Interactive Brokers

[captain black]

I spoke to IB three times and they never actually say I'll be moved to a cash account. I was told to keep a cash buffer and my account configuration (Regular T Margin account) will continue.

My advice has been the same. The CSO I raised the ticket with on Monday escalated my enquiry to management and the reply I received yesterday was that our accounts will NOT be converted to cash accounts (ie. they remain Reg-T margin) and futures trading will be as normal. As long as the securities account doesn't have a negative balance (ie. a margin loan) then there's no problems. The account with IB is actually 2 separate accounts, a securities account and a futures account. The issue with margin lending applies to securities. The account still remains a Reg-T margin account but margin lending on the securities account is disallowed.

 

[sammy84]

I have used IG extensively until I stopped trading for myself. I have no problems with IG and CFD per se, I was just making sure that you make an informed decision about switching from a margin equities provider to a CFD provider (IG is NOT a broker). Obviously with IG you take on counterparty risk but you'd be well aware of that since MF (I was a client there as well). IG is listed in London so a keen eye on their share price and company announcements will help reduce some of that risk.

In terms of costs:

Say you buy and hold a position for 1 month.

With CFD @ say 8bps commission and 5.75% interest on full position size, the holding/transaction cost is ~64bps.

With another margin provider at say 50% leverage, 7% interest and 11bps commission, your costs are 51bps.

So depending on your trading style, CFD's lower commission may be more than offset by its higher funding cost.

Thanks mate, all good advice. Sometimes I very quickly scrap a trade so the lower commission is important.

Hopefully this will just be a temporary measure and IB can offer margin again soon. It's amazing that there are no other brokers who offer a service which is even close to IBs. Surely there's an opening in the market for a competitor.

 

[yazz]

My advice has been the same. The CSO I raised the ticket with on Monday escalated my enquiry to management and the reply I received yesterday was that our accounts will NOT be converted to cash accounts (ie. they remain Reg-T margin) and futures trading will be as normal. As long as the securities account doesn't have a negative balance (ie. a margin loan) then there's no problems. The account with IB is actually 2 separate accounts, a securities account and a futures account. The issue with margin lending applies to securities. The account still remains a Reg-T margin account but margin lending on the securities account is disallowed.

You're right.

I rang one person at IB today and they said the T-Reg account would be converted to a Cash Account. I asked them again, and they put me through to someone with more knowledge on the matter and they said what you said i.e. the accounts will stay T-Reg, and the only limitation is that you can't short stocks or have a negative balance. Otherwise the account will operate the same.

So, at this stage I won't open a company account. Sounds like an Individual account is still OK for futures day traders.

That's great news.

 

[ftw129]

Excuse me for my possibly already answered and slightly ignorant question...

But does that mean we can short the ES (for example) and only need the $5500 to cover?

 

[Sir Burr]

After specifying Australia, it came up with a message that asked me to acknowledge that I understood margin would not be offered. It didn't say just for individuals, just an across the board statement that margin would not be offered.

That's interesting.

I placed a question with their help desk asking for confirmation on whether margin will be offered for LLCs or not. That was 36 hours ago and I still haven't got a reply.

I've sent a message to them too.

A few people here have indicated company setup is good for margin but might wait a bit on this idea to set one up until someone (especially IB!) can confirm we can definitely use margin

 

[TPI]

Hi,
If one moves from IB to a regular Aussie CHESS-sponsored broker, where the shares are held in your own name, do you have to pay capital gains tax (CGT) on this transfer?
Thanks.

 

[yazz]

Seems it's easy to get conflicting information, depending on who you actually ask at IB. Happened to me again today.

I'm personally going to continue using my Individual account, on the assumption it'll remain a T-Reg account after the 11th of November. The only difference seems to be that you can't short stocks or have a margin loan.

If for any reason that changes, and they decide to change my T-Reg account to a Cash Account, I'll use a company account instead.

 

[kid hustlr]

Excuse me for my possibly already answered and slightly ignorant question...

But does that mean we can short the ES (for example) and only need the $5500 to cover?

Yes

 

[kid hustlr]

Hi,
If one moves from IB to a regular Aussie CHESS-sponsored broker, where the shares are held in your own name, do you have to pay capital gains tax (CGT) on this transfer?
Thanks.

IM NOT AN ADVISER

my understanding is no change of beneficial ownership = no CGT event

EDIT:

Apologies I was assuming shares held on ISN, poster below explained it well and long story short I don't know the answer either!

 

[captain black]

Hi,
If one moves from IB to a regular Aussie CHESS-sponsored broker, where the shares are held in your own name, do you have to pay capital gains tax (CGT) on this transfer?
Thanks.

Given that IB hold shares in street name and not in an individual's name then it may trigger a CGT event. Someone who has done a transfer in the past may know whether it does or not, but it's not as simple as a transfer between 2 Chess brokers. ( I don't trade shares with IB so I've got no direct knowledge of CGT with IB in regards to shares).

 

[bellenuit]

That's interesting.



I've sent a message to them too.

A few people here have indicated company setup is good for margin but might wait a bit on this idea to set one up until someone (especially IB!) can confirm we can definitely use margin

I've received a response in the meantime from a manager who confirmed you could trade on margin if an Australian company. He said he created a new account and didn't get the message I got, but if I could recreate it to screen copy him. So I started all over. I specified Small Business, created a new username and password, entered my email address and when it asked for country of residence/incorporation I specified Australia. It immediately popped up the same message, saying among other things margin would not be offered and I had to click on the I Understand button to proceed.

This is how the message begins....

"Due to ongoing concerns in the IB account structure, certain account types and services including margin accounts, spot commodity accounts and CFD accounts will not be available. "

It doesn't limit the above to individual accounts but seems written as an across the board statement.

I have emailed the screen shot and am awaiting a reply. The actual message goes on to say that they hope the situation will be resolved within a few weeks, which is a lot less than the 4 or 5 months in the email they sent. This makes me think that it may be a left over message from the initial restrictions on margin put in place a few months ago, rather than the new situation as of last week.

 

[Sir Burr]

It doesn't limit the above to individual accounts but seems written as an across the board statement.

Jst got a reply from IB:

Thank you for your web ticket.

Yes, we will continue to offer margin lending capabilities to Australian entities (i.e. Pty Ltd companies) as well as Trusts with all corporate Trustees.

 

[yazz]

...hopefully this is correct

EDIT:

me : Hello Ernest
me : I am an Australian citizen, and I was recently told about changes to my account due to margin regulations, are you aware of this change?
Ernest: yes Australian citizens are not allowed margin
me: I recognise this change in regards to stocks, as I can no longer purchase stocks on margin, yet I'm confused as to whether this change will influence my futures trading at all?
Ernest: The regulation is for stock and stock options not commodities
me: ok, so there will be no change in regards to how my futures trades will be settled? As I understand it, my futures trades are settled immediately, will this still be the case given these changes?
Ernest: As I understand it Futures are not Affected by the rule
Ernest: Is there anything else that I can assist you with today?

I was told something similar today. i.e. they won't change our T-Reg accounts to Cash Accounts. So settlement/margin requirements should be the same as it is now for futures day traders. That's great news.

 

[CanOz]

You would think it would be in IBs interest to clear up some of this....they must have lost some accounts over it.

 

[village idiot]

in the worst case of bad timing ever....

I have had for years a UK based IB account from when I used to live there, which I had stopped using as I transferred all my trading to Aust based accounts which were linked via the adviser scheme a year or so ago.

The UK one sat there , copping the inactivity fee each month, and I keep on thinking I should really close that account but kept putting it off just in case there was a reason I might need it one day. Finally I bit the bullet, pulled the money out and closed it.......... about a week before the big announcement from IB hit the email box.

wouldn't mind having it back now ....

 

[TPI]

Another thing I am wondering now is that if their licensing arrangements are such that they can't lend to "natural persons", then what makes it so easy for them to lend to trusts with company trustees - which are effectively controlled by these very same natural persons, ie. mum and dad investors... ?

When I've done trust applications for CHESS-sponsored brokers they still require one (or more) directors guarantees (usually from these natural persons).

Is it likely that they will later come back and say that they can't lend to trusts anymore, even with company trustees?

If ASIC is serious about licensing of international brokers perhaps they will extend their requirements further?

 

[So_Cynical]

Hi,
If one moves from IB to a regular Aussie CHESS-sponsored broker, where the shares are held in your own name, do you have to pay capital gains tax (CGT) on this transfer?
Thanks.

Its a transfer, your not selling so no CGT event i would think, when i transferred my shares into IB back in May i never for a moment considered it a CGT event and didn't include it in my tax return.

By no means an expert though.

 

[lejmorro]

I've received a response in the meantime from a manager who confirmed you could trade on margin if an Australian company. He said he created a new account and didn't get the message I got, but if I could recreate it to screen copy him. So I started all over. I specified Small Business, created a new username and password, entered my email address and when it asked for country of residence/incorporation I specified Australia. It immediately popped up the same message, saying among other things margin would not be offered and I had to click on the I Understand button to proceed.

This is how the message begins....

"Due to ongoing concerns in the IB account structure, certain account types and services including margin accounts, spot commodity accounts and CFD accounts will not be available. "

It doesn't limit the above to individual accounts but seems written as an across the board statement.

I have emailed the screen shot and am awaiting a reply. The actual message goes on to say that they hope the situation will be resolved within a few weeks, which is a lot less than the 4 or 5 months in the email they sent. This makes me think that it may be a left over message from the initial restrictions on margin put in place a few months ago, rather than the new situation as of last week.

I asked yesterday and got a reply within several hours.

The current margin restriction applies to accounts in the name of an individual, joint accounts where one or more of the named account holders is an individual, and trust accounts where the trustee is an individual. This does not affect other accounts.

Best regards,
Alan L
IB Customer Service

Although the reply seems unambiguous, Bellenuit's experience is. I note that IB has also told you the same as above now. Do we trust the application process?

BTW, the reason I need a margin loan account is to sell options.

 

[TPI]

Its a transfer, your not selling so no CGT event i would think, when i transferred my shares into IB back in May i never for a moment considered it a CGT event and didn't include it in my tax return.

By no means an expert though.

I got a reply from Capital 19, who use the IB platform, re. this and they say no CGT/stamp duty payable.

But probably need an independent accountant's view on this to be sure.

 

[Kryzz]

Anyone looked into MB Trading as alternative to IB for margin lending with US equities?

I received the following response when querying whether Australian residents are eligible to trade US equities on margin:

"Hello Shaun:

Thank you for your interest in MB Trading.

We do offer Margin Equities accounts for Australian citizens and residents.

Once the account is approved you will receive a welcome email that will
contain all funding instructions, including the wire instructions and
banking information. Our bank will be an American bank, but we can
accept a wire from a foreign bank."


Their rates seem quite competitive also.