Migration to IB Australia Pty Ltd: Margin Restrictions for Retail Accounts

[ScottMcNab]

I hope new code for MRV systems doesn’t affect SettlementDelay ?:unsure:

[JulianCohen]

What’s Settlement Delay Scott?

Also with RUA I think you might find actual fills won’t meet expectations.

[ScottMcNab]

Julian Cohen wrote:

What’s Settlement Delay Scott?

Settlement delay if using cash acct (T+2) to avoid violations

https://www.schwab.com/active-trader/insights/content/stock-settlement-why-you-need-to-understand-the-timeline

setoption(SettlementDelay,2);

Also with RUA I think you might find actual fills won’t meet expectations.

Its a concern for sure. I have been trading RUT (20 positions at 10%) for several months now gradually increasing size and so far so good….on that basis was anticipating that using RUA (10 at 10) with even higher hurdle for turnover and volume filters should work too (aiming for top 2000 rather than the current bottom 2000 with RUT) .

..not sure when the tipping point will come when partial fills and/or slippage will become an issue…… and not sure how to work that out other than by slowly stepping my way up and monitoring ?

[JulianCohen]

..not sure when the tipping point will come when partial fills and/or slippage will become an issue…… and not sure how to work that out other than by slowly stepping my way up and monitoring ?

I would think that’s the only way to do it

[Nick Radge]

I have arranged a call with the head of IBKR Aust today to discuss, specifically,

(1) is this just an IBKR decision,
(2) an ASIC directive to IBKR or
(3) an ASIC directive to all retail broker providing margin?

Will revert afterward.

[GlenPeake]

Nick Radge wrote:

I have arranged a call with the head of IBKR Aust today to discuss, specifically,

(1) is this just an IBKR decision,
(2) an ASIC directive to IBKR or
(3) an ASIC directive to all retail broker providing margin?

Will revert afterward.

Thank you Nick.

[Nick Radge]

I have spoken with IB Australia.

This is an IBKR decision and only impacts Australian residents. At this stage they’re looking to move all corporate accounts under the wholesale sphere.

Those that meet minimum wholesale requirements will retain access to margin.

Those that DO NOT meet the minimum wholesale requirements will, for the interim, lose access to margin. You will retain access to options and futures facilities.

Apparently this decision is not set in stone and may be reversed. They could not offer any timeline on that decision.

[TrentRothall]

Nick Radge wrote:

I have spoken with IB Australia.

This is an IBKR decision and only impacts Australian residents. At this stage they’re looking to move all corporate accounts under the wholesale sphere.

Those that meet minimum wholesale requirements will retain access to margin.

Those that DO NOT meet the minimum wholesale requirements will, for the interim, lose access to margin. You will retain access to options and futures facilities.

Apparently this decision is not set in stone and may be reversed. They could not offer any timeline on that decision.

Are you only discussing corporate accounts here? Or both individual and corporate accounts?
So with my corporate account I will lose access to margin because I do not meet the minimum wholesale requirements.Well that’s shit and throws a spanner in the works!

[Nick Radge]

Individuals can’t get access to margin anyway, but yes, corporate accounts that are not deemed Wholesale.

I will write up some ideas in the next or so for people to investigate.

[Nick Radge]

I have reached out to TradeStation Securities. Here is their response:

Quote:

Australian clients are able to maintain accounts in TradeStation and gain access to margin accounts should they qualified. To ensure we are on the same page, TradeStation offers access to US Equities, Options and OTC markets. In Futures we deal in the US Futures and some exchanging in Europe such as Eurex and LIFFE.

We don’t prohibit margin accounts for international clients. As long as they qualify financially we are okay with giving access to margin. They don’t need to be qualified investors or anything of the sorts they just have to meet our minimum liquid net worth requirements. We don’t share what this thresholds are, we just want the prospect/client to answer the questions in a truthful manner.

Margin accounts required minimum funding of $2,000 and pattern day trading accounts require $25,000+. We also do work with the international entities. Funds, trusts, etc.

[Nick Radge]

Add:

I have a meeting set with TradeStation on Tuesday morning to discuss further. I’m also going to be chatting with their API team.

[Nick Radge]

The meeting I had with TradeStation wasn’t only productive.

They’ll take on Australian clients and will allow normal margin as per US exchange regulations.

However, they have no API connectivity like IB. Instead you would need to reprogram the systems in TradeSTation and have their platform execute accordingly. This is not necessarily the end of the world; the software and data is free with all accounts, but proper historical testing will be difficult and learning the TradeStation EasyLanguage would be required.

[GlenPeake]

Thanks for the update Nick.

I haven’t had any further ‘reminder’ alerts from IB about the migration…. no follow ups. So we’ll see if they follow through with their plans on the 14/12.

[GlenPeake]

Update:

FYI

Spoke to IB last week, they indicated that the migration of accounts was schedule for this past weekend.

Logged into IB this morning to check the status….. Confirmed, my account has now been migrated over and my access to margin has now been removed……… 👿

I also needed to fill out/submit some online forms (to do with tax etc).

I also have a new account number.

Bugger!!!

[RobGiles]

Nick was the recent voicing of your displeasure with IB on Twitter relating to the margin issue for non ‘sophisticated’ accounts or was it another issue?

[Author]

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