Interactive Brokers

[IB12]

Have recently been asked to go through the novation process.
I wonder how this will impact:
1. margin for Australian clients
2. fx trading
3. regulation (in the event of default / breach of corporations act e.g. BBY)
A while back ASIC urged IB to set up a regulated Australian subsidiary:
https://www.leaprate.com/news/exclu...to-launch-new-company-for-australian-clients/

 

[mjim]

Just confirmed the following
- Gradual transfer first Individual accounts and then Trust accounts
- NO Margin
- NO SIPC protection only AFG so for
1) AUS HIN stock it should be ok ,
2) Cash seating in a/c subject to AFG ,
3) Stock in US????? dont know ! IBAU is a client of IB LLC USA
Overall not great IB for some reason treats AUS clients weirdly ( mildly put)

 

[Sharkman]

Just confirmed the following
- Gradual transfer first Individual accounts and then Trust accounts
- NO Margin
- NO SIPC protection only AFG so for
1) AUS HIN stock it should be ok ,
2) Cash seating in a/c subject to AFG ,
3) Stock in US????? dont know ! IBAU is a client of IB LLC USA
Overall not great IB for some reason treats AUS clients weirdly ( mildly put)

HIN? i thought IB uses the nominee account model... does this mean they are switching to CHESS sponsorship (at least for ASX holdings)?

AFG is far inferior protection to SIPC isn't it? $250K AUD vs $500K USD for SIPC? that is a bit worrying because IB is really for trading not for buy & hold (given the monthly minimum activity). for people who use it for trading, even if they do switch from nominee accounts to HIN, that doesn't really cushion the blow from losing SIPC and only getting the inferior AFG in its place, as sometimes one might feel that the market isn't throwing up any trading opportunities and therefore it's prudent to shut down most or even all positions, and go full cash whilst waiting for an opening to show up. if they happen to go down and turn into another sonray or MF global at that exact time...

 

[mjim]

HIN? i thought IB uses the nominee account model... does this mean they are switching to CHESS sponsorship (at least for ASX holdings)?

AFG is far inferior protection to SIPC isn't it? $250K AUD vs $500K USD for SIPC? that is a bit worrying because IB is really for trading not for buy & hold (given the monthly minimum activity). for people who use it for trading, even if they do switch from nominee accounts to HIN, that doesn't really cushion the blow from losing SIPC and only getting the inferior AFG in its place, as sometimes one might feel that the market isn't throwing up any trading opportunities and therefore it's prudent to shut down most or even all positions, and go full cash whilst waiting for an opening to show up. if they happen to go down and turn into another sonray or MF global at that exact time...

HIN/ Chess may be I used the wrong word, what I meant was The shares will be identifiable,, to give you an example, When Sonray collapsed some of the clients had ASX shares via Sonray but held by IB and at the end of the wind up those who had cash got 62 cents a in ad ollar back and those who had ASX shares held by IB they got them back BUT important to remember is Sonray was largly OTC hence not much protection either in ASIC or in USA!
... Now speaking of AFG and SIPC , yes I agree with you not only it is not enough but also is the AFG not likely to have a large pool as compared to SIPC .. Now, about Australian Corporations law when a broker goes burst ... If there are shares then AFG comes in to picture but if is all Cash then my interpretation is you just become unsecured creditor as experienced with Sonray
And that is where I think SIPC is superior,,, It protects both cash and shares
Obviously there is no protection for Futures and other OTC positions except in UK
Another thing with IB USA if evnen though it is a hybrid Cash? SHARES/ FUTURES they swipe all cash in to SIPC protection every day.. but please can somebody more knowledgeable cross check what I am saying . What I dont get is why a big broker like IB does not get it's XXX together with ASIC and give us the service we need! perhaps not enough business but it all sounds arrogant

 

[Nitro773]

Just confirmed the following

Yes, I also found out the same today. Even those that had margin prior have lost it with the transfer.
They did say that they are looking at offering margin in future but cannot say when.
The reduction in protections is a worry, so much for Australian authorities aim at protecting us.
I suspect now that, being an Australian company, IB Australia will also be increasing fees and charges.
I’d image ASX access fee for starters going from $25 to $37.50 (or whatever is the usual price here).
Anyway, it was good whilst it lasted.
At least we have Forex quotes now.

 

[minwa]

Withdrawal problems with the new Aus company. Used to receive withdraws same working day if withdrawn before noon or overnight latest, without fail.

2 working days and 2 nights still nothing. Equity already deducted from brokerage account. Keep this up OzIB and I'm firing you.

And phark you ASSic for abusing a proffesional broker into a crap one instead of going after binary brokers and seminar gurus.

 

[Wysiwyg]

And phark you ASSic for abusing a proffesional broker into a crap one instead of going after binary brokers and seminar gurus.

Meawhile the local brokerage firms have been able to maintain their high brokerage fees and market dominance with CFD brokers offering cheapest rate. Maybe a bit of home team bias in there.

 

[Sharkman]

this is a worrying development. i don't mean to come across as condescending or snobbish in any way, just making a genuine enquiry to get some thoughts on the matter - for the people on these forums who have a trading book >= $500K USD (or equivalent) with IB, does it concern you that it appears we are going to be losing SIPC for the inferior AFG protection?

are you leaning towards (or have already decided to) keeping your full trading book in IB, cutting your account back to $250K AUD and moving the excess to a CHESS sponsored account at one of the rip-off Aust brokers (what i've been doing over the last few years to stop my IB account from growing above the SIPC limit), or switching brokers entirely (not sure if there's anything better available to us though?) or do you think i'm just being way too paranoid about the whole nominee account thing?

 

[mjim]

this is a worrying development. i don't mean to come across as condescending or snobbish in any way, just making a genuine enquiry to get some thoughts on the matter - for the people on these forums who have a trading book >= $500K USD (or equivalent) with IB, does it concern you that it appears we are going to be losing SIPC for the inferior AFG protection?

are you leaning towards (or have already decided to) keeping your full trading book in IB, cutting your account back to $250K AUD and moving the excess to a CHESS sponsored account at one of the rip-off Aust brokers (what i've been doing over the last few years to stop my IB account from growing above the SIPC limit), or switching brokers entirely (not sure if there's anything better available to us though?) or do you think i'm just being way too paranoid about the whole nominee account thing?

Not sure if this will help but how about
- Instead of personal account with IB AUS can you convert it to a company account with IBUSA?
and also split with multiple US brokers!

 

[mjim]

Withdrawal problems with the new Aus company. Used to receive withdraws same working day if withdrawn before noon or overnight latest, without fail.

2 working days and 2 nights still nothing. Equity already deducted from brokerage account. Keep this up OzIB and I'm firing you.

And phark you ASSic for abusing a proffesional broker into a crap one instead of going after binary brokers and seminar gurus.

SO do you blame ASIC??? how come other overseas HQ brokers has been compliant and doing business.. it is easy to blame regulators as they can't reply on a forum.. and it is fashionable to just shout "too much government too much regulations" Having said that I agree that ASIC should go after all the "questionable" OTC ( Binary / CFD/ FX) brokers and the worst of the lot "Education Gurus seminar sellers!

 

[Nitro773]

are you leaning towards (or have already decided to) keeping your full trading book in IB, cutting your account back to $250K AUD and moving the excess to a CHESS sponsored account at one of the rip-off Aust brokers

It’s not a good idea to have one’s full trade book with only one broker, for even if the guarantees are honoured it may be years before one gets recompense (should the broker default). In addition, being limited to one broker prevents one from hedging positions in case of system failure or other disruptions with the broker.

I have not used IB for large ASX trades anyway, for they are not the cheapest at .08%. Trader Dealer was charging $33 up to 200K before they changed their fee structure. Amscot only charge $33 or .044% (whichever is higher), and now we have SelfWealth at $9.50 regardless of amount (I’ve got accounts with all three).

IB is an effective means of diversifying exposure away from Australia, so I’m most concerned with the change to protections, which means that we’ll be basically on our own should the SHTF here. I would much prefer if IB leaves Australia and my account status changes back to what it was before IB came to this country (I’ve been with them since the early 2000’s).

 

[Sharkman]

Not sure if this will help but how about
- Instead of personal account with IB AUS can you convert it to a company account with IBUSA?
and also split with multiple US brokers!

i would be surprised if we are allowed to do that without establishing a US domiciled company to trade thru, i would have thought if you are an Aust resident or are trading thru an Aust domiciled company, you're going to be obliged to open your account with IB Aust.

It’s not a good idea to have one’s full trade book with only one broker, for even if the guarantees are honoured it may be years before one gets recompense (should the broker default). In addition, being limited to one broker prevents one from hedging positions in case of system failure or other disruptions with the broker.

I have not used IB for large ASX trades anyway, for they are not the cheapest at .08%. Trader Dealer was charging $33 up to 200K before they changed their fee structure. Amscot only charge $33 or .044% (whichever is higher), and now we have SelfWealth at $9.50 regardless of amount (I’ve got accounts with all three).

IB is an effective means of diversifying exposure away from Australia, so I’m most concerned with the change to protections, which means that we’ll be basically on our own should the SHTF here. I would much prefer if IB leaves Australia and my account status changes back to what it was before IB came to this country (I’ve been with them since the early 2000’s).

i agree it is risky to have all your capital with one broker, as i mentioned i have periodically been drawing funds out of IB to keep my IB account below the SIPC limit and moving them into a rip-off (but at least CHESS sponsored) Aust broker.

IB has been really good for me as i run 2 portfolios, a long term buy & hold one that i keep under CHESS sponsorship and a trading book in IB where 90% or more of the trades i do are ASX options trades. i'm mainly an option seller so i am forced to keep a good chunk of cash in IB for collateral - it's going to restrict the # of contracts i can sell after the migration if i can only keep 250K in there (at least if i want to be able to sleep at night). but, i've yet to find a broker that comes anywhere close to IB as far as ASX options commissions are concerned, though i might check out the brokers you mentioned in case those are any good for options.

 

[bellenuit]

Has anyone had trouble trading options since your account was transferred. I tried tonight to sell a US covered call from my iPad using the very latest of TWS mobile, which I had downloaded just minutes before. I am overseas, so I only have access to the mobile app. It is the first time I traded since I was converted (an individual account), so I am not sure whether the problem is due to the conversion or is some bug in the latest TWS Mobile.

In any case, it was just selling one call option at $0.34 and when I selected slide to transmit order it came up with a message saying my order wasn’t accepted because my equity with loan value of $xx.xx was insufficient to cover some other value that was a bit bigger than $xx.xx. This doesn’t make sense as it is not a margin account, it has a considerable equity and cash balance, and the order was a sell order.

 

[cutz]

hi bellenuit

Is your current equity with loan value similar to your initial margin ?

 

[cutz]

Has anyone had trouble trading options since your account was transferred. I tried tonight to sell a US covered call from my iPad using the very latest of TWS mobile, which I had downloaded just minutes before. I am overseas, so I only have access to the mobile app. It is the first time I traded since I was converted (an individual account), so I am not sure whether the problem is due to the conversion or is some bug in the latest TWS Mobile.

It appears that margining process for options on my account has changed, now it seems to be aligned with the ASX margining process, it works for me, I only trade ASX options.

In your covered call case, do you already own the stock or are you attempting to leg the position option first ?

 

[bellenuit]

Cutz. I’m a bit confused by the whole thing at the moment. I received an email today saying my Daily Activity Statement is now ready. It is now about 6 hours since that email came, but when I go under account management it tells me the daily activity report for yesterday (16th) is not yet ready. I’m worried because there should have been no activity as the attempted covered call sales failed.

As to your other questions, the calls were covered as I own several thousand of the underlying and was just selling one contract.

I don’t want to try a new order in order to see that message again as I am worried about why I got an email today saying I had an activity statement (did it actually execute even though it said the order wasn’t accepted?). From the account management home screen it doesn’t show any open options for me, so I hope it is ok. The values the home screen shows for initial margin is the same as that for maintenance margin which is equal to the stock value.

I get home late tomorrow so I’ll check out with IB on Thursday as to what is going on.

I have noticed some other issues too. The home screen notifications bell shows that there are 4 corporate actions related to my account, but when I click on it to get the detail, all I get is a page not found message.

Hopefully these are just teething issues related to the transition and will be sorted quickly.

 

[cutz]

Cutz. I’m a bit confused by the whole thing at the moment. I received an email today saying my Daily Activity Statement is now ready. It is now about 6 hours since that email came, but when I go under account management it tells me the daily activity report for yesterday (16th) is not yet ready. I’m worried because there should have been no activity as the attempted covered call sales failed.

As to your other questions, the calls were covered as I own several thousand of the underlying and was just selling one contract.

I don’t want to try a new order in order to see that message again as I am worried about why I got an email today saying I had an activity statement (did it actually execute even though it said the order wasn’t accepted?). From the account management home screen it doesn’t show any open options for me, so I hope it is ok. The values the home screen shows for initial margin is the same as that for maintenance margin which is equal to the stock value.

I get home late tomorrow so I’ll check out with IB on Thursday as to what is going on.

I have noticed some other issues too. The home screen notifications bell shows that there are 4 corporate actions related to my account, but when I click on it to get the detail, all I get is a page not found message.

Hopefully these are just teething issues related to the transition and will be sorted quickly.

Hello,

I believe change in your account should generate an activity statement, i.e. dividends, interest accruals, cash deposits, trades.

Sorry I'm scratching my head with your covered call problem, on my end nil issues since the transfer.
Check your account window, available funds should be a positive value with some buffer, Do you already hold multiple option positions ?

 

[cutz]

I have noticed some other issues too. The home screen notifications bell shows that there are 4 corporate actions related to my account, but when I click on it to get the detail, all I get is a page not found message.

Hopefully these are just teething issues related to the transition and will be sorted quickly.

Hello,

I receive this error message in "New" account management, "Classic" account management works OK.

 

[bellenuit]

Hello,

I receive this error message in "New" account management, "Classic" account management works OK.

After querying it with IB, I have also found that if you need to see (daily) activity statements from before you were transferred, you will also need to go to the Classic Account Management, select reports, statements and then tick the box that says "include closed accounts". Your old account (which has the same number) will appear at the top of the screen but will have a strikethrough over it. Tick the box beside it and then you can select reports prior to the transfer date.

 

[Nitro773]

go to the Classic Account Management, select reports, statements and then tick the box that says "include closed accounts".

Thanks for that. It saved me from having to manually consolidate 12 monthly reports to do my tax.

I also noticed that I have pending items regarding verification of my identity and address, but they never emailed me about it. I sent certified documents to them years ago. Anyone have similar pending items?