IB's Unbundled and bundled (futures)

Discussion in 'Retail Brokers' started by Tradism, Dec 15, 2009.

  1. Tradism


    Hey I found that unbundled are actually charging higher than bundled for some products in ECBOT/Globex/NYMEX. Hmm... I will still be overcharged in some products either way.

    How can I get the best of both worlds?

    I remember someone said I can trade under different plans but I forget the details.

    The account management obviously doesn't allow you to pick both plans within the same accounts at the same time. So how is it possible? Open two accounts?

    Does anyone know? Thank you. :)
  2. Benign


    Yes, simply open two accounts. Set the first account to use bundled another unbundled.

    Someone in EliteTrader said IB unbundled was nearly always cheaper than bundled if you don't usually hold contracts overnight. In fact it's not true. The situation is more complicated.

    I found out more and more products are dearer than bundled. Here names a few examples. The first figure is unbundled. The second is bundled.

    YM 2.35 (u) vs 2.13
    ZB Options 2.02 (u) vs 1.73
    ZB 1.77 (u) vs 1.73
    ILS 2.81 (U) vs 1.24
    KRW 2.81 (U) vs 1.24
    DD 2.77 (u) vs 2.40
    SEY 347 (u) vs 300
    ZF 1.77 (u) vs 1.73
    SGXNK 318 (u) vs 300
    ZF Options 2.02 (u) vs 1.73

    Unbundled plan is suitable for:
    a) high-volume trader
    b) some futures products which unbundled is cheaper even for low-volume trader

    Bundled plan is suitable for:
    a) Swing traders
    b) some futures products which bundled is cheaper than unbundled. Save as much as 1.57 USD in the worst case.

    By the way I don't understand why IB has to hassle its customers to open two accounts to get cheapest prices from both plans. IB can simply set a cap at unbundled (cap is the amount charged in bundled plan) to solve the problems. The choice would have been much simpler. Daytraders will go for unbundled while swing/position traders for bundled.
  3. Benign


    The second issue you have to pay attention about unbundled plan is IB's fees and commissions are calculated on marginal basis. This means you won't enjoy full discounts as some contracts are still charged at higher costs. For example ZB options becomes $1.47 when you reach the third tier (over 1K but below 10K), which is cheaper than 1.73 bundled. But you only break-even and start to gain when you trade more than about 1600 contracts. It would have been 600 contracts less if calculated on flat basis.

    The third issue you have to pay attention is margin policy. IB has abnormally conservative margin policy. Most contracts are still required full margin even though IB claims to offer half margin. For example All except one futures product in NYBOT are at full margin. Full intraday margin means reduced profitability. Full intraday margin isn't justifiable for traders who practice low-risk / tight-stop trading, for example scalpers.