Interactive Brokers

[Chronos-Plutus]

Man the IB website makes feel dumb.

Can someone point me in the right direction, I am wanting to use my longer term holdings as collateral for some shorter term stuff, options, maybe CFDs. Cannot find what type of account I would need, or fees or anything details really???

I don't think you can use stock holdings as collateral for a CFD, not that I am aware of. But you can write covered options with Commsec.

You can use your stock holdings to write covered options. CommSec can help you do this, if you satisfy the trading knowledge requirements; but there is a fair bit of paperwork that you need to go through to open up an options account if you haven't before: https://www.commsec.com.au/support/frequently-asked-questions/1102.html

 

[Chronos-Plutus]

Man the IB website makes feel dumb.

Can someone point me in the right direction, I am wanting to use my longer term holdings as collateral for some shorter term stuff, options, maybe CFDs. Cannot find what type of account I would need, or fees or anything details really???

Also NABtrade is another option: https://www.nabtrade.com.au/investor/investor-solutions/investments/exchange-traded-options

You might be able to write options with Interactive Brokers, but I am not familiar with their platform and financial instrument options.

If you have an interactive Brokers account, you should contact them and tell them that you want to write options. I would do my homework and research before writing the options.

 

[Sharkman]

For AU IB customers, does anyone know what protection we have on US shares?

The AU IB site just says we 'may be able to access compensation available under the National Guarantee Fund (NGF)' - unclear if this is for US and AU shares, or the amounts that they will cover?​

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my understanding is that we have none. zip. nada. after the migration to IB Aust, all we have is the AFG that protects up to 250k AUD of the cash balance only. not the old SIPC insurance that we used to have under IB LLC which covered up to 500k USD regardless of asset class. i'd be happy to be proven wrong but so far since the migration, which was some time ago now, i have yet to see anything advising to the contrary.

 

[Sharkman]

Man the IB website makes feel dumb.

Can someone point me in the right direction, I am wanting to use my longer term holdings as collateral for some shorter term stuff, options, maybe CFDs. Cannot find what type of account I would need, or fees or anything details really???

you can definitely use long stock holdings as collateral for short calls, even post migration to IB Aust. i do this all the time. when they say we no longer have access to margin under IB Aust, what they actually mean is that your cash balance cannot drop below zero. collateral is still calculated using the old margining calcs eg. Reg-T.

you can still sell naked puts even with no cash in your account, provided that you have the collateral for it under the old margining calcs. you just can't let them get assigned if you don't have the cash to take delivery, otherwise you'll get margin called and they'll sell off enough of your holdings at random to raise the cash needed to take delivery.

don't know about CFDs, don't trade them myself.

 

[bohn]

my understanding is that we have none. zip. nada. after the migration to IB Aust, all we have is the AFG that protects up to 250k AUD of the cash balance only. not the old SIPC insurance that we used to have under IB LLC which covered up to 500k USD regardless of asset class. i'd be happy to be proven wrong but so far since the migration, which was some time ago now, i have yet to see anything advising to the contrary.

It seems it could be that way. I suppose we have the option of Schwab? They seem to have the SIPC / Lloyd's insurance.

 

[cutz]

Man the IB website makes feel dumb.

Can someone point me in the right direction, I am wanting to use my longer term holdings as collateral for some shorter term stuff, options, maybe CFDs. Cannot find what type of account I would need, or fees or anything details really???

It's all here mate https://www.interactivebrokers.com.au/en/index.php?f=40071

Explore the tabs along the top.

 

[fiftyeight]

you can definitely use long stock holdings as collateral for short calls, even post migration to IB Aust. i do this all the time. when they say we no longer have access to margin under IB Aust, what they actually mean is that your cash balance cannot drop below zero. collateral is still calculated using the old margining calcs eg. Reg-T.

you can still sell naked puts even with no cash in your account, provided that you have the collateral for it under the old margining calcs. you just can't let them get assigned if you don't have the cash to take delivery, otherwise you'll get margin called and they'll sell off enough of your holdings at random to raise the cash needed to take delivery.

don't know about CFDs, don't trade them myself.

Just the info I was looking for cheers. I will keep hunting for how it specifically applies to me, but at least now I have the basics

 

[fiftyeight]

Also NABtrade is another option: https://www.nabtrade.com.au/investor/investor-solutions/investments/exchange-traded-options

You might be able to write options with Interactive Brokers, but I am not familiar with their platform and financial instrument options.

If you have an interactive Brokers account, you should contact them and tell them that you want to write options. I would do my homework and research before writing the options.

Commish and fees in Australia are waaaaay to high, and my account is not big enough to justify any extra protection

 

[cutz]

Commish and fees in Australia are waaaaay to high, and my account is not big enough to justify any extra protection

Agree,

I learnt the hard way !!

Try rolling WTFITM positions with a bit of size, Aussie Bank broker commission structures are a joke along with the junk software that's provided.

They should just stick to providing home loans !

 

[Chronos-Plutus]

my understanding is that we have none. zip. nada. after the migration to IB Aust, all we have is the AFG that protects up to 250k AUD of the cash balance only. not the old SIPC insurance that we used to have under IB LLC which covered up to 500k USD regardless of asset class. i'd be happy to be proven wrong but so far since the migration, which was some time ago now, i have yet to see anything advising to the contrary.

That's correct for the national guarantee. It is up to AUD$250k per person, per Australian institution, for savings accounts and term deposits.

 

[bohn]

That's correct. It is up to AUD$250k per person, per Australian institution, for savings accounts and term deposits.

So is everyone just happy with IB knowing they are a large listed company? Anyone switched to Schwab or something similar?

 

[bellenuit]

For AU IB customers, does anyone know what protection we have on US shares?

The AU IB site just says we 'may be able to access compensation available under the National Guarantee Fund (NGF)' - unclear if this is for US and AU shares, or the amounts that they will cover?​

This is a reply I got from them some time back after I asked them a similar question after migrating to IB AU.

It would seem that only ASX traded shares are covered by the NGF. I suspect that there is no cover for US securities and you are basically relying on the strength of IB itself and hope that it will never go broke or insolvent. I hope I am wrong on that, so please correct me if any of you have other information.

As an AFSL holder, Market Particpant and Clearing Participant Interactive Brokers Australia requires to maintain one or more Trust/segregated client money accounts (Client Money Accounts held in Trust) with a bank, for the holding of monies it receives on behalf of clients. This means it is protected in the case of insolvency from IBA's creditors. Client money is segregated from house money and IBA only uses client money as directed by Clients or as allowed under the Corporations Act 2001.

In addition, IB Australia is a participant of ASX. For securities traded on ASX, clients may be able to access the National Guarantee Fund (NGF) if you suffer losses in certain circumstances (but not due for instance to market losses). However, claiming from NGF would be subject to their guideline. For further details, you should read the material or contact NGF directly.

The financial services offered by IBA are covered by a professional indemnity insurance policy which satisfies the requirements for compensations arrangements set out under section 912B of the Corporations Act. The IB Australia Financial Services Guide can be found here: https://www.interactivebrokers.com.au/en/index.php?f=legalDocs&p=disclosures
You will need to scroll down to access it.

Please note IB AU is a part of Interactive Brokers Group which has an equity capital of more than US$6 billion, is risk adverse and has reported solid earnings in the past 20 consecutive years. We believe IB's conservative approach to margin, strong capital and solid history of earnings along with the strict client money rules in all markets in which we are regulated should provide confidence to our clients.​

 

[Chronos-Plutus]

So is everyone just happy with IB knowing they are a large listed company? Anyone switched to Schwab or something similar?

Interactive Brokers are a solid broker, I just haven't traded with them before. I have used Saxo Bank, IG Markets, FXCM and City Index trading CFDs. I haven't traded CFDs in a month or so now and have been focusing on equity research for junior mining developers that are in the transition phase to production.

 

[cutz]

So is everyone just happy with IB knowing they are a large listed company?

Yep

 

[Sharkman]

So is everyone just happy with IB knowing they are a large listed company? Anyone switched to Schwab or something similar?

not 100% happy, was much happier under the old SIPC arrangement, but happy enough to leave 20-30% of my capital in there, knowing that whilst the chance of capital loss due to broker failure is not zero, it's also extremely small.

 

[bohn]

I've been trading some short-term smallish ASX trades (eg 5k) on IB as I have funds in there and the brokerage is cheap. But the price caps are total bull****. Not sure if any other broker has such nonsense.

Not sure IB understands how the opening auction works on the ASX. Eg stock today, closed $4.10 yesterday, was going to open at $4.32 at one point - but if you put an order in for $4.32 it will just say it's been price capped to $4.30. If the stock took off you wouldn't be in it, at least not with that order.

Info on their website says price caps will not be removed, you need to contact them about each order - yeah right.

 

[cutz]

I've been trading some short-term smallish ASX trades (eg 5k) on IB as I have funds in there and the brokerage is cheap. But the price caps are total bull****. Not sure if any other broker has such nonsense.

Not sure IB understands how the opening auction works on the ASX. Eg stock today, closed $4.10 yesterday, was going to open at $4.32 at one point - but if you put an order in for $4.32 it will just say it's been price capped to $4.30. If the stock took off you wouldn't be in it, at least not with that order.

Info on their website says price caps will not be removed, you need to contact them about each order - yeah right.

Mmm, haven't really come across this one, don't get capped on options. I did a test on a stock by putting in a buy order at 15% above, only got a warning on preview, didn't go any further to see what would happen.

Did you get an outright rejection ?

 

[bohn]

Hmm - I will have to look at it later - perhaps I was too quick and it is something that can be overridden in that window. Although I don't think that we should need to fiddle with it to get an order through on open.

 

[cutz]

Hmm - I will have to look at it later - perhaps I was too quick and it is something that can be overridden in that window. Although I don't think that we should need to fiddle with it to get an order through on open.

In the warning window the percentage preset limit can be adjusted.

 

[bohn]

My mistake then.

On another note, whilst I don't expect there to be a problem with IB I think I will move all my US positions to Schwab. I really don't like that IB is able to treat AU as second class citizens through IB AU in not offering any protection for our international shares.

Will still keep IB for some trades I do in Europe/Asia and some small ASX trades.