Fixed Income With Interactive Brokers

Discussion in 'Retail Brokers' started by HappyTrader, Aug 22, 2017.

  1. I know that IB offers Fixed Income trading through their TWS Application (and even include a Bond Screener). But I do not see too many people discussing using IB/TWS for trading bonds on this forum.

    I'm curious if others consider IB/TWS a good platform for trading bonds or would suggest another broker/platform?

    Thank you.
  2. JSOP


    No idea never used IB/TWS to trade Fixed Income, dunno about others. If nobody uses IB/TWS to trade Fixed Income, that might tell you something about that platform for trading Fixed Income. ;)

    If you want to learn more about how TWS can be used for trading Fixed Income, you can watch their webinars, live and recorded ones to find out and maybe test drive it with paper trading.
  3. Why bother using a low-cost broker for a buy-and-hold-forever instrument?
    It makes about as much sense as buying mutual funds at IB.
    tommcginnis likes this.
  4. IB's customer mix is changing. While the traditional "individual trader" base is not shrinking, most new signups are from RIA's that bring all their investor client accounts over. This is where demand for mutual funds, bonds etc. comes from.

    And BTW, I assume that some bonds also trade rather frequently (although not that many I guess). Since the spreads on these instruments are wide, and volatility and competition is lower than with stocks, that sounds like a much better niche for a true trader than stocks. And then, execution costs and direct market access become important just like with stocks
    tommcginnis likes this.
  5. There are also situations where one wishes to have a portion of their portfolio holding bonds (either as a short term cash alternative, or a market hedge) and then liquidate those positions when the market moves in the appropriate direction.

    As well as part of an overall 'diversified portfolio' (where a customer may wish to hold all their assets with one broker, and do the classic 60/40, rather than use two brokers).

    Obviously in some cases, using ETFs may be an easier instrument to trade. But in some situations, holding the actual underlying bond could be preferred.

    Unfortunately, TWS (or IB) does not seem to be well geared towards fixed income trading (or I'm missing some hidden features that show more details on previous sales, volumes, etc.)
  6. just21


    Are they marginable? If they are then you can use them as margin to speculate invest in something else/the same instrument.
  7. If IB is not suitable for Bond trading, then which broker would be good for this?

    I was considering IB as 'I'm already there'.
  8. drenaud


    I use IB for trading treasury notes. TWS works very well.

    IB publishes a schedule of the margin based on credit quality for corporates and time to maturity with treasury products.
    i960 likes this.
  9. Ryan81


    I've traded corporate bonds with TWS. Works fine for me.
  10. IB not showing you more details on previous sales and volumes has less to do with IB and more to do with the nature of the market. I don't know about all the facilities out there for trading bonds in 2017 but historically the way it worked was contacting a bank and asking for a quote. Some assholes refuse to give you a bid-ask and ask your side to conceal the exorbitant bid-ask spread. Obviously with such structure in place you won't see all last prices, volumes and so on.

    IB website claims that they use combination of their trading desk and access to multiple electronic venues. I don't know what they really are doing but in my experience one has to sell at bid and buy at offer, so it's no way the same as trading stocks where chance of buying at bid or selling at offer is real and more similar to asking for quotes. Of course it could do with the frequency the bonds are traded.

    The bid-ask IB show you is often quite competitive. I don't know what the big banks show, but what IB show for US corporates is often better than what the smaller European banks show (but not always). One problem is that sometimes IB only show price for 2k notional, so you don't really know what you have to pay to get bigger size. Usually the quotes are for 50-500k though, so it should work for retail trading. Another problem is that sometimes you submit an order with the price they show but there is no fill. I will emphasize that it's sometimes and usually you get the fill at the price they show. Outside US bonds IB is quite weak.

    I don't know if there are better brokers out there for US bonds, but unless your tickets are a multiple of 100k I doubt it.
    #10     Sep 23, 2017