IB Restricts Access

Discussion in 'Retail Brokers' started by Babak, Jun 5, 2004.

  1. Babak


    I'm disapointed to hear that IB will not allow full and unfettered access to the newly arrived at Canadian markets. What I'm referring to is their apparent decision to restrict trading in trust units (REITs, oil/gas trusts, business trusts, power gen, etc.).

    This section of the market has been the fastest growing one in Canada for the past 4-5 years and the trend for it is to continue as limited liability law is passed after the federal election (removing the last barrier for institutional investors).

    This move on IB is not only detrimental to its clients, it is also detrimental to itself as such a move shows that they are simply not serious about their foray into the Canadian markets. How can one be a broker while at the same time saying you can trade these stocks, but not these other ones ?

    The success of IB in Canada, ironically, hinges on the access it provides its customers to trusts. This is because the largest and most important part of any brokers business in Canada is RRSP (401k). And by far the largest constituents of the majority of RRSPs in Canada are trusts. So by not allowing trading in trusts, they are in effect stopping potential clients from moving their RRSPs account to IB. And when they chose to lose the RRSP market, they might as well just pack up and leave Canada's brokerage market altogether because that is 75% of assets in brokerage accounts seeking a home.

    I am very disappointed at IB for making this mistake and hope that, as in other cases in the past, they will be quick to rectify the situation.

    ps I have been in touch with IB management but with all due respect, they seem to be out of touch with their clients, and simply out of it in general.
  2. Is this state of affairs not mainly due to government regulations and/or protectionism in Canada?
  3. Babak


    No, for once the good ol' boys club, slash, facist, slash, socialist, government policies on Cdn markets are not to blame. This is a decision by IB.

    Their perception is that it is too much hassle to try and get such things as distributions, taxation, etc. right. Instead they've just said "Aww! Hell, we'll just through the baby out with the bath water!".

    It will take them a while (maybe a year or more). But they will realize that they shot themselves in the foot. Just like the trailing stop loss fiasco of a few years back.

    I just hope that it is sooner, rather than later.