IB Canada Unbundled Commissions

Discussion in 'Order Execution' started by plugger, Sep 16, 2007.

  1. plugger


    Anyone choose to go with unbundled commission structure in Canada? I just finished reading through and if I understand correctly, it sounds like you could save money. I read that IB will still cap the commission charge at 0.5% of the trade value even under the unbundled pricing structure.

    "5. IB's unbundled fee will be capped at 0.5% of trade value."

    That's good if it's correct and I'm interpreting it correctly. I wasn't going to switch to unbundled because I like to trade some TSX Venture stocks (low priced). Originally it seemed liked you got hosed if you went unbundled. For example, you buy 10 000 shares at $0.30:

    10 000 x (0.008 + 0.0001 + 0.00011 + 0.0004) = $88.30

    0.008 = per share charge
    0.0001 = clearing fee
    0.00011 = regulatory fee
    0.0004 = exchange fee

    If it is capped it would work out to:

    (10 000 x $0.30) x 0.005% = $15.00

    Not bad, if it works this way. Although it is ironic that TD Waterhouse is able to offer unlimited shares for $7.00 now.

    The upside is that you could earn some liquidity rebates from your TSX trading which could help to reduce overall commissions. There are no rebates from the TSX Venture. And, when you get over 300,000 shares for the month, your per share commission drops to $0.005 and you could earn $0.002 in rebates.

    Any comments? Am I reading this correctly? Anyone from IB care to clarify? I'm trying to reduce my commission charges as even a 30% savings would put some good money back in my own pocket.

    Thanks in advance.
  2. plugger


    Just as a follow up, can you swith back easily from unbundled to bundled when you want?
  3. how many canadian stocks are there? and just curious why do you choose to trade canadian stocks vs say us stocks?
  4. plugger


    Thousands of stocks. The liquidity is certainly not as good as it is for U.S. stocks for the most part. I tend to stick to what works best for me. I'm not in this for bragging rights or to stroke my ego, it's just about generating profits.
  5. FCCT


    Volume might start picking up with the exchange rate close to par.
  6. Yes... I have.

    Unbundled is ALWAYS cheaper above 300,000 shares/month.

    At my 3,000,000 shares/month level...
    It's about $0.003/share... or 40% cheaper than bundled.

    I suppose that you must realize...
    Fees for CAN stocks are > DOUBLE that for US stocks.

    I cannot imagine why...
    You would chose to trade CAN stocks...
    As opposed to similar US stocks.

    I last traded CAN stocks for 9 months in 1993...
    Then switched 100% to US stocks...
    And that was about 500,000 trades ago.

    And the cherry on top...
    Is that you can buy US dollars at close to par...
    Something that happens once or twice in a lifetime.
  7. plugger


    Well then, when I do start to trade more U.S. stocks, I guess I'll be up to par considering the lower liquidity and higher commissions here in Canada.
  8. IB has terrible commissions on the Canadian side... if you are doing size you are looking to pay hundreds of dollars on commissions a day... you are better off trading CDN stocks with CIBC or TD Waterhouse... $7-10 per share unlimited shares... CIBC even groups all transaction for each stock, on each side into one transaction for the day.
  9. plugger


    Just as a follow up to my original post. I switched to unbundled pricing and started receiving the commissions today. Overall, quite please. The savings were good although I must over the 300 000 share tier.

    HOWEVER, unbundled pricing really sucks for TSX Venture exchange trades. Bought 10 000 shares of a stock for $0.12 and paid $44 in commission (hit the offer). Doh! It almost reminds me of the old school brokers writing out tickets on paper type commission. Very expensive. And contrary to the way IB's website reads and was confirmed to me by a rep, the 0.5% unbundled cap DOES NOT include exchange fees. Kind of aggravating that this information conveyed to me by an IB rep was inaccurate because I made the attempt to verify the information (as I read it from their website) Anyways, I should know better than this since you will often receive inaccurate information from large organizations (depending on who you talk to).

    To sum it up, I think it's worth it to switch to unbundled pricing but do not trade Cdn penny stocks through IB. You will pay through the nose. Personally I will be allocating some money to a TD Waterhouse account for these trades since I can trade unlimited shares for $9.99 (or cheaper depending on your activity level)

    BTW, this wasn't meant as an IB bashing comment since I am happy with them for the most part. Just a little disappointed that they changed their commission structure from when I first started using them (0.2% of trade value as a cap). They went from the cheapest Cdn broker to middle of the pack.
  10. IB has absolutely NO competition when it comes to trading US stocks from Canada...
    Assuming you do Pro Level volume.

    No other broker can even be seriously considered.

    Trading Canadian Venture stocks is highly unusual...
    And not a very rational choice...
    Considering the VAST alternatives.

    You will never convince me that you are not purely gambling.
    But I hope you evolve... as oppose to die.
    #10     Sep 24, 2007