Interactive Brokers

[freebird54]

I have been using IB as my broker for my SMSF for several years including trades for Australian equities.

I have no problems with my auditor. I print out the IB fiscal year statements for the auditor and prepare a schedule listing dividends received and franking credits claimed which can be easily checked against a number of online resources.

IB now provide a report in the reports tax section which details all the franking and imputed credits
there has been an error with it though and I am not sure if it has been resolved

 

[tminus]

I was wondering what the second line means
http://www.interactivebrokers.com/en/p.php?f=minimumDeposits#broker-clear

A USD 10,000 (or non-USD equivalent) up front deposit will be required that will be applied against commissions during the first 5 months. At the beginning of the 6th month, any positive difference between the deposit and the first 5 months of commissions is taken as a commission minimum.
Beginning in the 6th month, a regular commission minimum of USD 2,000 (or non-USD equivalent) per month will be applied against commissions, with any positive difference taken as a commission minimum.

 

[captain black]

I was wondering what the second line means
http://www.interactivebrokers.com/en/p.php?f=minimumDeposits#broker-clear

That's only applicable for a broker's account not an individual account.

 

[tminus]

That's only applicable for a broker's account not an individual account.

sweet, thanks

 

[bellenuit]

Interactive Brokers for US Trades

I currently have a portfolio of US stocks held through TD Ameritrade. I find TD Ameritrade excellent for trading, but the main issue I have is withdrawing money from my account to repatriate to Australia. I must send a fax to do this and it always takes quite a few days. And when the money does arrive, I usually get a note from Westpac saying they should have done things a different way as the US seems to use a different routing mechanism to Australia.

Is it the same with Interactive Brokers? I notice they have an Australian website with a .au address. I have browsed this website and can't find the information I need regarding banking procedures.

Can someone who knows answer the following.....

Are the banking facilities based in the US or Australia for Australian customers?
To trade US shares, must my funds be in US dollars or can they be in AUD and converted to/from USD when each transaction settles?
If the latter, can I have one funding source for trading both US and Australian equities?
Is repatriating funds difficult?

 

[skc]

Re: Interactive Brokers for US Trades

I currently have a portfolio of US stocks held through TD Ameritrade. I find TD Ameritrade excellent for trading, but the main issue I have is withdrawing money from my account to repatriate to Australia. I must send a fax to do this and it always takes quite a few days. And when the money does arrive, I usually get a note from Westpac saying they should have done things a different way as the US seems to use a different routing mechanism to Australia.

Is it the same with Interactive Brokers? I notice they have an Australian website with a .au address. I have browsed this website and can't find the information I need regarding banking procedures.

Can someone who knows answer the following.....

Are the banking facilities based in the US or Australia for Australian customers?
To trade US shares, must my funds be in US dollars or can they be in AUD and converted to/from USD when each transaction settles?
If the latter, can I have one funding source for trading both US and Australian equities?
Is repatriating funds difficult?

IB has a bank account with BofA in Sydney, so transfering money in is simple like your everyday online banking (BSB/account number etc).

Withdrawl is simple and quite quick once setup. Usually takes <24 hrs but my bank charges me $2 for every deposit from IB which suggests that the money comes from an overseas bank.

When you set up the account you can choose to nominate the base currency. If you choose $AUD, you are borrowing $USD when you buy $US shares. And when the position is closed, the loan is repaid and you have an entry of $US outstanding equal to the P&L. You then have to close that P&L FX position manually and convert back to your base currency at any time of your choosing.

I "think" the alternative is to actually purchase $USD via the FX trader and so you can buy the US stocks using $USD. That way you are exposed to exchange rate movements on the whole position, as opposed to just the P&L. But I am not 100% sure as I've never traded FX with IB.

Mod... Can we move this to the IB thread? So people can verify whether what I am saying is true...

 

[bellenuit]

Re: Interactive Brokers for US Trades

IB has a bank account with BofA in Sydney, so transfering money in is simple like your everyday online banking (BSB/account number etc).

Withdrawl is simple and quite quick once setup. Usually takes <24 hrs but my bank charges me $2 for every deposit from IB which suggests that the money comes from an overseas bank.

When you set up the account you can choose to nominate the base currency. If you choose $AUD, you are borrowing $USD when you buy $US shares. And when the position is closed, the loan is repaid and you have an entry of $US outstanding equal to the P&L. You then have to close that P&L FX position manually and convert back to your base currency at any time of your choosing.

I "think" the alternative is to actually purchase $USD via the FX trader and so you can buy the US stocks using $USD. That way you are exposed to exchange rate movements on the whole position, as opposed to just the P&L. But I am not 100% sure as I've never traded FX with IB.

Mod... Can we move this to the IB thread? So people can verify whether what I am saying is true...

Thanks. What do you mean by P&L? Profit or Loss on the trade? Also, is FX Trader a feature of IB or some service external to it?

If I nominate my base currency as USD, if I make a funds transfer from my Westpac account to my IB account using their BSB & A/C number allocated to me, will it just get converted to USD at their rate at the time of the transfer. Ditto for withdrawals from that account. That would parallel what happens with Ameritrade, but be a lot simpler as I would presumably be using the "Pay Anyone" feature of Australian banks, with only the need to nominate the BSB & A/C no. of the recipient.

 

[skc]

Re: Interactive Brokers for US Trades

Thanks. What do you mean by P&L? Profit or Loss on the trade? Also, is FX Trader a feature of IB or some service external to it?

If I nominate my base currency as USD, if I make a funds transfer from my Westpac account to my IB account using their BSB & A/C number allocated to me, will it just get converted to USD at their rate at the time of the transfer. Ditto for withdrawals from that account. That would parallel what happens with Ameritrade, but be a lot simpler as I would presumably be using the "Pay Anyone" feature of Australian banks, with only the need to nominate the BSB & A/C no. of the recipient.

- P&L = profit and loss on the trade. The principle if you like is repaid when you close the trade and the balance (i.e. the P&L) reamins as a FX position.

- FX trader is a feature within IB.

- Don't know. I am not sure too many people here have US denominated account but they might be able to answer that.

P.S. Thanks Mod (they are everywhere, looknig at everything...)

 

[nomore4s]

Thanks. What do you mean by P&L? Profit or Loss on the trade? Also, is FX Trader a feature of IB or some service external to it?

If I nominate my base currency as USD, if I make a funds transfer from my Westpac account to my IB account using their BSB & A/C number allocated to me, will it just get converted to USD at their rate at the time of the transfer. Ditto for withdrawals from that account. That would parallel what happens with Ameritrade, but be a lot simpler as I would presumably be using the "Pay Anyone" feature of Australian banks, with only the need to nominate the BSB & A/C no. of the recipient.

skc has answered most of it but imo it would be a lot easier to nominate your base currency as AUD and then convert whatever is in USD back to AUD before withdrawing any money from IB. It really is a very simple to convert the money back to AUD. Nominating you base currency in USD would probably cause a few headaches with the reporting for P/L at the end of the year as it would all be in USD.

skc do you ever sleep? : And I think you should bring back the sexy kinky chick, hahaha

 

[bellenuit]

A couple of questions regarding account opening.

I have Fasttrack and Protrack options. It gives criteria for which to choose and one for the former is: You want to trade in a single country with a single currency.

Does that currency need to be that of the country? I want to trade US shares but with my trading account in AUD. I believe purchases of US shares will mean I will be lent the purchase price in USD. I can either repay this loan immediately or at a later stage from my AUD account. Does that still qualify as "You want to trade in a single country with a single currency"

Earlier in this forum some mentioned that there is a minimum income of $40K to be allowed trade and it will ask for employer details. Does that eliminate retirees? And if not, how is the income test assessed? In my case, apart from dividend and interest income, which is usually less than $40K, if I need additional funds I just sell some shares that I hold as long term investments. However, if these funds are to be treated as income from an ATO point of view, they would need to produce Net Capital Gains for the year. This may often not be the case if they result in a capital loss or are applied against carry forward losses. So the fact that my income in the ATO sense is less than $40K, does not mean that my financial capacity to trade shares is as limited as an employee on a salary less than $40K.

 

[skc]

A couple of questions regarding account opening.

I have Fasttrack and Protrack options. It gives criteria for which to choose and one for the former is: You want to trade in a single country with a single currency.

Does that currency need to be that of the country? I want to trade US shares but with my trading account in AUD. I believe purchases of US shares will mean I will be lent the purchase price in USD. I can either repay this loan immediately or at a later stage from my AUD account. Does that still qualify as "You want to trade in a single country with a single currency"

Earlier in this forum some mentioned that there is a minimum income of $40K to be allowed trade and it will ask for employer details. Does that eliminate retirees? And if not, how is the income test assessed? In my case, apart from dividend and interest income, which is usually less than $40K, if I need additional funds I just sell some shares that I hold as long term investments. However, if these funds are to be treated as income from an ATO point of view, they would need to produce Net Capital Gains for the year. This may often not be the case if they result in a capital loss or are applied against carry forward losses. So the fact that my income in the ATO sense is less than $40K, does not mean that my financial capacity to trade shares is as limited as an employee on a salary less than $40K.

I don't know about your options...

As with income... I am a self-employed private trader and I put in whatever income I made. I don't remember a minimum and certainly wasn't aware of any assessment on that claim.

skc do you ever sleep? :

Lol. I am so tired today I actually took a nap during market hour. It has been two 100hr weeks in a row for me. I think the average trader is burnt out and this volatility will die through sheer physical exhaustion of the market participants.... except those damn bots I guess.

And I think you should bring back the sexy kinky chick, hahaha

Your wish is granted.

 

[notting]

No Tiddles!

 

[nomore4s]

Lol. I am so tired today I actually took a nap during market hour. It has been two 100hr weeks in a row for me. I think the average trader is burnt out and this volatility will die through sheer physical exhaustion of the market participants.... except those damn bots I guess.

100 hrs I'm a lazy futures trader, I trade maybe 2hrs a day if I'm lucky (bit more this week though), mind you I have a full job as well.

Your wish is granted.

Hahaha, not really what I had in mind.

 

[Sir Gordon Gecko]

Great thread Guy's & thanks for your reply's Perry!

Can anyone tell me what their experience is using NT7 or Multichart platforms as an ordering system with IB,

Anyone willing to have a skype chat with me about IB & opening a SMSF account data feed etc

Keen to hear more about when the HIN & SMSF will be established Perry

Ang

 

[Perryt]

Good Afternoon,

Chess sponsored HIN numbers are still in managements queue. I'll update everyone when it is available.
SMSF accounts can be setup with IB, for more details kindly pm myself.

Thanks and regards
Perry Tse
IB Sales Rep

Great thread Guy's & thanks for your reply's Perry!

Can anyone tell me what their experience is using NT7 or Multichart platforms as an ordering system with IB,

Anyone willing to have a skype chat with me about IB & opening a SMSF account data feed etc

Keen to hear more about when the HIN & SMSF will be established Perry

Ang

 

[Lone Wolf]

A while back people here were complaining about order vetting. Where if a stock moves more than 10% your order is held until you call IB to get it released.

Has anything changed in this area? How often is it an issue? I'm about to start trading a longer term system which buys and sells on open. I have a full time job so don't want to be checking every morning to see if the trade went through.

Also, your account with IB is insured in the event that IB go under. Is it also insured if the bank the funds are held in goes under? Or is the insurance purely on a collapse of IB itself?

I had decided to use Commsec until IB gets chess sponsored HIN's up and running. But it would cost me an extra $3000 a year in commissions. A $10,000 transaction with Commsec will cost $20. A $10,001 transaction will cost you $30. It's like they're trying to punish you for using them.

 

[skc]

A while back people here were complaining about order vetting. Where if a stock moves more than 10% your order is held until you call IB to get it released.

Has anything changed in this area? How often is it an issue? I'm about to start trading a longer term system which buys and sells on open. I have a full time job so don't want to be checking every morning to see if the trade went through.

Also, your account with IB is insured in the event that IB go under. Is it also insured if the bank the funds are held in goes under? Or is the insurance purely on a collapse of IB itself?

I had decided to use Commsec until IB gets chess sponsored HIN's up and running. But it would cost me an extra $3000 a year in commissions. A $10,000 transaction with Commsec will cost $20. A $10,001 transaction will cost you $30. It's like they're trying to punish you for using them.

The order vetting thing is still happening and it's annoying as hell esp in the current market volatility. I use a different broker for these sort of trades as I just couldn't be bothered calling up IB. Having said that though, many times the stock gaps higher on open without filling your order (because it is still being held at a lower level), but the share price retraces to give you a better fill...

Have you looked at Bell Potter? There's a thread on them somewhere and they are advertisers of this forum. I know little of them but I understand that are Chess sponsored, and they are cheaper than comsec.

 

[Lone Wolf]

The order vetting thing is still happening and it's annoying as hell esp in the current market volatility. I use a different broker for these sort of trades as I just couldn't be bothered calling up IB. Having said that though, many times the stock gaps higher on open without filling your order (because it is still being held at a lower level), but the share price retraces to give you a better fill...

Thanks SKC.

So your order will automatically be filled if the stock drifts back down to within 10%? Or are you saying that in the time it takes you to call IB you may end up with a better fill? If the process is automatic and consistent I could possibly code it and backtest it to see what affect it has. But I'm not calling IB to amend orders.

Have you looked at Bell Potter? There's a thread on them somewhere and they are advertisers of this forum. I know little of them but I understand that are Chess sponsored, and they are cheaper than comsec.

I looked at Bell Direct a while back. The PDS clearly states that the cash account is not guaranteed in the event that Bell Potter Capital defaults. I'd rather pay higher brokerage and know exactly what my risk is.

CMC offer a flat rate of $10 or 0.10%. But I think the interest paid on cash was a bit low. In the current environment my system could remain in cash for some time, so that's something else to consider.

 

[skc]

Thanks SKC.

So your order will automatically be filled if the stock drifts back down to within 10%? Or are you saying that in the time it takes you to call IB you may end up with a better fill? If the process is automatic and consistent I could possibly code it and backtest it to see what affect it has. But I'm not calling IB to amend orders.

As far as I understand my order stays at whatever price it was allowed to creep to... and sometimes the share price retraces from the open to give me a fill at that lower price.

Things may have changed recently as I haven't used IB for this kind of situation for some time. I usually just cancel my order and move on to my other broker. I get annoyed seeing other orders jumping in front of me.

It's a competition out there and getting delayed is a huge disadvantage.

You best contact IB yourself to understand exactly how the mechanism works. I don't know if the rule is in fact 10% - thought it was a bit less.

I looked at Bell Direct a while back. The PDS clearly states that the cash account is not guaranteed in the event that Bell Potter Capital defaults. I'd rather pay higher brokerage and know exactly what my risk is.

CMC offer a flat rate of $10 or 0.10%. But I think the interest paid on cash was a bit low. In the current environment my system could remain in cash for some time, so that's something else to consider.

Fair enough.

 

[Perryt]

Hi Lone Wolf,

The ASX exchange has very strict rules regarding order submission at prices it deems are outside the range of fair market value. Fines can be in excess of 100,000 AUD for violating this rule. The general rule is 10%. To be more clear, if you were to submit an order to buy at $10.00 and price dropped to were the moving average or fair market value was $9.00, IB would adjust your limit provided the ask was below $10. If the stock is illiquid and the market is wide enough that even at the bid ask you would violate the rule, IB will hold this order. If counter party to such an execution called the exchange to have the order busted, it will be and IB would be fined. Those are the rules and IB does everything it can within those rules to adjust limit prices and provide executions.

Anyone has a specific example that deviates from my explanation, please feel free to send myself an email on ptse@interactivebrokers.com or you can call the helpdesk on +612 8093 7300.

Account protection: SIPC
http://www.interactivebrokers.com/en/p.php?f=ibgStrength&p=acc

Our commissions on the ASX for stocks are 0.08% of the trade value.

Thanks and regards
Perry T
IB Sales Rep

A while back people here were complaining about order vetting. Where if a stock moves more than 10% your order is held until you call IB to get it released.

Has anything changed in this area? How often is it an issue? I'm about to start trading a longer term system which buys and sells on open. I have a full time job so don't want to be checking every morning to see if the trade went through.

Also, your account with IB is insured in the event that IB go under. Is it also insured if the bank the funds are held in goes under? Or is the insurance purely on a collapse of IB itself?

I had decided to use Commsec until IB gets chess sponsored HIN's up and running. But it would cost me an extra $3000 a year in commissions. A $10,000 transaction with Commsec will cost $20. A $10,001 transaction will cost you $30. It's like they're trying to punish you for using them.