Interactive broker as personal "bank"

[Martin Everson]

It's a pity that Revolut decides to center its activity to EU (migrating to Lituania?)

Like every EMI or bank in UK that has opened up operation in EU it has no choice since brexit. If it wants to continue to serve clients in EU it needs to be regulated within EU.

now any European court decision can seize your assets on Revolut, which is not possible with GB bank ..

EMI's should not be used as a bank account. Especially Russian owned ones like Revolut.

 

[Lewcifer]

Most people aren't clever enough to realize that a brokerage account can also serve as a bank account, given the fact that large brokerages offer both a debit card (Visa/MasterCard) and checkbook option. Interactive Brokers offers both, of course (so does TD Ameritrade). I would suggest you enable the "cash sweep" feature of IBKR, which allows them to sweep uninvested funds into interest-bearing money markets. In addition, IBKR is working with (if I recall) 10 banks, and apportioning client funds into each of them. This allows your account to be insured for 10x the FDIC amount (since, in effect, it splits your cash into 10 bank accounts, each individually insured). It's an excellent way to ensure funds over $250,000 US without worrying about bank liquidity.

For depositing client payments (e.g., invoices paid by *your* clients), you may need to have clients ACH or wire to your TransferWise account, and then move that payment over to IBKR. This is because IBKR wants to see that the money is coming directly from you.

Hope that helps.

 

[Martin Everson]

You've not told the full story about IBKR. You need to check carefully which entity of IBKR you are with and the terms and conditions associated with that entity you use i.e is it IB UK, IB HK, IB Lux, IB US you are referring to? UK entity offers only £85k protection.

Perhaps you can post a link to this "10x the FDIC amount" coverage so we can see which IB entity it applies too. Thx.

P.S I am very interested if things have changed protection wise with IBKR group since I last used them.

 

[jackfrost]

You've not told the full story about IBKR. You need to check carefully which entity of IBKR you are with and the terms and conditions associated with that entity you use i.e is it IB UK, IB HK, IB Lux, IB US you are referring to? UK entity offers only £85k protection.

Perhaps you can post a link to this "10x the FDIC amount" coverage so we can see which IB entity it applies too. Thx.

P.S I am very interested if things have changed protection wise with IBKR group since I last used them.

IB UK accounts that do not end in F are also being held bei IB US LLC with fdic etc coverage

As a IB UK client you get two accounts. One regular (funds held be US LLC with full coverage but still negative interest >80k eur) and one account ending with F that is being held by IB UK with only 85k gbp coverage

 

[Martin Everson]

B UK accounts that do not end in F are also being held bei IB US LLC with fdic etc coverage

As a IB UK client you get two accounts. One regular (funds held be US LLC with full coverage but still negative interest >80k eur) and one account ending with F that is being held by IB UK with only 85k gbp coverage

How are they deciding or allocating the accounts ending in F? Do you get any control over which you can use with IB UK?

 

[jackfrost]

PS: Source: I had IB UK give that to me in writing from two different support agents.

 

[jackfrost]

How are they deciding or allocating the accounts ending in F? Do you get any control over which you can use with IB UK?

Yes you have two different accounts in your login interface that you have to switch between. Everything is seperated as far as i can tell. I never used the F one.

 

[Martin Everson]

Yes you have two different accounts in your login interface that you have to switch between. Everything is seperated as far as i can tell. I never used the F one.

Sounds a pretty important point for a client to understand. Do they have any documentation on there website on this other than a support agent telling you this in a ticket?

Can you see it in their terms and conditions for example?

P.S Sorry I am just curious. I don't trust any broker whose parent company is american after MF Global.

 

[jackfrost]

I saw it referenced in account management docs, trading uk cfd and metal docs etc. I have to admit at first i did not know either because the default account you use will be the non-F account. The F account is only always talked about when you want to specifically trade UK stuff in the UK.

The way i found out is when i came across multiple references that IB UK accounts are indeed fdic etc insured + cash sweep capable for much larger sums than the measly 85k gbp. When i started digging about that i found multiple references in the IB UK docs itself as well as on the net.

As for the IB UK ToS well basically the whole document is about how you are really dealing with IB LLC. As in regard to deposits this is probably the corresponding section:


"B.United Kingdom Client Money and Custody Rules:i.IB LLC is located outside of the United Kingdom and IB LLC may deposit and hold money,securities, and other assets (including, but not limited to, collateral and safe custodyinvestments) on behalf of Customer in accounts that are located outside of the UnitedKingdom. The legal, regulatory, and settlement regime applicable to IB LLC and to theentities in which Customer's money, securities and other assets will be held will be differentfrom that of the United Kingdom (i.e., any client money and custody Rules promulgated bythe FCA will not apply). Among other things, different practices for the separate identificationof Customer's money, securities, and assets may apply and, in the event of a default of IBLLC or the entity in which Customer's money, securities and other assets are held,Customer's money, securities and assets may be treated differently from the position thatwould apply if the money, securities or assets were held in the United Kingdom.ii.To the extent that IB LLC holds Customer money, securities, or other assets, IB LLC will holdsuch money, securities, and assets in accordance with the rules of the U.S. Securities andExchange Commission ("SEC") and the U.S. Commodity Futures Trading Commission("CFTC"), as applicable."

https://gdcdyn.interactivebrokers.com/Universal/servlet/Registration_v2.formSampleView?formdb=3207

 

[lavel]

https://gdcdyn.interactivebrokers.com/Universal/servlet/Registration_v2.formSampleView?formdb=3207

it is a very long read.

Can you use Interactive Brokers if you live in Italy or is it UK only?

I saw it referenced in account management docs, trading uk cfd and metal docs etc.

this part is interesting, we don't need to have physical metal but can buy ETF's there?

 

[jackfrost]

it is a very long read.

Can you use Interactive Brokers if you live in Italy or is it UK only?


this part is interesting, we don't need to have physical metal but can buy ETF's there?

Well... read it

IB accepts clients in all of EU afaik. Just the regulatory entity (IB UK) is/was in the UK but will be replaced by IB LI for most it seems.

 

[LegitBananas]

After some tests with them, I have been facing very unpleasant things like:
-Horrible software, security biased (sends a notification on smartphone to ask validation of big withdrawal -150000€ : this notification actually contains no message, you just click because you know you have to, but if any other hackers does the operation from his computer, you will also touch notification without doubting anything wrong...
-Horrible costumer service : withdrawal was frozen with 5 days without answer after transmission of documents required...
-then this transfer was denied, because in the meantime they took fees on account (everyweek it seems...)
-completly dark fees : I had to guess they take something like 1.5% py on € cash balance... Easy... Also 20€/ month if you don't spend enough

At the end, I get same currency rates than Revolut Premium, plus much more issues...

Why did they freeze your withdrawal? Which documents they asked for?

 

[Martin Everson]

I read document and it is clear that protections are offered if assets are booked under IB LLC. If it is absolutely clear within the platform which assets are booked where then all is good .

However as I mentioned some months ago FDIC coverage is not reliable. The FDIC almost went bust in 2009 crisis when liabilities exceed assets. But I guess that's irrelevant as the Fed has everyone's back in the end .

https://www.fdic.gov/about/financial-reports/corporate/cfo_report_3rdqtr_09/balance.html

 

[jackfrost]

I would not say it is clear - it is clear if you know the the F account is the UK account I was under the impression i would only get 85k gbp protection through FCA when i signed up to be honest.

Yes well all the deposit schemes are kind of a brainwash at the end and rely on the states to bail out since lets be honest - none of the schemes i know of would ever be able to pay out even smaller bank failures.

 

[Martin Everson]

I would not say it is clear - it is clear if you know the the F account is the UK account I was under the impression i would only get 85k gbp protection through FCA when i signed up to be honest.

It's very clear if you read section 36a and 36b . But as I said you before need to check which account and asset is booked with which entity within the platform. Also the maximum claim on that terms and conditions is out of date...lol . Its no longer £50,000 but £85,000 since 1st April 2019.

P.S Why the hell do I care about this subject. I no longer use IB or any US owned broker...lol.

 

[Peter66]

P.S Why the hell do I care about this subject. I no longer use IB or any US owned broker...lol.

Which non-US brokers do you use? Most of them have fees starting from 0.2% per trade, which sucks compared to IB

 

[Martin Everson]

Which non-US brokers do you use? Most of them have fees starting from 0.2% per trade, which sucks compared to IB

Flatex is cheaper

https://www.flatex.de/en/trade/securities-trading/usa-and-europe/

 

[kkein]

Flatex is cheaper

https://www.flatex.de/en/trade/securities-trading/usa-and-europe/

Can it be used like IB as a place to park money? do they make troubles if then you want to move the money back to an EMI? do they offer a card, like some said about most brokers?
Or else what alternatives are there to IB?

 

[Martin Everson]

Can it be used like IB as a place to park money?

Yes Flatex is a German bank with 100k euro deposit insurance.

do they make troubles if then you want to move the money back to an EMI?

You have to specify a linked account which becomes your external account for withdrawal too. You can move funds back and forth from that account but keep in mind if your of no economic value to them like any business then they may tell you to get lost. Basically think carefully before attempting to freeload with any FI business.

do they offer a card, like some said about most brokers?

No card

Or else what alternatives are there to IB?

Not much. Flatex took over Degiro. Other brokers are more expensive in EU than IB or Flatex I think. Perhaps someone else has suggestions.

 

[lavel]

Yes well all the deposit schemes are kind of a brainwash at the end and rely on the states to bail out since lets be honest - none of the schemes i know of would ever be able to pay out even smaller bank failures.

what are you going to use as an alternative to them?