Today I received this e-mail from IB: Dear client, Due to regulatory requirements, Interactive Brokers has recently completed a routine review of financial advisor accounts to confirm that advisors trading commodities or leveraged forex are appropriately registered or exempt from registration as required by National Futures Association (NFA) Bylaw 1101. Under NFA Bylaw 1101, Interactive Brokers may not allow advisors who are not registered with the CFTC or NFA but are required to be registered from trading commodities or leveraged forex. Based on our review of your Interactive account and the accounts of your clients and other available information and your firmâs registration/exemption status (as reflected on the NFA's website), it appears that you need to register as a CTA and become an NFA member to trade Commodities for paying clients and register as a Forex Firm to trade Retail Leveraged Forex for your clients. We noticed that you have not traded commodities or leverage forex in your client accounts this year so you may no longer wish to trade these products and may not wish to become registered to trade these products. We have blocked your ability to trade commodities and leveraged forex in your client accounts as a preventative measure. This will not have any effect on your ability to trade securities or other products for which you have been approved to trade other than commodities and leveraged forex. These restrictions will not effect your ability to convert currency. If you do wish to trade commodities and/or leveraged forex for public clients, we are happy to discuss whether you need to be registered or exempt to do so and how you can become registered with the CFTC/NFA if necessary. If you would like to discuss this issue with a Compliance Officer, please send an email with your account number in the subject line to Brett Engelmann at bengelmann@interactivebrokers.com. Thank you, ### First of all, applying these restrictions without prior notice is extremely unprofessional. Secondly, according to NTA regulations, CTA registration do not apply if you have less than 15 clients (http://www.nfa.futures.org/NFA-registration/cta/index.HTML), and in the above only commodities and forex are mentioned, not index futures - these have always been treated separately by IB in the past. Is IB totally out of its mind? Anyone else had similar problem?
I understand his problem. IB just changes things onesided without full information and no proper pre consultation or investigation. It is similar to the exposure fee implementation, which is just impelmented with a week's notice. This fee will cost much more than any commissions for the people concerned. Honestly, you get the feeling that IB is in trouble and I start to seriously worry about the security of my account.
The insider traders and those in the know will pick up on any problems well before the masses know anything. No different from Corzine's company, that stock got cratered a few days before the news got out. Do what I've done, put an alarm on IBKR at say $10, if it hits that, get the hell out. Looking at the chart though, maybe $14/$15 is better. Any move lower will of course be fast. Personally, as a long time client of IB, I'm very happy with their service and have no reason to be concerned. The alarm is just insurance and like most insurance it won't be needed. IB always tends to get a load of stick, but like most things it's from a vocal minority. You never hear much from their happy client base.
I also get the feeling that something's going on at IB. It could be anything from compliance with new regulations to a newly hired risk & compliance officer who is very conservative. Then again they may have taken on a new customer of considerable size that represents a major risk. Like the Jon Corzine hedge fund?
I began managing client accounts at IB under my CTA registration this year and it was somewhat rigorous to get approved. They mentioned they just finished undergoing a 2 year review/audit with the NFA and they've made their compliance procedures and controls more stringent as a result.
Yes, due to the other posters it's probably all to do with new/tighter regs and yet more compliance. If you've got clients and aren't 100% with the regs/compliane, then you'll probably get them on your back. Retail clients doing plain vanilla trades probably aren't on their radar.
well, could also be that too many customers are imbeciles that are over leveraged in risky positions. no way to tell.