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Apparently, Advantage Futures applies negative interest rates on EUR balances, starting from the first dime, so unlike Interactive Brokers, which exempts them below 100k.
Is the reference rate the 1 month EUR LIBOR ? How much mark-up over it ?
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,388
Thanks Received: 10,207
EUR interest rates are negative but must admit that would be really annoying. I'm very surprised Interactive are giving people the break they are. Probably worried about losing smaller European customers.
Here's an interesting look at how Interactive Brokers make money on currency trading and interest rates. If you buy USD sell EUR, they will pay you 0% on the USD deposit and charge you 1.5% on the EUR margin, hence the trade has a 1.5% carry cost. If you sell USD buy EUR, they charge you 1.6% on the USD margin and pay you 0% on the EUR deposit, hence the trade has a 1.6% carry cost. So there's a 1.5% carry cost no matter whether you buy or sell. Great business to be in. Now lets assume your a big swinger and have the position on for $250,000. If you sell USD buy EUR, they charge you 1.1% on the USD margin and also charge you 0.84% on the EUR deposit, hence the trade has a 1.94% carry cost which is even higher than for smaller positions. Inverse discount for trading size! If you do the same calculation for the Indian Rupee there's a 1.6% carry cost buying INR vs USD and a 12.1% selling the INR. Nice 13.7% interest spread! I guess the advertising slogan "Our bid-ask is only a quarter of a pip but we charge exorbitant carry costs" wouldn't generate much business. Sorry for getting off topic. References...
When opening a new account with Advantage Futures, they will run an inquiry against your credit. I am not sure if its a soft or hard inquiry. No issues, I am not in the market for credit, presently.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,388
Thanks Received: 10,207
When you are trading upon margin its easy to see the parallels to being extended credit. Given that with futures you can lose a lot more than you have (unlike unlevered long only stocks) I can see why they (or any FCM) may check your credit This is interesting though as I have never heard anybody else say this (for any FCM not specifically Advantage). Of course its becoming so much easier to monitor your credit now we may hear of more cases.
Yes, I too can see the parallels. It was just a little surprising given that I have never had a broker run a credit check before trading futures.
One other thing I learned is that Advantage will not open an account for a client, who intends to trade on the CME exchange, until he/she signs up with CME Group's Firmsoft. Firmsoft is a web interface that gives traders a way to cancel existing orders in the event that a front-end platform fails or loses connectivity.
I was under the impression that in the event of such a failure, a client could simply call Advantage's 24 hour execution desk to cancel orders. Nevertheless, I understand the reasoning as it allows those working the desk to focus on executing orders instead of dealing with clients requests to cancel orders due to a loss of connectivity.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,388
Thanks Received: 10,207
When ever I've had issues I've always called the IT group and they've got the orders cancelled for me. This happens very rarely though. I probably do have a firmsoft ID but I don't think I've used it.
