Interactive Brokers

[DocK]

So is this margin lending still illegal? Is that what the issue is with IB in Australia?

I really don't understand why there is no margin lending.

Are you able to explain it?

My understanding is that IB did not obtain the necessary licenses in Australia to satisfy ASIC requirements for providing margin lending to Australian clients. As they are not based in Australia I understand we were able to obtain the same margin available to their global clients, but ASIC consider they should have treated their Aussie clients differently, based on our domestic regulations etc. I wonder whether the expense and hassle of satisfying ASIC will be worth the bother for IB for the number of Australian clients they have? It was originally going to be all fixed up within 6 months - and that was about a couple of years ago now wasn't it?

Still, a nice surprise to wake up to, as you say.

 

[tech/a]

I used it for 7 yrs.
Never had a problem.
Was great.

Wish it was still available.
Seems we are small fish!

 

[McLovin]

If you're a company you can still use their margin lending, as I understand.

 

[pavilion103]

I wonder if it's worth setting up and account as a company if it doubles exposure.

I guess there are a number of other considerations too.

I would love some thoughts on this. Is there a specific thread for it?

 

[McLovin]

I wonder if it's worth setting up and account as a company if it doubles exposure.

I guess there are a number of other considerations too.

I would love some thoughts on this. Is there a specific thread for it?

If you're planning on making $50k/year (which is what I think you said in another thread) a company is not a great structure because you'll be taxed a flat 30%. I'd do a trust with corporate trustee which looks like it's OK. You'll need to work out whether the structure is worth the $$$ to maintain.

4. Does this margin restriction apply to all Australian residents?

No. This restriction applies solely to accounts associated with a natural personal and not entities such as corporations. In the case of trust accounts, the restriction applies if any of the trustees are natural persons.

https://ibkb.interactivebrokers.com/article/2101

NB: I've never used IB so I have no idea how up to date that information is. Definately ring them before you go and start setting up things.

 

[pavilion103]

Thanks mate.
If I was hypothetically working too it would then be worth it?

Say 70K in my job + 50k as a company in trading?

But if I left work and only made 50K then not worth it?

 

[tech/a]

Thanks mate.
If I was hypothetically working too it would then be worth it?

Say 70K in my job + 50k as a company in trading?

But if I left work and only made 50K then not worth it?

Youll get bored PAV

Your only trading a few hrs a night
wont upset a job.

Chat to an accountant re structure.
I've not used a company--and it has been expensive.
Complacently slack!
Got devoured when I closed out the system before 2008.
Even though some were over 12 mths held.

 

[McLovin]

Thanks mate.
If I was hypothetically working too it would then be worth it?

Say 70K in my job + 50k as a company in trading?

But if I left work and only made 50K then not worth it?

It works like this...

Once you're income is above $37k you're paying a marginal rate that is higher than the corporate tax rate, however you're effective tax rate is much lower. An effective tax rate of 30% kicks in at about ~$180k.

So when you're working for someone else it will make sense to be trading through a company, once you stop working for someone else it will be better to trade through yourself/trust until you reach $180k in income/year.

A trust with a corporate bene might be an option but you really need to speak to an accountant, which I am not! When you do these things you need to make sure you hit the sweet spot with minimum tax but that is scaleable that if you're income does grow you're not trapped in a structure that sees you paying more tax than you need to.

 

[skc]

I just saw that. A nice surprise.

Does anyone know what exactly this is all about? Why the refund?

Going to get >$1k back... I didn't even know I used margin that much.

With this development I can't see IB offering the margin product anytime soon.

 

[hawamahal]

With this development I can't see IB offering the margin product anytime soon.

I totally agree with this.

 

[rnr]

I wonder if it's worth setting up and account as a company if it doubles exposure.

I guess there are a number of other considerations too.

I would love some thoughts on this. Is there a specific thread for it?

Here are some details to consider (the usual disclaimers apply as I am not a tax accountant).

 

[geeroy]

what is getting refunded? is it just interest charges or brokerage too ? I've since closed my account at IB and haven't heard anything

 

[DocK]

what is getting refunded? is it just interest charges or brokerage too ? I've since closed my account at IB and haven't heard anything

Hi Geeroy,

I've copied and pasted the email I received from them for you, with my name & number deleted, naturally.

Interactive Brokers LLC REFUND TO CLIENTS

February 9, 2015


Dear Sir/Madam:


RE: Interactive Brokers LLC REFUND TO CLIENTS

On 8 December 2014, Interactive Brokers LLC offered an enforceable undertaking (EU) to the Australian Securities and Investments Commission (ASIC) under which it agreed to provide refunds of net fees to all retail clients who utilised margin lending facilities during the period from 1 July 2010 to 19 August 2013. You are receiving this letter because you have been identified as a retail client to whom Interactive Brokers will provide a refund.

Interactive Brokers offered the EU in response to ASIC's concerns about its margin lending activities. A copy of the EU and ASIC's media release can be found at www.asic.gov.au.

Your Refund

The refund of net fees includes commissions and interest but not payments made by IB to third parties such as regulators, clearing houses and intermediaries. The refunds also do not include IB's cost of funds.

Your refund has been calculated as follows (all figures in Australian Dollars):


Client Name: xxx

Client Account Number: xxxx

Transaction Period: 01-JUL-10 to 10-AUG-10


Commission/Interest
Amount (AUD)

Commissions from margin transactions 881.53

Less fees paid to regulators, operators, intermediaries 87.41

Interest paid
2068.42

Less cost of funds 1400.32

TOTAL REFUND: 1462.21



Receiving Your Refund

As an existing client of Interactive Brokers, your refund will be paid into your Interactive Brokers account. You do not need to do anything further and may verify that payment has been made through review of your Daily Activity Statement.

Disputing Your Refund

If you have any questions about this letter or wish to contact Interactive Brokers directly, please telephone Interactive Brokers Client Services at +61 (2) 8093 7300 or send an email to auclients@interactivebrokers.com..

If you wish to dispute your refund, you may also contact the Financial Ombudsman Service (FOS), an external complaints resolution body. You can contact FOS by telephone 1300 780 808, through their website www.fos.org.au or in writing at:

Financial Ombudsman Service Limited
GPO Box 3
Melbourne Victoria 3001

You may also wish to quote our membership number to FOS, which is 11683.

Contacting Interactive Brokers

Again, if you have any questions about this letter or wish to contact Interactive Brokers directly, please telephone Interactive Brokers Client Services at +61 (2) 8093 7300 or send an email to auclients@interactivebrokers.com..



Interactive Brokers Client Services

Interactive Brokers, member/regulated: NYSE, FINRA, SIPC, SEC, CFTC, NFA, IIROC FCA(#208159an), ASIC(#245574)

Message Reference Number: 18504681-150, Sent Date: 2015.02.09 13:36:42 -0500

 

[geeroy]

Thanks for that Dock, will try contacting them about it

 

[freebird54]

Thanks for that Dock, will try contacting them about it

I have been using IB for years both personal and in a company - get a good accountant, it works well

 

[village idiot]

The above post is a little old now but I don't see that this issue of contravening section 13.14 of the SIS act (charge on assets) has been answered here. Clause 15 of IB's customer agreement places a charge over the SMSF assets that are held by IB, so trading in the name of an SMSF with IB definitely contravenes the SIS act.

For all those that have SMSFs with IB, have you done anything to address this. Maybe that Clause 15 is just for Reg T margin type accounts, which is what I have with my SMSF, but I have a feeling it is in any agreement that IB puts out.

There was a user on here, jorgon, who has done some work on this, it's mentioned in a few threads including this one: https://www.aussiestockforums.com/forums/showthread.php?t=25202

Has anyone contacted IB and asked them to remove clause 15 of the agreement and replace with something along the lines of what jorgon is suggesting. I think I'm gonna go down that path. If you're generating a bit of cash in your SMSF with IB, don't want to get hit with 45% tax rate, or worse.

I think Esuperfund used to have IB as one of their comulsory brokers, I don't think they are with IB anymore. Maybe they stopped because of this charge on assets issue.

bit of a belated reply, but yes I have done this and had the CA amended. Took a while to get them to co operate though, they were unwilling to recognise the issue. I recommend everyone else with an IB SMSF account does the same.

 

[yonnie]

DocK,

I see you got a refund for the period 1/7/2010 - 10/8/2010.
IB is refunding fees from 1/7/2010 - 19/8/2013.
did you get any refunds for the period 11/8/2010 - 19/8/2013?

 

[jubuss]

Hey guys, has IB reduced their brokerage for option trading?? I thought i was $3.00 per contract but the picture below clearly shows $.030 per contract (minimum of $2.00). I normally trade with only 10 to 30 contracts at a time so am i really only looking at $3.00 to enter or exit a position??

Would love the clarification as this pricing is absolutely awesome if correct, thanks!

 

[icemanmelb]

Hey guys, has IB reduced their brokerage for option trading?? I thought i was $3.00 per contract but the picture below clearly shows $.030 per contract (minimum of $2.00). I normally trade with only 10 to 30 contracts at a time so am i really only looking at $3.00 to enter or exit a position??

Would love the clarification as this pricing is absolutely awesome if correct, thanks!View attachment 61693

The contract size is now 100 instead of 1000. http://www.asx.com.au/documents/professionals/asx_eto_contract_size_reduction.pdf

Ice

 

[jubuss]

The contract size is now 100 instead of 1000. http://www.asx.com.au/documents/professionals/asx_eto_contract_size_reduction.pdf

Ice

Awesome to hear. See ya e trade!!!!