Interactive Brokers

[bellenuit]

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.

I have now got a reply to my query that included the screen scan with the message.

They didn't actually explain why they are showing that message, but did again confirm that companies can open margin accounts. They said if I completed the application process, I would be offered a margin account as one of the available options. They also said that if I had not chosen Small Business, but (this is going from memory) Other Proprietary Groups, I would have been able to create the same company account but would not have encountered that message. I don't know why they simply don't correct or delete that message if it is ambiguous or wrong.

I had also asked whether it was as simple to transfer cash and shares between a company account and an individual account as it was between two linked individual accounts, but unfortunately the answer is No. You can do it by sending a special request to Professional Services, but I was hoping for something immediate without making special requests each time. You can obviously do the cash side by transferring to your external bank, make a pay anyone there to the external account of the other entity and then transfer back to the other entity's IB account. This could take a few days to fully execute. I was hoping to be able to do things like transfer the excess cash in my individual account after a settlement to the company's margin account to reduce its negative balance, thus saving interest, and then transferring back when there is an opportunity to buy something I want for my individual account. Sometimes such opportunities don't last more than a few hours, so the external method would be useless

 

[OZ Trade]

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 ....

Did you try re-activation?

A "Closed" account is never really closed with IB.. you can send a request to reactivate from the account management page.

 

[OZ Trade]

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.

I am trading with them currently with margin and haven't had any issues in that regard.

You'll need to be in USD though so be aware of the currency risk on larger sums..

There has been some funny things happen with them so far..

Yesterday I had a buy stop order that mysteriously filled at market.. well below the stop price.. and the day before was charged multiple commissions on a single order from my end that they executed in multiple blocks..

So yeah.. already more issues in a couple of day than in a year with IB.

 

[yazz]

MB Trading is pretty small.

http://www.cftc.gov/ucm/groups/public/@financialdataforfcms/documents/file/fcmdata0713.pdf

On 31st July 2013, MB's excess capital was only $3,014,245.

At the same time IB had $1,556,909,670, ETrade $563,713,537 , TD Ameritrade $262,933,801

Something to consider.

 

[redsky0]

Assuming you don't have access to a margin account, how do you guys trade the major currency pairs (up/down) without the ability to short? Just started actively trading and the the viable options I see are:

(1) ETFS like ETFS 3x Long AUD Short USD (LAU3@LSE) - While these work well enough for hedging USD stock exposure, and are granular, they have large spreads and only trade London business hours.

(2) Futures on GLOBEX - Large minimum transaction sizes, not granular, narrow spreads.

Are there any better options I'm missing?

Sorry to be a hassle, but anyone have any advice on this? I would hate to have to move to a standard forex broker over IB. Much appreciated.

 

[OZ Trade]

Sorry to be a hassle, but anyone have any advice on this? I would hate to have to move to a standard forex broker over IB. Much appreciated.

From what I've heard FX trading with margin/leverage is not affected by the changes..

You should have no problem buying or selling the FX pairs directly with leverage/margin of 40:1 on the majors..

If not there is a heap of long and short of ETFs:

http://etf.stock-encyclopedia.com/category/currency-etfs.html

Many of these suffer poor liquidity though.

EFTs I have used with descent liquidity:

FXA- Long the Aussie vs USD
FXE- Long the Euro vs USD
FXY- Long the Yen vs USD
EUO- 2x short the Euro vs USD

 

[ftw129]

The response I got (after waiting 2 weeks)....

******************************************************

Thank you for contacting IB Customer Service.

Your account will maintain the existing trading capabilities but it will be restricted from any new trades that would cause or lead to a margin loan. If you are already holding a margin loan, then your account is subject to liquidation after 2013-11-11 or you may take the actions described from the notice.

This margin restriction will not affect the trading of index options trading. The restriction applies to the margin lending of long securities in which the securities acts as collateral and IB loans you funds to trade.

A margin loan exist if there is a debit net cash on the securities segment after taking into account of interest, dividend accruals, as well as removing the absolute value of short securities positions and a AUD 500 cash buffer required to be maintained for any interest, dividend payable and fees that may result in opening or increasing existing margin loan.

Should you have any further enquiries, please let us know. Thank you.

Best regards,
Kenny Tsang
IB Customer Service

 

[alphaman]

This margin restriction will not affect the trading of index options trading. The restriction applies to the margin lending of long securities in which the securities acts as collateral and IB loans you funds to trade.

A margin loan exist if there is a debit net cash on the securities segment after taking into account of interest, dividend accruals, as well as removing the absolute value of short securities positions and a AUD 500 cash buffer required to be maintained for any interest, dividend payable and fees that may result in opening or increasing existing margin loan.

This is the clearest and best explanation I've seen from IB.

 

[redsky0]

From what I've heard FX trading with margin/leverage is not affected by the changes..

You should have no problem buying or selling the FX pairs directly with leverage/margin of 40:1 on the majors..

If not there is a heap of long and short of ETFs:

http://etf.stock-encyclopedia.com/category/currency-etfs.html

Many of these suffer poor liquidity though.

EFTs I have used with descent liquidity:

FXA- Long the Aussie vs USD
FXE- Long the Euro vs USD
FXY- Long the Yen vs USD
EUO- 2x short the Euro vs USD

Hmm, not unless I'm doing something wrong. Buying with a currency I don't have (on leverage) gives me insufficient funds. Yep problem with ETFs is low liquidity, especially outside exchange hours and limited leverage.

 

[i4ever]

How do we know whether a broker uses CHESS or not? Is it something they normally do in the US, or is it an Australian thing?

Has anyone used Firstrade Securities?

 

[bellenuit]

How do we know whether a broker uses CHESS or not? Is it something they normally do in the US, or is it an Australian thing?

Has anyone used Firstrade Securities?

CHESS only applies to Australian stocks. You would normally assume that Australian brokers are part of the CHESS system, but it is always better to check if you want to be sure. Overseas based brokers may not be part of CHESS. IB isn't.

Rather than explain what it is, do a Google search or check the ASX website. It's sort of a centralised holding system where you get allocated a holder id (HIN) that keeps track of what stocks you own and sends a monthly statement of transactions to you (only the quantity bought, sold and the balance held; there is no pricing data. That you get from the broker).

 

[bigchrisb]

I'm new to the forum, so please go easy on me.

I had an account with IB that I was using for a low interest rate margin loan (I used it to be long for AU and US stocks, with cheap margin debt in AUD and USD). I've had margin loans with other brokers (CHESS sponsored) for years. Like the rest on this thread, I've been a bit frustrated by the withdrawal of margin to Australian clients. In parallel to my IB account, I have a margin account with ANZ/etrade, at a significantly higher interest. These accounts are in my name. I also have (un-geared) accounts with NAB for a family trust, an investment company, and a SMSF.

I thought I'd report back on my experience of closing my IB positions, transferring stock, and the like. What I have done may not be relevant to you, but I've presented it for your information, as there seems to be a lot of hyperbole (as opposed to things people have done) in this thread. Please get your own advice, and don't take what I have written here as investment advice. Here is what I have done and why I have done it:

1. For my ASX stocks that had a capital loss in IB, I've sold them, and repurchased them in my family trust account (with NAB). This means I can claim the capital loss in my name, and avoid the ATO's washing rules (as the stocks have been re-purchased in a different entity).

2. For my ASX stocks that had a capital gain, I got IB (through writing them a ticket) to convert them to issuer sponsored shares at the registry, in my name (now CHESS sponsored). Once I got my CHESS holding statements, I got these transferred to broker sponsored under my Etrade HIN. My accountant has advised that as there is no change in beneficial ownership, there should be no CGT owing. The process itself was very smooth, and took about a week.

3. For my international stock (US listed shares), the annual custodial fees were fairly offputting to transfer these to my Australian brokers. Hence I sold these in IB and wore a capital gain. Thankfully it was less than the loss I could harvest from 1, but still frustrating to be forced into a CGT event.

I'm now in the process of closing my account.

All said and done, I'm sad to see IB exiting this market, as I found them very good, and very cheap for margin debt. That said, I find their help files pretty hard to navigate, and not really set up for the Australian environment.

Hope that helps someone.

 

[alphaman]

For my ASX stocks that had a capital gain, I got IB (through writing them a ticket) to convert them to issuer sponsored shares at the registry, in my name (now CHESS sponsored).

Does IB charge a fee for doing this?

 

[bigchrisb]

I don't think I have been charged. But I have only transferred a couple of holdings (of about $25k each) like this.

 

[pavilion103]

I have a tax question.

I went to my accountant today and they seemed confused about how to do my tax return.
They said for shares they have to enter every single transaction (buy, sell, profit etc).
I have so many transactions.

I printed off the 2012-2013 summary statement and gave it to them.

Does anyone else have any idea of how they do their tax?
Does each one have to be entered individually? Or an overall net figure?

 

[Lone Wolf]

I have a tax question.

I went to my accountant today and they seemed confused about how to do my tax return.
They said for shares they have to enter every single transaction (buy, sell, profit etc).
I have so many transactions.

I printed off the 2012-2013 summary statement and gave it to them.

Does anyone else have any idea of how they do their tax?
Does each one have to be entered individually? Or an overall net figure?

Are they getting confused about whether you're an investor or a trader? If you were investing, they'd need to know what the hold time was to tell if you are eligible for the CGT discount. They might need to know the number of trades or the $ turnover to decide if you are a trader or investor. But once designated as a trader, what does the ATO stand to gain by being told details of every single trade a trader makes?

What if you were using ETAX? I doubt ETAX has the facility to enter every individual trade (I've never used it).

Previously I've given my accountant both a list of all trades and a total summary. They've never told me which one they actually use. When I asked them what the requirements are for being classed as a trader. They responded with "What do you think you are?".

 

[CanOz]

Does anyone here trade seasonal spreads on commodities or any other futures products? If so do you get the exchange margin discount through IB?

 

[So_Cynical]

I have a tax question.

I went to my accountant today and they seemed confused about how to do my tax return.
They said for shares they have to enter every single transaction (buy, sell, profit etc).
I have so many transactions.

I printed off the 2012-2013 summary statement and gave it to them.

Does anyone else have any idea of how they do their tax?
Does each one have to be entered individually? Or an overall net figure?

Confused accountant, you need a new accountant.

Nothing needs to be entered individually with Etax so cant see how an accountant would need to do it that way unless you haven't? you have a spread sheet or some sort of portfolio/trade software print out?

A record of all dates and trades etc needs to be kept for audit purposes but that's it as far as i have ever done.

 

[bellenuit]

Has anyone else had trouble with the IB website (for administration etc., not the trading platform). For the least 20 hours or so I haven't been able to get in. Mostly it just freezes after log in but the few occasions where I have successfully got in only the heading banners were displayed not the content. Its just that I've updated my OS recently to OS X Mavericks and I am not sure whether that is a coincidence or the problems are somehow linked.

 

[keithj]

Has anyone else had trouble with the IB website (for administration etc., not the trading platform). For the least 20 hours or so I haven't been able to get in. Mostly it just freezes after log in but the few occasions where I have successfully got in only the heading banners were displayed not the content. Its just that I've updated my OS recently to OS X Mavericks and I am not sure whether that is a coincidence or the problems are somehow linked.

It's down for maintenance today (2nd Nov).