Why does there need to be ANY kind of requirement for cash accounts? I can't possibly see anyone incurring even moderate liabilities with a cash account.
I'd assume because they don't want the overhead of managing an account that will make them virtually no money. Add to that an American society that will sue anyone over anything (coffee too hot? Sue McDonalds!), and a lawyer could easily argue that IB "should have known" that a low-income individual has no business being in the stock market.
Even the wealthy are smart enough to start with small positions then to increase size right? Everyone needs to have a learning curve before going all in. The hot coffee thing was actually a good case. Mcdonald's had no reason to have it at that temperature, they claimed that it was hot enough so that the customer could bring it home and it would still be warm but that was not what it said in their mcdonald's manual. The woman had the car stopped, held the coffee cup between her legs to open the lid, and the cup collapsed and spilled over her causing first degree burns and genital mutilation!! Scalding, but first degree burns? Excessively hot.
In my opinion, if you hold hot coffee in you lap, between your legs, while driving..........you get what you deserve. Is there such a thing as personal responsibility anymore?
Hmm... from IB net income requirement to hot scalding genitals in only 5 posts... This has to be some kind of record. As for me, I would never open hot coffee between my legs. (dumb) This person shouldn't of been driving in the first place...
There is no minimum income requirement at IB. They just require you to SAY that your income is sufficient to cover their ass.
IB also won't let you open various account types, if you put your experience down as (i believe the wording is) minimal, or whatever the lowest setting choice is. i manage several accounts as an account advisor, as well as 3 of my own accounts via IB and I like the way they operate. the point is that they are a discount broker who won't hold your hands, etc. and they are (reasonably) taking these measures to cover their arses. basically, you are saying in your app that you can cover your losses, and have the experience to trade with margin and without broker input, even w/o margin also note that if you are trading leveraged instruments, you can lose MORE than your accoutn value, and IB will come after your assets. as they should, like any broker
It's called 'Know Your Customer' and is a SEC requirement. Is it necessary? Maybe not, but as another poster said, as soon as a lawyer found out that a person was not suitable to have an account, a lawsuit would follow.