IBKR - Interactive Brokers

[TwoCitiesCapital]

Yes, the margin rates are low and international trading unparalleled, but I am trying to comprehend such outages happening with other businesses...say Google/Gmail shut down for as many hours. Or the App store. Or Facebook.

 

These kind of things just should not happen anymore with a business at IBKR's scale. There isn't much of an excuse, it's 2020. There are lots of other problems with IBKR account tools being down routinely after hours for maintenance. A lot of companies have figured out how to get around routine maintenance/down time. It seems IBKR has not. The technology is not that hard.

 

Lots of signs they are operating technology from a different era...

 

If they got a handle around their technology (operated on something robust on the order of AWS), they could be a force to be reckoned with. For now, their user experience leaves a lot to be desired.

 

I have been with IB for ~15 years and this was the longest partial outage I have experienced with them. IB is typically rock solid even on extremely high volume days when other websites from Wells Fargo, Etrade and Fidelity were unresponsive.

 

Yes, their customer service is crappy, but I had much better luck with chat than I had on the phone. I do business with them because of the international trading and margin/interest on cash balances.

 

If Fidelity comes up with better international trading, then I would probably move my accounts over.

 

All the things you list are well known advantages of IBKR. They are the low cost provider (like AMZN) with things that truly matter--margin rates, etc (not dumb "free commissions" whilst selling your order flow).

 

IBKR as a business would be unstoppable--on an AMZN level--if they got their act together in customer service and technology. Their evening outages of account tools is routine and an unnecessary nuisance.

 

Sure, cater to high end traders initially, but if you upgrade the UI, service, backend then the masses will come. IB has not been able to transition to this. Eventually some tech outfit may figure out how to do it better.

 

I'm not sure the masses would. As someone who works for an IB competitor with margin rates that aren't anywhere near competitive (IMO), I don't think the reason people are with us is because of our UI or custom service. It's because the masses want personalized service via a trusted advisor - they won't get that @ IB no matter how sleek their UI becomes.

 

They know their markets - sophisticated individual and professional investors and they're doing a good job catering to those individuals even if a few things are lacking

[Cicero]

All great points in the discussion. However, I think many esp. US based folks don't quite appreciate how different the market outside the US looks. It is way less competitive (I used to be based in the UAE and IB was the only serious broker back then, am based out of Hong Kong/ Singapore now and there are maybe two or three options each way worse than IB). If you go a bit further afield it's getting even worse. Not surprisingly that is where IB seems to make the biggest gains and I think that is where the real opportunity is.

 

To illustrate the point in Hong Kong retail options are IB, Saxo Bank (charges 0.12% as depository fee + inactivity fee + bunch of other rip off fees), Ameritrade (US stocks only and I hear there are constant issues with the app because it does not quite work with regulatory requirements) + bunch of local brokers which are all pretty pricey. Singapore is the same.

 

To be transparent I am long IB.

[Gregmal]

I think the last two posts/points made are good ones. I have a little familiarity with the biz as well, and IMO US brokerage, especially retail, is not a great business from the grander perspective. Its a grind to zero game. Customers are high maintenance, super cheap, have no loyalty, just in general continuously want and even expect more and more for less or even free. Step outside the US and there's some very lucrative markets.

[TwoCitiesCapital]

Just to counter all this IB negativity, my Schwab account has also been down all day. Either it's pure coincidence or the problem that they're having exists outside of their sphere of control and is impacting multiple companies at the same time.

 

I logged in to my Schwab account before the open and it has been connected all day. I gave up trying to use IB today.

 

I only trade US stocks and I don't use margin. So the advantages I used to have with IB are not there anymore. I do want to have at least two different brokerage accounts for situations like today when I can't log into one of them.

 

I dunno. I was able to log-in to my Schwab account, but no trades in any stocks could be made until after 2 PM. It kept telling me the system was down and gave me a number to call. Even after single stock name trading was restored, I received the same notice for all attempted options trades into the close.

 

For those who worship at the alter of Schwab, it's STILL not letting me trade options today. Same system error BS message.

 

Once again, not an issue today, but I have options positions that I need to roll before 12/11 and now it's coming down to the wire since I've had two days where I couldn't place orders to try to catch favorable limit-fills.

 

I'd also add that Schwab messed up on me back in early March and I couldn't trade for 3 days as well. Ultimately, probably for the best as what I wanted to do would've have probably been a slight loss, but definitely unnerving seeing the markets move 5-10% per day and not even having the option to trade because Schwab locked down my account for some reason unknown to anyone. Took two separate calls over 3 days to get fixed.

 

Robinhood also failed multiple times over that period, though I don't think IB did. Ultimately, this isn't an IB problem is the whole the point. All brokers have periods of being down - even the "customer centric" ones like Schwab.

[TwoCitiesCapital]

Just to counter all this IB negativity, my Schwab account has also been down all day. Either it's pure coincidence or the problem that they're having exists outside of their sphere of control and is impacting multiple companies at the same time.

 

I logged in to my Schwab account before the open and it has been connected all day. I gave up trying to use IB today.

 

I only trade US stocks and I don't use margin. So the advantages I used to have with IB are not there anymore. I do want to have at least two different brokerage accounts for situations like today when I can't log into one of them.

 

I dunno. I was able to log-in to my Schwab account, but no trades in any stocks could be made until after 2 PM. It kept telling me the system was down and gave me a number to call. Even after single stock name trading was restored, I received the same notice for all attempted options trades into the close.

 

For those who worship at the alter of Schwab, it's STILL not letting me trade options today. Same system error BS message.

 

Once again, not an issue today, but I have options positions that I need to roll before 12/11 and now it's coming down to the wire since I've had two days where I couldn't place orders to try to catch favorable limit-fills.

 

I'd also add that Schwab messed up on me back in early March and I couldn't trade for 3 days as well. Ultimately, probably for the best as what I wanted to do would've have probably been a slight loss, but definitely unnerving seeing the markets move 5-10% per day and not even having the option to trade because Schwab locked down my account for some reason unknown to anyone. Took two separate calls over 3 days to get fixed.

 

Robinhood also failed multiple times over that period, though I don't think IB did. Ultimately, this isn't an IB problem is the whole the point. All brokers have periods of being down - even the "customer centric" ones like Schwab.

 

Just an update - just tried to call Schwab to understand what the issue is and if they anticipate it'll be fixed by tomorrow if I need their assistance placing trades.

 

 

Phone rang twice, automatically sent me to an automated voicemail system, and then disconnected me before I could even leave a message. I'm assuming this is some bug with call forwarding/working remotely, but ultimately can't even call/speak with anyone about the issue.

 

So much for Schwab being "client centric", right?

[KCLarkin]

I think the last two posts/points made are good ones. I have a little familiarity with the biz as well, and IMO US brokerage, especially retail, is not a great business from the grander perspective. Its a grind to zero game. Customers are high maintenance, super cheap, have no loyalty, just in general continuously want and even expect more and more for less or even free. Step outside the US and there's some very lucrative markets.

 

This is a pretty good summary. IBKR has targeted some of the most lucrative niches. Has enviable product margins. A visionary CEO. And still has average economics. I own it, but I was expecting more operating leverage. I am looking for something better.

 

[scorpioncapital]

That may be so but the returns since IPO have been dismal. This genius CEo sold out at a bubble top to line his pockets but maybe one day ibkr shareholders will turn a reasonable profit!

[Cicero]

That is a good point, but I would argue that a key reason why the share price has not done much since IPO is that on the surface the earnings have not increased much. At IPO there were two business, the market maker and the broker. The broker was pretty successful on a standalone basis (I think 5x or so in terms of profits), but the market maker was not. I would also argue that the valuation was expensive at IPO given that 80% or so of the earnings came from a relatively poor business that (with the benefit of hindsight) seems to have been overearning.

 

The market making business is basically gone now, if the broker continues to grow, I would think the returns from here to be much better.

[KCLarkin]

That may be so but the returns since IPO have been dismal. This genius CEo sold out at a bubble top to line his pockets but maybe one day ibkr shareholders will turn a reasonable profit!

 

This is an interesting historical statement*, but irrelevant to this thread. This thread was started March 2011 when the stock was $15/share and it was clear that the MM business was impaired.

 

Since then:

Customer equity: $22B -> 269B

Accounts: 158k->1037k

 

---

* "dismal" returns since IPO is not accurate. IBKR likely outperformed the majority of stocks over that period.

[TBW]

Isn't the key here interest rates? If they go up, IBKR will earn a lot of money and stock will go up a lot. If they don't it will be slow and steady, but I would guess growing, profits inline with where they currently are.

[kab60]

Isn't the key here interest rates? If they go up, IBKR will earn a lot of money and stock will go up a lot. If they don't it will be slow and steady, but I would guess growing, profits inline with where they currently are.

Yeah, that's what eventually got me to sell the stock early last year. A way to make this less a play on rates is if they introduce a custody fee of say 0,1 pct. of AUM, but I don't really see that happening.

[bizaro86]

Isn't the key here interest rates? If they go up, IBKR will earn a lot of money and stock will go up a lot. If they don't it will be slow and steady, but I would guess growing, profits inline with where they currently are.

Yeah, that's what eventually got me to sell the stock early last year. A way to make this less a play on rates is if they introduce a custody fee of say 0,1 pct. of AUM, but I don't really see that happening.

 

Raising their margin rates a bit would increase their income and probably cost less customers than a custody fee.

[TwoCitiesCapital]

Just to counter all this IB negativity, my Schwab account has also been down all day. Either it's pure coincidence or the problem that they're having exists outside of their sphere of control and is impacting multiple companies at the same time.

 

I logged in to my Schwab account before the open and it has been connected all day. I gave up trying to use IB today.

 

I only trade US stocks and I don't use margin. So the advantages I used to have with IB are not there anymore. I do want to have at least two different brokerage accounts for situations like today when I can't log into one of them.

 

I dunno. I was able to log-in to my Schwab account, but no trades in any stocks could be made until after 2 PM. It kept telling me the system was down and gave me a number to call. Even after single stock name trading was restored, I received the same notice for all attempted options trades into the close.

 

For those who worship at the alter of Schwab, it's STILL not letting me trade options today. Same system error BS message.

 

Once again, not an issue today, but I have options positions that I need to roll before 12/11 and now it's coming down to the wire since I've had two days where I couldn't place orders to try to catch favorable limit-fills.

 

I'd also add that Schwab messed up on me back in early March and I couldn't trade for 3 days as well. Ultimately, probably for the best as what I wanted to do would've have probably been a slight loss, but definitely unnerving seeing the markets move 5-10% per day and not even having the option to trade because Schwab locked down my account for some reason unknown to anyone. Took two separate calls over 3 days to get fixed.

 

Robinhood also failed multiple times over that period, though I don't think IB did. Ultimately, this isn't an IB problem is the whole the point. All brokers have periods of being down - even the "customer centric" ones like Schwab.

 

Just an update - just tried to call Schwab to understand what the issue is and if they anticipate it'll be fixed by tomorrow if I need their assistance placing trades.

 

 

Phone rang twice, automatically sent me to an automated voicemail system, and then disconnected me before I could even leave a message. I'm assuming this is some bug with call forwarding/working remotely, but ultimately can't even call/speak with anyone about the issue.

 

So much for Schwab being "client centric", right?

 

Receiving error messages again for each trade on Schwab all morning.

 

I'm not going to keep updating this thread about this (don't worry). Just demonstrating that I think it's clear we need to go easier on IBKR.

 

Also, for the guy who mentioned that this never happens to Google - you see the headlines happen yesterday where several google services including Gmail and their office suite were down for most clients?

 

These things happen. At this point, WAY more frustrated with Schwab than I am IBKR.

[Jurgis]

I'm gonna kvetch about IB again. Just completed their annual investor info gathering form. They require you to provide your employer's website. It's like WTF dudes. Is this really in KYC or did some idiot put that into your "let's ask more irrelevant questions" package? What if I work for a company that does not have a website? Is www.notyourfingbusiness.com fine for you?

 

And then there's the "did you really stop beating your wife" question about backup withholding. Anybody knows if the answer should be yes or no? They phrase it in a way that makes you really not sure what "yes" means and what "no" means. It's something like "Are you not subject to the backup withholding?" (sorry can't get to the actual formulation anymore). Their form answer defaults to "no", which would seem to indicate that "no" means that you're not subject to backup withholding. But for someone who reads the question "yes" seems to indicate that you're not subject to backup withholding. I marked "yes", but WTF really.

[Sunrider]

IB really is not living up to its claim to great anything anymore ... try dealing with support on a time critical matter which they are the cause of? Good luck, may as well be with any of the large incumbents ... and probably not have the issue in the first place

[Spekulatius]

If you don’t use margin often or deal with international stocks, there really isn’t a reason to use IB any more.

[rb]

Except when you try to trade on a high volatility day (aka when shit gets cheap) and for some reason all other brokers don't work or are reaaally slow.

[CorpRaider]

Those margin rates are attractive AF, but I just can't put real money with an institution that doesn't have a local physical location.  I might need to yell at someone or flip a desk or something.

[bizaro86]

IB really is not living up to its claim to great anything anymore ... try dealing with support on a time critical matter which they are the cause of? Good luck, may as well be with any of the large incumbents ... and probably not have the issue in the first place

 

I use IB and one of the big Canadian brokers. I submitted tender instructions 7 days prior to a tender deadline. They didn't get around to filing them. The stated reason was that customer service was busy due to higher volatility. So they were too busy worry about GME related margin issues to bother submitting my tender instructions. Thats a few thousand dollars I won't be getting back, but I'm moving a bunch more money from there to IB this week.

[Okta]

IB is great as long as you do not have to deal with service. Peterffy said once, they think they made a mistake if you have to contact them (praphrased from memory).

 

Most things work automatically with the corporate action tool. For example international tender offers can be tendered with IB most of the times on the deadline day, my other brokers sometimes require at least 7 days advance decision and some even in written form (print/sign/scan or send via post). Even non-traded warrants can be excercised without calling in person, also partially with their tools. TWS is quite intuitive and has even more functions than I need. They have more order types than my other brokers. One weak point is the safety of money deposits. European customers after Brexit have very low EU insurance now (USA customers have better insurance).

 

One bad example: Account has been short calls on GME and in TWS purchasing GME shares was blocked (temporarily), which would have made the trade a fully covered call (risk reducing). I do not know the reason, but sure cost money to close the option instead at the then higher price of GME after recognizing this. I would not use them for any critical position, but many things are very time efficiently dealt with via their computer system and cost is low in my opinion.

 

other weak points:

-If you have non-traded options/warrants/preferreds, which are excersisable, they will not even update it to intrinsic value automatically making the reports relatively useless.

-Withholding tax reclaim (most often from dividends) is not supported and they provide a limited number of tax forms only at extra charge (which is more expensive than local alternatives in my case, who can even file paperwork automatically at extra charge).

 

Overall, still the best for many use cases in my opinion (European perspective).

[Borgesian]

IB is great as long as you do not have to deal with service. Peterffy said once, they think they made a mistake if you have to contact them (praphrased from memory).

 

Most things work automatically with the corporate action tool. For example international tender offers can be tendered with IB most of the times on the deadline day, my other brokers sometimes require at least 7 days advance decision and some even in written form (print/sign/scan or send via post). Even non-traded warrants can be excercised without calling in person, also partially with their tools. TWS is quite intuitive and has even more functions than I need. They have more order types than my other brokers. One weak point is the safety of money deposits. European customers after Brexit have very low EU insurance now (USA customers have better insurance).

 

One bad example: Account has been short calls on GME and in TWS purchasing GME shares was blocked (temporarily), which would have made the trade a fully covered call (risk reducing). I do not know the reason, but sure cost money to close the option instead at the then higher price of GME after recognizing this. I would not use them for any critical position, but many things are very time efficiently dealt with via their computer system and cost is low in my opinion.

 

other weak points:

-If you have non-traded options/warrants/preferreds, which are excersisable, they will not even update it to intrinsic value automatically making the reports relatively useless.

-Withholding tax reclaim (most often from dividends) is not supported and they provide a limited number of tax forms only at extra charge (which is more expensive than local alternatives in my case, who can even file paperwork automatically at extra charge).

 

Overall, still the best for many use cases in my opinion (European perspective).

 

And if you're interested in and do invest on an international scale, really hard to find another broker that comes close.

[WneverLOSE]

IBKR continues to put up monster numbers amid the retail boom. Up 25% YTD.

 

DARTS +203% YoY, 43% MoM

Accounts +69% YoY, 11% MoM

 

Where do you see it ????? not published yet wtf

 

i'm checking every 20 minutes and its not live on the IR website or in a press release

 

EDIT : maybe you are looking at the January numbers and wrote 203% vs 223% actual number ?

[KCLarkin]

IBKR continues to put up monster numbers amid the retail boom. Up 25% YTD.

 

DARTS +203% YoY, 43% MoM

Accounts +69% YoY, 11% MoM

 

Where do you see it ????? not published yet wtf

 

i'm checking every 20 minutes and its not live on the IR website or in a press release

 

I'm an idiot. I assumed they had updated numbers and didn't look at the date. I posted January numbers. Deleted post.

 

[WneverLOSE]

ah OK, I'm the biggest IBKR nerd in the world, biggest position I've ever had and i follow everything (but everything) they do or say  ::) so I was shocked you found a way to get the numbers before everyone else haha

 

February gonna be a strong month as Thomas said on the Credit Suisse conference, usually they publish the numbers on the second day of the month (if its a trading day) so probably tomorrow they will get it published. 

 

 

[fareastwarriors]

ah OK, I'm the biggest IBKR nerd in the world, biggest position I've ever had and i follow everything (but everything) they do or say  ::) so I was shocked you found a way to get the numbers before everyone else haha

 

February gonna be a strong month as Thomas said on the credit Swiss conference, usually they publish the numbers on the second day of the month (if its a trading day) so probably tomorrow they will get it published. 

 

Ive found a few times really dumb security on some

 

 

Why you like IBKR so much to make it your biggest position?

What's your thesis?