I have traded for about 12 years now (a lot of that with IB) and have ended up wanting a brokerage with a strong financial position that didn't encourage or allow quite as much risk or active trading as IB does (so I can feel more comfortable about the company (and its/my fellow clients) in an uncertain global economic/'geopolitical backdrop with any potential large market sell-offs and how those might affect the brokerage overall) and yet still had commissions I can live with. Also wanted an FDIC insured account for the cash sweeps from both futures and equities trades. Was able to negotiate TOS commish down a bit and I like their platform - it does everything I need for what I am trying to do, which is a combo of swing trades and some day trading. Some issues, like all brokerages but I see improvement over at TOS, a bit at a time.
I don't know anything about IB that everyone else doesn't know and I never had a problem with wires out, executions, commissions, or any of the core stuff, all solid. Over the last few years, always up (like most platforms now). IB is probably fine for most people and my concerns with them are on the paranoid side and likely unfounded. Still ....
Your mileage may vary.
"The Future Ain't what it used to be"
The following user says Thank You to heywally for this post:
Hi @heywally, you can never be "too paranoid". My understanding with IB is if you elected to sweep excess funds into the IB securities account as opposed to the commodities account you had SIPC insurance up to $900k (See below) with SIPC which is why I used them. I'd prefer to have FDIC insurance over SIPC though.
I still have unanswered questions with this though. For example I got this from another forum awhile ago and have it in my notes:
SIPC clarified this in a letter to the SEC in 2007 when they wrote:
"Under SIPA, a customer's claim for "cash" derives from a few sources. One, the "cash" arises from the broker's sale of securities for the account of the customer. Two, the "cash" has been deposited by the customer with the broker for the purpose of purchasing securities. Three, the cash consists of dividends or other return generated on securities held by the broker for the customer. 15 U.S.C. $78lJ(2). Key is the fact that the cash owed by the broker to the customer is on deposit in connection with the purchase or sale of a "security," as defined in SPA. The facile labelling of an asset as "cash"does not transform it into a protected asset if unrelated to the purchase or sale of a "security." http://www.sec.gov/comments/s7-08-07/s70807-16.pdf".
So this appears to suggest that if you only trade futures at IB and any sweeps from the sale of commodities into the securities account may not be eligible for SIPC coverage as the sale didn't arise from the sale of securities. Even if you had 25% stocks and 75% commodities they could deem the trader as predominantly a commodities trader and be ineligible. I guess you will only know in the case of a catastrophe and SIPC reviews the claim.
I've also considered Velocity and other brokers as a futures only broker but there is a big problem if you use Ninjatrader ATM strategies with other brokers besides IB. ATM strategies are a core part of my trading system.
If you have an outage with IB the OCO works correctly with the stops and targets correctly reflected at the broker/exchange end.
If you use ANY other futures broker the stops will trigger ok but the target orders are simulated on your PC meaning that if you get stopped out during the outage naked stop market orders are left in place in the broker's system.
This is a big problem for people who swing trade futures. The last thing I want is to be asleep at night and then wake up in the morning down $10k because there was an outage and naked buy or sell stops orders trigger without any stop in place. This happened to me on sim on a few occasions. Some broker systems let you go in and cancel the naked orders on their system which still is of no use if you are asleep or out for the day.
Last edited by djkiwi; July 5th, 2012 at 03:57 PM.
Yes, I followed that whole thread on the IB futures cash sweeps, SIPC insurance (or not) and it left me with an unsettled sense. Maybe that got cleared up but I haven't seen anything. That was part of my decision along with some other stuff.
The other problem with this is if you choose the commodities option then you are reliant on segregation saving you. We saw in the case with MF Global where rules were pretty much ignored. I read an alarming article awhile ago how Merrill lynch was trying to co-mingle some "dirty laundry" into some BAC FDIC insured customer accounts. Check out this article which makes you wonder what the hell is really going on.....
They are doing something, they seem to be encouraging it and trying to pass the risk on to the FDIC. From the article:
"The Moody’s downgrade spurred some of Merrill’s partners to ask that contracts be moved to the retail unit, which has a higher credit rating, according to people familiar with the transactions. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody’s decision, said a person familiar with the matter".
I'm sure this is going on everywhere and could have even been the intention of the Fed when they encouraged these "marriages" after the crisis.
Hi, I think that is wise. Unfortunately no broker suits my needs either and will probably end up splitting my account up further to more brokers and using an external data feed like Kinect. I'm a little disappointed ninjatrader doesn't support options as well but am finding futures to be a much more cost effective hedging strategy anyway.
What you can do with ninjatrader is run say an equities ATM strategy off a chart which will then process all other equities trades to a specified equities broker. Then you run your futures trades off multiple charts and route those to different futures brokers. It is cumbersome though and needs much more flexibility to be able to specify the account within a strategy itself.
This allows you to manage and track your risk to within the SIPC and FDIC limits of each broker so you don't get caught out with too much exposure.
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A client of IB, that seems to me in line with the general setup.
They seem to me to put most of their effort into
the means of trading a huge range of instruments.
(Not that TWS doesn't have stability problems now
Things like good and easily accessible help files
aren't part of that. The files exist but you have to
search for them. And then they're oriented more
"this is what this feature of the software does"
than the things traders want to do.
After (rare) updates, TWS instals a windows startup routine
to check for new updates - which the user has to okay every
day. Even if you've told to check only every n days.
For most of us there is a lot of stuff we will never use -
making it harder to find the stuff you do.
Those who trade a large range of instruments will