Interactive Brokers

Interactive Brokers is one of the largest electronic brokerage firms in the world with over 800,000 daily average trades.

Interactive Brokers provide direct market access to:

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Stock Exchanges
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Countries

Clients are able to trade equities, options, futures, forex, bonds, ETF’s and CFD’s from a single IB Universal Account.

Clients can also access a large variety of offshore listed Funds via the platforms.

This agreement enables SA Stock Brokers the ability to offer the “One Account” solution for individuals and institutions that requires access to global markets.

Type of Institutional Accounts

An institution will open up an account(s) based on the following structures

  • Segregated private client managed accounts or
  • IB Clear Account where Institutions can execute and clear their trades with IB. Custody is also handled by IB

Institutional clients can route orders from Bloomberg directly to IB via EMSX.

Grounds for Interactive Brokers Prime Account vs Prime Accounts at Large Banks

Many of the large institutions that provide prime services globally have increased their account minimums as well as the brokerage that these accounts need to generate. The main reason for this is the increase of regulation and compliance.

Below is a transcript of an IB Earnings Report with reference to Prime Broking Services offered by competitors.

“The environment for the growth of our brokerage business remains excellent. The large banks are continuing to cut back on the business, raising prices and forcing prime brokerage and correspondent clearing customers to find new homes or pay up to new minimum requirements.

They’re raising the minimum equity a prime brokerage customer must maintain in the account and they are accepting higher required minimum commissions that accounts must pay.”

IB provides the following services to their account holders

  • Portfolio Analyst Account: The report includes the following information about the account
    • Summary of open positions
    • Allocation by asset class sector and region
    • Performance statistics
    • Custom benchmarks can be included in order to evaluate performance
    • Risk measures
    • Historical performance
    • Deposits and withdrawal summary
    • Corporate actions
    • Fee summary
    • Risk Analyzer
  • Abilty to “white brand” all documents, correspondence, email and trading systems
    • Client Statements will reflect the logo of the manager
  • Setup of Management and performance fees
    • Management and performance fees will be setup on the back end and will be calculated automatically on a monthly basis. No human intervention required.

Security and Safety of Client Funds

  • Interactive Brokers is an agency broker and is not involved in any proprietary or sales trading. Interactive Brokers do not trade for their own account
  • Interactive Brokers is a regulated broker subject to the SEC and CFTC (Commodity Futures Trading Commission) regulations
  • Customer funds are segregated in special bank accounts which are designated for exclusive benefit of customers. This allows the funds of the client to be returned in the case of broker default.
  • Customer Security Accounts are protected by Securities Investor Protection Corporation (SIPC)

Summary of Instrument Availability

  • Equities     US, UK, EU, AUZ, Asia
  • CFD’s        US, UK, EU, AUZ, Asia
  • Futures     Indices, Agriculture, FX, Metals, Etc
  • Options     IB provides access to a wide variety of options across all asset classes

FX Direct currency trades on USD/ZAR, EUR/USD, etc