Interactive Brokers Group
| Company type | Public (Nasdaq: IBKR) |
|---|---|
| Industry | Financial Services |
| Headquarters | Greenwich, Connecticut , USA |
Key people | Thomas Peterffy (Chairman, CEO, and Founder) |
| Products | Online Brokerage Services |
| Website | www.interactivebrokers.com |
Interactive Brokers LLC (official abbrev IB) is a United States-based discount online brokerage firm, operating on most major worldwide stock, futures, bonds, forex, and options exchanges. For 30 years IB has been building direct access trading technology that delivers to professionals worldwide. With consolidated equity capital that exceeds US $2.8 billion, IB and its affiliates average 500,000 trades/day and trade 18.7% of the world's equity options volumes in locations where IBG actively trades[1].
History
As of 2004, the firm's clients were making some 500,000 trades per year on various international markets and accounted for 21.4% of the trading volume of North America. They maintain offices in Chicago, Switzerland, Montreal, Hong Kong, London and Sydney. IB is regulated by the SEC, NASD, NYSE, SFA, and IDA. [2] The company had revenues of $1.6 billion USD and income of $734 million USD in the twelve month period ending in August, 2006. [3]
Recently Interactive Brokers filed paperwork with the SEC for an Initial Public Offering on the Nasdaq exchange. The proposed ticker symbol is IBKR. (please cite your source)
Account Minimums
To open a new account, one must deposit a specific amount of money or a minimum fee is charged, and strict account eligibility criteria are enforced.
Any fees charged (not interest received) in IB are not across evenly on a pro-rata basis. For example, a customer opens its account at 20th. The whole sum of any monthly charges will still be applied[4].
Commissions & Fees
Most US Equity purchases or sales, 200 shares or less, can be accomplished through Interactive Brokers for a commission of $1. A minimum commission of $10/month is charged ($3/month if the account holder is under 25), and strict account eligibility criteria are enforced.
Interactive Brokers has different plans for different products. There are 2 commission plans - unbundled and bundled plans - for US equities and futures. For others, only the unbundled plan is offered.
As to bundled plans, it is usually flat-rate. As to unbundled plans, commissions are based on volume. Discounts are given in pro-rata basis. The fees are applied on a marginal basis for a given calendar month. For example, a customer executes 1,500 US futures contracts in a month, the IB execution costs would be:
- the first 300 contracts at $0.90
- the second 700 contracts at $0.70
- the third 500 contracts at $0.45
Fees are charged on a monthly basis, not pro-rata basis. For example, a customer opens its account at 20th. The whole sum of any monthly charges will still be applied.
Margin Lending & Short-selling Rates
Margin lending rates are lower on outstanding debit balances with more discounts for larger balances. Interest credit is made for cash pledged as collateral for short selling. Interest credit is given in pro-rata basis, in which the first specified amount threshold of US$100,000 will never receive any interest credit.
Trading Platforms & Software
Trader Workstation
Trader Workstation (abbreviated TWS) is a cross-platform Java desktop application. It is primarily designed for experienced and active day-traders. Inexperienced users/investors will be faced with a significant learning curve. Free demo accounts are available for non-customers, but the demo accounts are buggy and unstable. Charting is simple and not feature-rich.
PaperTrader
PaperTrader is a slightly simplified version of Traders Workstation targeted developers and papertraders. Papertrading is to help traders to practice trading without risking one's actual capital, and to familiarize the platforms and features without risk.
WebTrader
WebTrader is an HTML based trading screen for use behind a firewall. It can be said as a very lite version of Trader Workstation, in which it offers very limited features and simple ways to manage your accounts and trades.
MobileTrader
MobileTrader, as the name suggests, offer the capability to execute orders when you are not at the computers. You can access from any wireless device to manage your accounts and trades.