have any advice I would be very grateful such as another Broker (eTrade?). I'm also going to contact some American and Aussie friends for advice.

Cheers,

Mark

without knowing your requirements or objectives, have you considered CFDs?

 

[OoieGooie]

without knowing your requirements or objectives, have you considered CFDs?

Cheers for the reply. Sorry for lack of info.

I havn't considered it. I know only a little about CFD's. I was pretty much going to do basic trading, buy\sell, with lower range stocks. It's more to get my skills up then make a new income as I enjoy learning new skills. Shortselling was also something I was going to do if the conditions were right (I trade safe with lots of research).

Im interested in learning Options but don't know enough about it yet. Right now though I'm just focused on trading USD.

 

[brisman]

Hi Everyone,

After much searching and bugging IB Support it seems I won't be able to trade USD from Australia.

It seems Aussies are not allowed a Margin account. My goal was to do basic trading on low price stocks with the 30k cash I saved. I read their requirements but didn't find the "no margin for international users" rule.

If you have any advice I would be very grateful such as another Broker (eTrade?). I'm also going to contact some American and Aussie friends for advice.

Cheers,

Mark

Having just sold my Medibank Private shares for a commission of $6 I'd hate to be without IB.

I'm happy trading options with IB even without the margin account but it will be great if they ever sort it out.

 

[hawamahal]

How do you transfer the Medibank shares to the IB account

 

[brisman]

How do you transfer the Medibank shares to the IB account

It was so easy I just asked for them to transfer by message ticket giving them the company, issuer sponsor number and number of shares. They transferred the shares a day later. It might have been more difficult to transfer broker issued shares. I haven't tried doing that yet.

 

[hawamahal]

It was so easy I just asked for them to transfer by message ticket giving them the company, issuer sponsor number and number of shares. They transferred the shares a day later. It might have been more difficult to transfer broker issued shares. I haven't tried doing that yet.

Thanks for the info. The problem i have is that the IB account is on single individual name whereas the Medibank shares are on joint name. Do you think will it be feasible to transfer or not.

 

[brisman]

Thanks for the info. The problem i have is that the IB account is on single individual name whereas the Medibank shares are on joint name. Do you think will it be feasible to transfer or not.

The account has to be in the same name as the shares.

 

[PinguPingu]

When the heck are they going to fix this?

 

[veggio]

When the heck are they going to fix this?

I went to the trouble of opening an account with IB only to find that as an Australian retail client it is next to useless for me - here's my exchange with the chat customer service rep -
Bob GH: How may I assist you?
ChatSys: This chat is associated with ticket #. Please record this number for use in future inquiries. You are currently in room 'Trade Problems'.
Bob GH: Hello, this is 'Bob GH'. How may I help you?
Bob GH: How may I assist you?
ChatSys: The communication channel has been successfully restored. You can continue communicating with the CSR.
me: Hello, I have an issue with the trading permissions. When I attempt to trade say eurusd, even if a very small trade of say 1000 units I get a message saying that I have insufficient funds in EUR to undertake the trade or similar
Bob GH: Since you have a cash account, you can only sell a currency you actually have balance in. In this case, you can only sell AUD
me: So how do I undertake a forex trade say eurusd?
Bob GH: You cannot do this in a cash account and since Australian residents are currently restricted from holding margin accounts, this would not be possible
me: what if the trade was audusd?
Bob GH: You can convert whatever your cash balance is, into another cash balance, but you cannot use leverage.
me: So there is no issue buying stocks on an overseas exchange then
Bob GH: No, as long as you have the currency to purchase the stock in the currency it is denominated in.
me: How do I do the conversion into the other currency in the case of stocks? Is this something that I do before I buy the stock?
Bob GH: You will have to bring up the quote the specific currency pair that you want to convert your currency into (Ex. AUD.USD). You will have to do this before you purchase the stock. Note that when you do a currency conversion, it takes 2 business days for the cash to settle, so you will not be able to purchase the stock until it settles
me: what is the point in having access to all of these overseas markets on an interactive program when I have to wait two days just to do a currency conversion, doesn't that sound ridiculous to you. I have an account with another broker and when I buy stock on the US exchange the currency changeover occurs instantaneously.
Bob GH: Unfortunately these are the current limitations for Australian account holders.
me: How long do you expect that these limitations will be in place?
Bob GH: This is a regulatory issues, so at this time we do not have a time line when we can offer margin accounts
me: With respect, its not just an issue about margin, its a matter of being able to do a currency changeover concurrently with the trade
Bob GH: Either way, you would still have to wait 2 business days for the cash to settle before you can use the funds. This is not an IB restriction this is a regulatory restriction for cash accounts.
me: In effect I have opened an account which enables me to trade Australian stocks and that's it - not even CFD's since I do not have access to margin. How do I close my account with IB? Absolutely pointless for me to have an account with IB, I wish it had been clearer on your website during the account opening process I have really wasted a lot of time on what is essentially useless for me. Sorry but quite annoyed about this
Bob GH: I apologize for the inconvenience. You can log into the Account Management menu, click on Manage Account > Settings > Close Account
me: Brokers like Saxo, IG, CMC and dozens of others offer instantaneous trading on exchanges around the world, even if as market makers and IB need two days just to change the money over....it's almost laughable, obviates the need for a whiz bang trading platform, might as well just have ticker tape and carrier pigeons - thanks for your help - no doubt it will take several days for my money to be refunded too.
ChatSys: This chat is being terminated by the Customer Service Rep.
Bob GH: Have a good night.

As you can see, the rep 'hung' up on me.
Anyway, food for thought if you are thinking of IB - very disappointing.

 

[tech/a]

I trade the DAX with AUD

 

[SuperGlue]

From memory when setting up account, you'll have to be on REG T Margin.

Then you can trade forex, etc. from your base currency on margin, but with so restrictions for Aussies.
Best you check with them to confirm.

Their website has been re-designed so can't find the link.
Quick search found this :
https://www.interactivebrokers.com/en/index.php?f=accountConfiguration&p=configuring

Check out "Account Types".


Please DYOR.

 

[veggio]

From memory when setting up account, you'll have to be on REG T Margin.

Then you can trade forex, etc. from your base currency on margin, but with so restrictions for Aussies.
Best you check with them to confirm.

Their website has been re-designed so can't find the link.
Quick search found this :
https://www.interactivebrokers.com/en/index.php?f=accountConfiguration&p=configuring

Check out "Account Types".


Please DYOR.

Thanks for the advice - went into account management - their system won't allow the transfer of a cash account to margin. Thanks anyway.

 

[DaveDaGr8]

I recently set up a few new IB accounts.

My Trust account with corporate trustee is now on regular margin ( originally was reg-t margin), although i had to get on live chat for them to activate it. Also needs US$110K balance, whatever that worked out to be in Aus$$.

My personal accounts have no such option, just cash.

 

[SuperGlue]

Thanks for the advice - went into account management - their system won't allow the transfer of a cash account to margin. Thanks anyway.

I went to the trouble of opening an account with IB only to find that as an Australian retail client it is next to useless for me

Ummmm
Thread starter had same problem.
Looks like IB ( or rather ASIC ) have change it recently for Aussies.

Quote from link below:

"Upgrading Your Account Type
If you have a Cash account, which does not let you trade on margin, you can upgrade to a Reg T Margin account.

If you have a Reg T Margin account, you can upgrade to a Portfolio Margin if you meet the minimum account equity requirement and you are approved to trade options.

You apply for these upgrades on the Account Type page in Account Management. The menu path is Manage Account > Settings > Configure Account > Account Type."

I recently set up a few new IB accounts.

My Trust account with corporate trustee is now on regular margin ( originally was reg-t margin), although i had to get on live chat for them to activate it. Also needs US$110K balance, whatever that worked out to be in Aus$$.

My personal accounts have no such option, just cash.

Quote from link below:

"Portfolio Margin accounts are intended for sophisticated traders, and require minimum equity of $110,000 to initiate and $100,000 to maintain.

One important thing to remember is this - if your Portfolio Margin account equity drops below 100,000 USD, you will be restricted from doing any margin-increasing trades. Therefore if you do not intend to maintain at least USD 100,000 in your account, you should not apply for a Portfolio Margin account."

https://www.interactivebrokers.com/...es/WN-UnderstandingIBMargin.php?ib_entity=llc


Please DYOR.

 

[-Bevo-]

I can trade stock in US using my AUD just cant go over my max AUD amount, anyone heard recent
news on when this margin will be fixed? I rang them over a month ago but they remained tight lipped they did say changes were coming but tone of voice was don't expect it soon.
Was going to write a letter to a local member or asic about this as someone with say 100k in there account can only buy 100k of spy etf yet tick the futures box and same index you could buy close to 2 million you can blame all the storm financial and labor party wankers for this guess if i tell them they want to ban futures trading for retail too

 

[bullbear39]

After much searching and bugging IB Support it seems I won't be able to trade USD from Australia.
Mark

This has been going on for too long. Today I decided to take a stand and encourage all IB Australian traders to write a similar letter to either Interactive Brokers using this email (auclients@interactivebrokers.com) or to ASIC here.

Keen to know the thoughts of fellow Aussie IB account holders who like me, are restricted to a Cash Account only which restricts liquidity - and of course trade parcel size.

My letter to Interactive Brokers

Good morning

For some years now IB has not been allowed to offer Margin Accounts to individuals who are Australian residents.
What IB may not know is that these restrictions seem to have been lifted in Australia. As you will see below, major brokers in Australia are now offering Margin Accounts with no such margin restrictions for Australian residents.

Based on this, it would seem to be a contravention of the ACCC anti-competitive behaviour policy to allow this for local Brokers, but not allow IB to do the same when operating in the same country.
Could you please investigate and raise this with the authorities in Australia?

I (and several of my colleagues) are at the point now, where if there is no news soon, we will be forced to close our IB accounts and transfer to one of the brokers below just so we can obtain a margin account. This would be regrettable. Thank you.

Australian Brokers offering Margin Loans

• Commsec - https://www.commsec.com.au/products/margin-loan.html
• NAB - https://www.nabtrade.com.au/marginlending
• E-Trade - https://invest.etrade.com.au/InvestmentProducts/MarginLending/Default.aspx

 

[bellenuit]

This has been going on for too long. Today I decided to take a stand and encourage all IB Australian traders to write a similar letter to either Interactive Brokers using this email (auclients@interactivebrokers.com) or to ASIC here.

Keen to know the thoughts of fellow Aussie IB account holders who like me, are restricted to a Cash Account only which restricts liquidity - and of course trade parcel size.

My letter to Interactive Brokers

The issue was not that margin wasn't allowed to Australian residents and now is, but when some changes were made to the regulatory framework a few years ago IB wasn't in compliance and had to withdraw the facility to individuals. We are waiting on IB to make the necessary changes to its structure or whatever is required so that it can be in compliance once more.

I agree though that the delay has been far too long and the only timeframe that we were give, to my recollection, was that it would take just 4 months or so to get their act in order. But that is several years ago now and there doesn't appear to have been any update to the status since.

 

[kushi212]

Hello folks,

I spoke to IB customer service today. They did advise me that I am only allowed to open the cash account. But, the consultant did advise me that I can still trade stocks, CFDs, futures and commodity futures. I can't trade currencies and can't write naked options. I asked him twice and he repeated the same thing. I was skeptical about the info he gave me as the IB website has N/A under futures in cash account.

I called up IB customer service once again and another consultant advised the same thing.

They said that I can't get the margin to trade. But, I can still trade futures and CFDs as the margin is set by the exchange. I do need to fulfill the complete margin requirements though.

 

[Taaait]

Really you've only got yourself to blame because you opened up a Cash Account. If you didn't know what a cash account was you should have read up on it. The fact that the Aussie regulators have banned IB from offering anything beyond a cash account (children's account) is not IB's fault. Indeed they were told originally when the new law came in that their existing licence did not need upgrading. Then ASIC changed their mind.

Secondly you cannot even remotely compare IG CMC and Saxo to Interactive Brokers. They are a totally different thing. They are bucket shops. Pure and simple. IB on the other hand is a real broker and is far far far superior. When you've got 10+ years of trading experience then you'd know what I'm talking about.

Also does anyone have an update on the state of things? That is, is IB now allowed to offer proper Margin Accounts?

Thanks.

I went to the trouble of opening an account with IB only to find that as an Australian retail client it is next to useless for me - here's my exchange with the chat customer service rep -
Bob GH: How may I assist you?
ChatSys: This chat is associated with ticket #. Please record this number for use in future inquiries. You are currently in room 'Trade Problems'.
Bob GH: Hello, this is 'Bob GH'. How may I help you?
Bob GH: How may I assist you?
ChatSys: The communication channel has been successfully restored. You can continue communicating with the CSR.
me: Hello, I have an issue with the trading permissions. When I attempt to trade say eurusd, even if a very small trade of say 1000 units I get a message saying that I have insufficient funds in EUR to undertake the trade or similar
Bob GH: Since you have a cash account, you can only sell a currency you actually have balance in. In this case, you can only sell AUD
me: So how do I undertake a forex trade say eurusd?
Bob GH: You cannot do this in a cash account and since Australian residents are currently restricted from holding margin accounts, this would not be possible
me: what if the trade was audusd?
Bob GH: You can convert whatever your cash balance is, into another cash balance, but you cannot use leverage.
me: So there is no issue buying stocks on an overseas exchange then
Bob GH: No, as long as you have the currency to purchase the stock in the currency it is denominated in.
me: How do I do the conversion into the other currency in the case of stocks? Is this something that I do before I buy the stock?
Bob GH: You will have to bring up the quote the specific currency pair that you want to convert your currency into (Ex. AUD.USD). You will have to do this before you purchase the stock. Note that when you do a currency conversion, it takes 2 business days for the cash to settle, so you will not be able to purchase the stock until it settles
me: what is the point in having access to all of these overseas markets on an interactive program when I have to wait two days just to do a currency conversion, doesn't that sound ridiculous to you. I have an account with another broker and when I buy stock on the US exchange the currency changeover occurs instantaneously.
Bob GH: Unfortunately these are the current limitations for Australian account holders.
me: How long do you expect that these limitations will be in place?
Bob GH: This is a regulatory issues, so at this time we do not have a time line when we can offer margin accounts
me: With respect, its not just an issue about margin, its a matter of being able to do a currency changeover concurrently with the trade
Bob GH: Either way, you would still have to wait 2 business days for the cash to settle before you can use the funds. This is not an IB restriction this is a regulatory restriction for cash accounts.
me: In effect I have opened an account which enables me to trade Australian stocks and that's it - not even CFD's since I do not have access to margin. How do I close my account with IB? Absolutely pointless for me to have an account with IB, I wish it had been clearer on your website during the account opening process I have really wasted a lot of time on what is essentially useless for me. Sorry but quite annoyed about this
Bob GH: I apologize for the inconvenience. You can log into the Account Management menu, click on Manage Account > Settings > Close Account
me: Brokers like Saxo, IG, CMC and dozens of others offer instantaneous trading on exchanges around the world, even if as market makers and IB need two days just to change the money over....it's almost laughable, obviates the need for a whiz bang trading platform, might as well just have ticker tape and carrier pigeons - thanks for your help - no doubt it will take several days for my money to be refunded too.
ChatSys: This chat is being terminated by the Customer Service Rep.
Bob GH: Have a good night.

As you can see, the rep 'hung' up on me.
Anyway, food for thought if you are thinking of IB - very disappointing.