IB Brokers Margin Account

Hello,
Has anyone singed up for a IB Brokers Margin account (just became available recently in Australia).
Got a normal IB account but the option is now there for a margin account and the rates look very cheap.
Anyone used this got any tips/opinions?
It mentions equifax may contact you to confirm some details for this account? Any idea what they are after? Will this go on record as a credit hit?

Cheers

 

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. For clients of Interactive Brokers Australia who are classified as retail, margin loans will be capped at AUD$25,000
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Rates appear to be 0.0218 plus 0.01 for retail clients.
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Doesn't seem to be worth bothering with?

 

They send u a link apparently from Equifax which asks u to put in you online banking logon details!! Seems odd to me. Is this common i havent applied 4 finance for a bit.

 

Let me know if you learn more - I want one !

 

I've asked IB about alternative ways to process the approval as i wasn't keen on providing my banking username and password.

Response was not helpful and just referred me back to the process with Equifax.

 

I had the same issue any questions where just refereed back to equifax. Idiotic thing is they say to qualify u need to prove 100k liquid assets, i had 100k with IB at the time so all they had to do was look at their own system. I ended up putting in the bank details them immediately changing the PW and having a good look at the account to make sure nothing dodgy happened. Account was approved a week or so later.

 

Does anyone have experience with Interactive Brokers margin lending as a wholesale investor (certified under per Section 761G(7)(c) of the Corporations Act 2001)? Their margin rates are really good (low 2%s) for AUD500K+

I'm aware that assets are not individually registered (ie no unique HIN for each account), but held as a single account under a custodial structure.

The account manager at another lender also indicated that pooled holdings are utilised as collateralised security for debt funding. This review seems to indicate this would be the case for non-natural person / non-retail clients, so I'm curious if this would apply for a client that was an individual, wholesale investor.

"For the non-natural person clients that are not categorized as retail clients, IBKR Australia is permitted to utilize for financing purposes a portion of the loan value of the stock these customers hold with IBKR Australia. Put otherwise, IBKR Australia borrows money from a third party (such as a bank or broker-dealer), using the customer’s margin stock as collateral, and it lends those funds to the customer to finance the customer’s margin purchases."​

Still researching before I request further information from IB but would be interested to know if others have been down this path already.

 

No wholesale investors using interactive brokers margin loans??

 

I am using a Pty Ltd company structure to get the Wholesale margin with IB.

I'm not sure what you are asking, but apart from the initial setup (always hard work with IB) , it has been straight forward.

just be aware that margin rates do change with market volatility. Was a bit hairy during the Covid crash

 

Just after any insight specifically with IB margin loan as a wholesale investor from those with experience. I've requested in personal name. Appreciate the response and insight.

Was it just changes to the rates during covid or other issues? (aside from the value of holdings dropping of course!)

 

When I set my account up a couple of years ago, there was no option to be AU citizen and get the full margin (not the crappy 25k Aust). I had to set up a Pty Ltd. I already had a personal & SMSF account with IB.

Was it just changes to the rates during covid or other issues? (aside from the value of holdings dropping of course!)

More so that I was margin compliant until they changed the margin rates.

Then I was not Margin compliant and they sold stuff automatically overnight

 

I presume you mean they changed the permitted LVR on your security holdings not the loan interest rate?

How much warning were you given between the change and auto sell?

 

Seems IBKR is no longer charging the additional 1% (for AUD) and 2% (all other borrows) for australian clients that are either natural person clients or non-natural retail clients. I had been considering DT/corp trustee, but no longer necessary and can continue with personal names.

BM rates change daily, but currently very sweet for AUD debt.


USD BM 0.330%
AUD BM 0.003%

 

Do they lend more than 50k yet?

 

Yes for entities that qualify as wholesale investor (certified under per Section 761G(7)(c) of the Corporations Act 2001).

 

I spoke too soon. IBAU Surcharge still applies to all retail and "natural person" wholesale clients.

Rates (particularly AUD) are still very sharp.

"For clients of IBKR Australia that are either natural person clients, or non natural person retail clients, an additional spread ("IBAU Surcharge") will be added to the standard rates below. The IBAU surcharge is currently 1% for borrows in AUD and 2% on all other borrowings."

Margin Rates and Financing | Interactive Brokers Australia Pty. Ltd.



1. The standard rate applies for specific clients of IBKR Australia i.e. clients that are non-natural person non-retail clients (wholesale or professional investor).

2. For clients of IBKR Australia that are either natural person clients or non-natural person retail clients, an additional spread ("IBAU Surcharge") will be added to the standard rates in all tiers. The IBAU Surcharge is currently 1% for borrows in AUD and 2% on all other borrowings.

3. A minimum floor of .75% will be charged on margin loans. Rates subject to change.

 

When was this 'surchage rate' introduced? I was surprised to learn that i'm getting charged the extra 1-2%. I'm sure i had reviewed the rates not too long ago.

I might have to start an account under corporate trustee as well. Good time to move given plenty of unrealized losses in the portfolio.

 

I setup wholesale (company) last year, there was no Equifax silly stuff like I saw in this thread. Was just documentation around structure etc.
No margin limit, can usually see a ridiculous amount of "buying power" that I would never act on.

No income checks, they have my assets so that's enough collateral and their liquidation system is automatic and instant. Didn't even do a director credit check with Veda from memory.

Platform is a bit funky but very powerful. Able to access any global market I could ever need.

Downside with wholesale is you have to pay more for data. $150US/month for US options data. Some just look up the price with commsec for free then put in a bid.