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I am done with Interactive Brokers! (2019 update: I am back to IB)


muscleman
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This Jan I bought senior bonds of Mongolian Mining corp. The company was in bankruptcy so they wanted bond holder to vote for their restructuring deal, which means filling out a few pages with info like broker's EuroClear account number or DTC account number. I asked IB for that info. It took them a whole week to respond to me: "The deadline is still two days from today, so why are you in such a rush to get the info today?" WTF!  :o

 

Then in May i found that  I needed to fill some additional paper work to get the new securities, so I contacted IB. Again I waited for a whole week to get their initial response, and every response took at least a week. After a month, they filled the paper work.

 

Then I finally got the bonds in August, but IB is such a lousy broker that they spent months and told me that they could not find any bids for the bonds. I got scared that I may not be able to sell at all and got stuck with these bonds.

 

I eventually found out that TD Ameritrade is able to sell these bonds, so I requested a transfer, which took months to happen. The bonds finally hit my account yesterday. I called TD, and in just one hour, they were sold. Great relief!

 

You don't know how much pain I suffered.

 

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This Jan I bought senior bonds of Mongolian Mining corp. The company was in bankruptcy so they wanted bond holder to vote for their restructuring deal, which means filling out a few pages with info like broker's EuroClear account number or DTC account number. I asked IB for that info. It took them a whole week to respond to me: "The deadline is still two days from today, so why are you in such a rush to get the info today?" WTF!  :o

 

Then in May i found that  I needed to fill some additional paper work to get the new securities, so I contacted IB. Again I waited for a whole week to get their initial response, and every response took at least a week. After a month, they filled the paper work.

 

Then I finally got the bonds in August, but IB is such a lousy broker that they spent months and told me that they could not find any bids for the bonds. I got scared that I may not be able to sell at all and got stuck with these bonds.

 

I eventually found out that TD Ameritrade is able to sell these bonds, so I requested a transfer, which took months to happen. The bonds finally hit my account yesterday. I called TD, and in just one hour, they were sold. Great relief!

 

You don't know how much pain I suffered.

 

With the recent nc spin of hbb..... IB converted my b shares of hbb within a few weeks allowing me to sell at 39/share... meanwhile ally.com (I know I should change) still hasn't done it and it's drifted to 27/share.

 

Just a anecdotal counterpoint. I wonder if other's with different brokers participating in the spin had other experiences?

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This Jan I bought senior bonds of Mongolian Mining corp. The company was in bankruptcy so they wanted bond holder to vote for their restructuring deal, which means filling out a few pages with info like broker's EuroClear account number or DTC account number. I asked IB for that info. It took them a whole week to respond to me: "The deadline is still two days from today, so why are you in such a rush to get the info today?" WTF!  :o

 

Then in May i found that  I needed to fill some additional paper work to get the new securities, so I contacted IB. Again I waited for a whole week to get their initial response, and every response took at least a week. After a month, they filled the paper work.

 

Then I finally got the bonds in August, but IB is such a lousy broker that they spent months and told me that they could not find any bids for the bonds. I got scared that I may not be able to sell at all and got stuck with these bonds.

 

I eventually found out that TD Ameritrade is able to sell these bonds, so I requested a transfer, which took months to happen. The bonds finally hit my account yesterday. I called TD, and in just one hour, they were sold. Great relief!

 

You don't know how much pain I suffered.

 

With the recent nc spin of hbb..... IB converted my b shares of hbb within a few weeks allowing me to sell at 39/share... meanwhile ally.com (I know I should change) still hasn't done it and it's drifted to 27/share.

 

Just a anecdotal counterpoint. I wonder if other's with different brokers participating in the spin had other experiences?

 

Interesting. I heard of similar things like that before when SHLD spin off various assets.

Does anyone have experience of TD's spin off handling? I assume no one is using TD here because the commission is too high?

 

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If you rate your broker by how they handle Mongolian bonds perhaps you need to rethink what you should expect...

 

Not just how they handle Mongolian Bonds, but their customer service in general.

 

I also found this interesting, but maybe it is written by someone who works for the brokers that work with HTFs. I've seen articles written in the opposite way and saying that brokers who place orders directly into the exchanges are the best.

https://www.barrons.com/articles/fidelity-tops-in-price-improvement-for-retail-investors-1436589662

 

"But the big lesson from the statistics, Weisberger says, is that retail trades executed through the big wholesale market makers get the best pricing in the stock market. That’s an inconvenient fact for the market makers’ stock-exchange rivals, and brokers that patronize them, such as Interactive Brokers Group (IBKR)."

 

 

 

 

 

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That quote isn’t really supported by the article.

 

I thought the quote from fidelity was more interesting:

“Brokers that extract the best price improvement for their customers necessarily forgo some hefty payments that other brokers get for sending their order flows to market makers. “The market makers are not both going to pay you a lot for order flow and then turn around and provide your customers with a high level of price improvement,” says Gregg Murphy, Fidelity Brokerage’s senior vice president for trading.”

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That quote isn’t really supported by the article.

 

I thought the quote from fidelity was more interesting:

“Brokers that extract the best price improvement for their customers necessarily forgo some hefty payments that other brokers get for sending their order flows to market makers. “The market makers are not both going to pay you a lot for order flow and then turn around and provide your customers with a high level of price improvement,” says Gregg Murphy, Fidelity Brokerage’s senior vice president for trading.”

 

Yep. This is right. I am using Fidelity and I am happy with it so far.

Most brokers take rebates from HFT firms, which make me concerned. On the other hand I do felt like over the past few years, my orders in IB almost always got filled at bid/ask instead of somewhere in the middle with price improvements, while my order at Fidelity seems to do better.

I started using TD now and I'll keep an eye on it. Worst case is that I transfer the account to Fidelity, but I'll never use IB again. I focus mostly on micro caps, and IB's really expensive for buying those low price shares.

 

 

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  • 1 year later...

I didn't want to start a new thread and I have a few questions on IB.

 

Does anyone here use them for their RRSP /  TFSA?  It seems they support that now.  I am looking for something that will allow me to do trades on foreign exchanges, my current broker charges prohibitive prices ($200 per trade + forex charge).

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I didn't want to start a new thread and I have a few questions on IB.

 

Does anyone here use them for their RRSP /  TFSA?  It seems they support that now.  I am looking for something that will allow me to do trades on foreign exchanges, my current broker charges prohibitive prices ($200 per trade + forex charge).

 

I am a US user so probably not very applicable, but I've seen other Canadian users saying that they support buying US stocks in these accounts but not stocks from other countries.

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BTW, I went back to IB in January this year.

I find it too much trouble to place multiple orders in various accounts, and it is far easier to use a friend and family account to manage multiple accounts at once. Individual account, IRA account, family member accounts.

Also they pay good cash interest, while a lot of other brokers pay nothing.

I learned the lesson and would not buy any foreign bonds any more. So that's fine to stick with them.

 

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BTW, I went back to IB in January this year.

I find it too much trouble to place multiple orders in various accounts, and it is far easier to use a friend and family account to manage multiple accounts at once. Individual account, IRA account, family member accounts.

Also they pay good cash interest, while a lot of other brokers pay nothing.

I learned the lesson and would not buy any foreign bonds any more. So that's fine to stick with them.

 

:) That must have been hard to admit.

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BTW, I went back to IB in January this year.

I find it too much trouble to place multiple orders in various accounts, and it is far easier to use a friend and family account to manage multiple accounts at once. Individual account, IRA account, family member accounts.

Also they pay good cash interest, while a lot of other brokers pay nothing.

I learned the lesson and would not buy any foreign bonds any more. So that's fine to stick with them.

 

:) That must have been hard to admit.

 

I am open to changing my mind as always, just like I can be very bullish and a few weeks later be very bearish.

 

BTW, I still have some concerns regarding IB's tauted execution quality.

I see this:

https://www.fidelity.com/trading/execution-quality/overview

 

and this:

https://www.interactivebrokers.com/en/index.php?f=1340

 

There seems to be some discrepancies among these numbers.

 

Interestingly, both reports were done by IHS Markit.

 

I asked IB about this and asked in second half of 2018, where did Fidelity stand. They refused to disclose.

 

Fidelity provides an easier to read format in FIF:

https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/FIF-FBS-retail-execution-quality-stats.pdf

 

While IB argued that IB's report was for Q3, Q4 of 2018 and Fidelity's report included Q1 this year, I don't see any material difference between these quaters in the Citadel securities report.

https://s3.amazonaws.com/citadel-wordpress-prd102/wp-content/uploads/sites/2/2016/09/06202722/FIF-Rule-605-606-WG-CitadelSecurities_Retail-Execution-Quality-Stats_Q4_2018.pdf

https://s3.amazonaws.com/citadel-wordpress-prd102/wp-content/uploads/sites/2/2016/09/09175131/FIF-Rule-605-606-WG-CitadelSecurities_Retail-Execution-Quality-Stats_Q1_2019.pdf

 

Keep in mind that IHS Markit was paid by IB to do the report, so they have to come up with some good statistics even though the numbers may be massaged.

 

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I didn't want to start a new thread and I have a few questions on IB.

 

Does anyone here use them for their RRSP /  TFSA?  It seems they support that now.  I am looking for something that will allow me to do trades on foreign exchanges, my current broker charges prohibitive prices ($200 per trade + forex charge).

 

Yeah, I helped my sister in law set up a TFSA account with IB in Canada. I'm based in the UK, and it's a shame they don't offer the UK equivalent ISA account.

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  • 5 months later...

Just a heads up for folks on the forum that use Interactive Brokers for some of their business - they have a new policy where they will lock you out from trading any security you own more than 1% of the outstanding shares of.  When you tell them you are not an affiliate of the issuer, a compliance analyst at IB will perform due diligence to verify you are not an affiliated person.  Then they will unlock your accounts to trade that security for a period of 2 weeks.  Then you have to do it all over again.  Every two weeks - unless you transfer the shares out to another broker.

 

Some companies are quite small and 1% of the shares is nothing.  These also tend to be the least liquid securities to trade.  The kind of securities you need to be unlocked for trading at all times in order to take advantage of momentary liquidity and price changes

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Yes, it’s fucking terrible. To make it worse, on top of the 1% rule they seem to select positions arbitrarily, e.g. I also got restricted from trading in some securities where I own far, far less than 1%. I also hear from people that they can trade some stocks in one account but not in another. All seems quite a clusterfuck and if they keep this up I’ll probably have to move a significant part of my account elsewhere.

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I didn't want to start a new thread and I have a few questions on IB.

 

Does anyone here use them for their RRSP /  TFSA?  It seems they support that now.  I am looking for something that will allow me to do trades on foreign exchanges, my current broker charges prohibitive prices ($200 per trade + forex charge).

 

Yeah, I helped my sister in law set up a TFSA account with IB in Canada. I'm based in the UK, and it's a shame they don't offer the UK equivalent ISA account.

 

They were probably forced by regulators in Canada. I don't get the impression they really want to.

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The poor compliance guy I spoke to yesterday (David) sounded like he had been being screamed at by customers all day.  He kept expecting me to blow up on him or something.  I felt bad for the guy..  He couldn't even tell me where the cut-off of ownership was - all he would say is "something like 3/4 to 1% of shares outstanding."  The main issue I'm dealing with I'm at 3% of shares outstanding and that's not close where I can sell a few over two weeks time and have them leave me alone.

 

We'll see how this policy evolves after they've had to do this dance every two weeks in perpetuity for a while.  Its not like I'm magically going to transform into an affiliated person next month.

 

Yes, it’s fucking terrible. To make it worse, on top of the 1% rule they seem to select positions arbitrarily, e.g. I also got restricted from trading in some securities where I own far, far less than 1%. I also hear from people that they can trade some stocks in one account but not in another. All seems quite a clusterfuck and if they keep this up I’ll probably have to move a significant part of my account elsewhere.

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None of my positions are even close to 1% of share o/s. I'm interested to know what companies they are.

 

What I found annoying was that for illiquid stock they wouldn't allow you to enter order to sell at bid or buy at ask because of "dramatic price movement". For example, if last trading price is $3/share, they won't allow me to enter a sell order at $2.5/share, even when I called them. By the time I can enter an order, the bid/ask will disappear, or at least not at size I wanted.

 

With the amount of commissions they charge on penny stocks, I'm looking at options to move assets somewhere that have 0 commission.

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Rich investor problems, pffft.  :P

 

If only they were. I cannot sell or buy ASFI anymore even though I just hold 100 shares worth $1000 .. Admittedly I had a larger position in the past but even then I wasn’t close to owning 1% which would be 65k shares - a position worth a few hundred k and three weeks of trading volume ..

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Seems like it has to do with them getting into trouble with FINRA for allowing affiliates to trade without restrictions. Probably they were too lax at first and are now compensating by being extremely obnoxious. We’ll see where it ends .. So US only.

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I am not sure I fully understand the specific issue relating to Interactive; I have accounts there are have had my share of inconveniences, but not relating to this. Typically however, it would appear this to be more an issue relating to the security, vs the amount owned. I use IBKR, Hilltop, Fidelity, RBC, and Axos. All have their own quirks and inconvenient features. At the end of the day it always comes back to cover your ass regulatory bullshit. And the two biggest triggers are penny stocks(sub $10 shares occasionally and definitely anything under $5)/OTC positions, and AML.

 

I think I mentioned in a previous thread, but even Fidelity would not transfer in(from an outside firm) shares in LAACZ and HTL. Two companies that are hardly "high risk" but when judged by their covers, fit the profile.

 

I do believe there is a high correlation between industry wide fee reduction, and lack of risk a firm in willing to take. The motto in the biz used to be that paying regulatory fines was just a cost of doing business. But as fees get driven down I'd imagine the number of favors firms are willing to do for clients contracts, and the degree to which they are willing to dedicate resources to potential compliance matters, dwindles. As such, they just throw many of these issues on the compliance "lists". Which just inconvenience the fuck out of us. Now its our "cost of doing business".

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