Hi Def, 1)Is IB going to offer NYBOT's softs contract? 2)Have you guys finanlized the commision rate for HK stocks yet? Is HK stocks marginable? If so, how many percent of initial margin is needed? Finally, when should we expect to see it under the trading permission page, so we could add it? Thanks!
1. Yes. 2. The commission rate will be 0.088%. This includes exchange trading fee and CCASS settlement fees. It does not inclue SFC transaction levy and government stamp duty (total 0.104%). There is no stamp duty for warrants. Hopefully you'll be able to add it next week. It will be marginable. We'll be following US margin rules.
1) what is the estimated time for the NYBOT contracts? 2) I dont trade big. I will be probably under the minimum. What is the minimum for each order?
That is a bit expensive, man. It should be reduced to at least 0.050-0.060% to be competitive with local securities brokerage. If one trades at large volume (eg over HK$1,000,000), they may offer discounts for them (usually via negotiations so the discounts may vary per customer), in addition to free market real-time data. The current HK exchange trading fee is just 0.005%; while CCASS settlement fees 0.002%, but many just waive these fees. IB VS local direct-access brokers:
I was told via a ticket reply that they expect to have the ICE stuff by the end of Feb at the latest. Seems like a long time -- they got the NYMEX softs going faster....
You should also take into account our lower minimum, our higher interest rates, our lower margin interest rates, the ability to trade multiple asset classes and products from the same account, quicker order entry speed, the comprehensive number of orders types, etc, not to mention account security and insurance â I doubt most of the people on this forum would want to put substantial funds with any of the brokers you mentioned. Thereâs over 500 brokers in HK, so while our rates will be better than 95+% of the local brokers there will always be a few with lower rates. One other thing to add, our minimum ticket fee of $18 is significantly lower than what you posted. For larger size, I wouldnât rule out a sliding scale once we get up and running.
Lower minimum ticket -- illusion. In effect, IB caluclates each order separately even on the same side and the same stock. They collectively calculate the commission on the same side and the same stock. For example, here's your executions: Buy: 2000 @ 2.25 (place buy limit order at $2.25) 1000 @ 2.26 1000 @ 2.27 (change the limit price to $2.27) For IB, this means 3 orders. For local brokerage, it is treated as 1 order as long as you are on the same side (ie Buy/Sell) and on the same stock. [Note: It is not the case for one brokerage which charge HK$60/order. Its definition of 'order' is the same as IB] Higher interest rates -- illusion. It is [3.1% (BM - 0.75%)] now. It is even worse. The interest rates are deteriorating. Don't forget the first HK$78000 has no interest at all. Provided that some brokerage will give 3% for every single penny, it is just about even. Margin interest rates -- Partially true. It is quite competitive (eg local: P+3% vs IB: P+1.5%). However your margin ratio is not going to be as competitive as other local brokerage. For example, you may only allow a low magin ratio for all stocks. They can be down to 30% depending on different stock (the lower the risk, the better the margin rates). They provide margin for warrants too (the farther the expiry date, the better the margin rates). Ability to trade multiple asset -- True. IB offers many products from different countries. Quicker order entry speed -- Unknown or just about the same. I have no idea about IB's execution speed for HK stock markets. The culture of HK brokerage is different from US. Generally speaking, the execution speed for bank is poor (eg sometimes 20-30 seconds or more); while fast speed for brokerage (eg within 1 second or so). There is not much difference among each brokerage unless their platform are very unstable. Account security -- True. You are a big brokerage company. However, as long as you stick with the middle to large brokerage (just not pick small ones), the risk of bankruptcy is very low. If memory serves, only very small ones have problems or go bankrupt. Our rates better than 95+% of local brokers -- Overstatement, man . While IB is generally cheaper than banks and large brokerage; you can't beat many middle and small brokerage. Don't forget their rates are bargainable while IB not. Their advertised one is the dearest. If you are large-volume trader or regular customers, you may bargain for a very attractive rates (eg the one I know can cut more than half of commission). I doubt most people would put substantial funds with these brokers -- true for foreign traders but false for local people. It is not convenient to open accounts in these firms. You may need to mail the forms and proofs which may take long to go. You will not have the confidence to open an account since you don't know much. You can't visit them either. One of the above I quote is actually about mid-to-large-sized. It has a large customer base and branches in HK Island, Kowloon and NT. It has been estasblished for several ten years. It is actually very safe to open an account here. I wouldnât rule out a sliding scale for large size -- I wish you would. For large-volume, IB is definitely not attractive in terms of commission. They may cut more than half for regular customers. I don't believe you will. Other benefits a local brokerage has: -- quick action in case of emergency: if your software or connection goes wrong, they will pick up the phone in less than a few rings. They don't surchange you on phone orders like IB does(altho the commission rates of phone orders are a bit higher, a few give the same commission rates as Internet orders for the first few phone orders) -- better personal services: Some may assign a personal broker to you (no investment advice, just help you to deal with account issues). They are more responsive and dealing with issues quickly. For example, if they made a mistake and cost you moeny, they may reimburse to you within a few days. For IB, it may take more than a few months to do. That's the difference. -- IPO: They all have IPOs services, while IB not. In conclusion, although IB is still not a bad choice for foreign traders, I don't see it can really attract local people. When considering all above, I don't see IB is clearly winning most mid-small brokerage. IB is attractive for HK futures, but it is not the case for HK stocks. I don't see any compelling reasons for local people to make a switch. Maybe IB doesn't care about the local Chinese market. By the way, 'the last but one' is what I would recommend among those local brokerage. Rather big in size. Safe to trade. Fast execution. Good personal services. The only complaint is its too-conservative margin policy, like IB. If you trade small, you may consider other brokerage.
While we are at it (Nybot)... IB added several exotic currencies to their IDEALPRO listing (but not trading) months ago (HUF, KRW, about 15 or so). I think it's at least half a year now. Can we still expect these to be tradeable in the future ?