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Why is Interactive Brokers Right for Your Online Trading?
John Seeberg, Interactive Brokers203-618-5991
Presented to the US Investor ClubsDecember 17, 2007
Member SIPChttp://www.SIPC.org
Presentation Outline
I will discuss competitive I will discuss competitive advantages of Interactive Brokers: advantages of Interactive Brokers: Highlights Highlights http://institutions.interactivebrokers.com/en/general/education/highlighhttp://institutions.interactivebrokers.com/en/general/education/highlights.php?ib_entity=instts.php?ib_entity=inst
Review the trading Platform, TWS Review the trading Platform, TWS (TraderWorkstation), order types, (TraderWorkstation), order types, and trading toolsand trading tools
Account types, account opening Account types, account opening steps, Account Management steps, Account Management
Interactive Brokers Group Fact Sheet30th year as a Broker Dealer with equity capital currently around $3
billion
Barron’s Review of Online Brokers had Interactive Brokers earned the only 5-star rating for cost out of 27 web- and software-based online brokers
Interactive Brokers Group (IBKR) is a newly formed public holding company created through an IPO in May 2007
Timber Hill, affiliate of IBG, is the largest Market Maker of Options in the world. Responsible for more than 20% of total US equity derivatives volume.
Direct Membership, and access to 70 market centers in 17 countries
IB Smart Route and IB Smart Spreads technology is unique in the industry. Solving best execution for Equities and US Options.
IB executes over 700,000 trades a day; a 40% rise since December 2006
IB Competitive Advantages
IB Universal AccountIB Universal Account http://institutions.interactivebrokers.com/en/accounts/universalAccount.php?http://institutions.interactivebrokers.com/en/accounts/universalAccount.php?
ib_entity=instib_entity=inst
Global Market AccessGlobal Market Access Low Commissions, competitive financingLow Commissions, competitive financing http://individuals.interactivebrokers.com/en/accounts/fees/commission.php?http://individuals.interactivebrokers.com/en/accounts/fees/commission.php?
ib_entity=llcib_entity=llc Choose a product Options, Stocks, Futures, etc Choose a product Options, Stocks, Futures, etc
Technology and Efficiency as a Technology and Efficiency as a PhilosophyPhilosophy
"Create technology to provide liquidity on better terms. Compete on "Create technology to provide liquidity on better terms. Compete on price, speed, size, diversity of global products and advanced price, speed, size, diversity of global products and advanced trading tools."trading tools."
IB Universal Account® in TWS
The IB Universal Account allows trading of The IB Universal Account allows trading of stocks, options, futures, Forex, bonds, and stocks, options, futures, Forex, bonds, and Exchange Traded Funds (ETFs) all from the Exchange Traded Funds (ETFs) all from the same Trader Workstation screen.same Trader Workstation screen.
Real Time margining of Real Time margining of all positionsall positions presented presented with account balances and current margin.with account balances and current margin.
Account can operate with a single currency Account can operate with a single currency where margin loans are created when foreign where margin loans are created when foreign products are traded; or multiple currency products are traded; or multiple currency balances can be held.balances can be held.
• North AmericaNorth America• EuropeEurope• AsiaAsia
IB Global Market AccessStocks, ETFs, Securities Options,Single Stock Futures, Futures, Futures options,Forex
North American Stocks Commission
US Securities Options Commission
US Futures Commission
Interest Earned on Long Cash BalancesBenchmark= Fed Funds Effective1 (Overnight Rate)4.300
Interest Earned on Short BalancesBenchmark= Fed Funds Effective1 (Overnight Rate)4.300%
Margin Interest Expense
IB Order Types
Trader Workstation supports over 40 order types
http://www.interactivebrokers.com/en/trading/orderTypesMatrix.php?ib_entity=llc
limit risk speed execution provide price improvement use discretion time the market simplify the trading process
BookTraderBookTrader:: Enter single or multiple orders into the Enter single or multiple orders into the market depth of any marketmarket depth of any market
OptionTraderOptionTrader:: Option chain display, greek risk factors, option Option chain display, greek risk factors, option modeler, order entry and management for single contracts, modeler, order entry and management for single contracts,
combination orderscombination orders
FXTrader: An advanced Foreign Exchange market order entry tool which offers tight interbank spreads and integration with other asset
classes such as forex futures and options
ChartTraderChartTrader: Real-time charts and the ability to enter orders: Real-time charts and the ability to enter ordershttp://www.interactivebrokers.com/en/software/pdfhighlights/PDF-ChartTrader.php?ib_entity=llchttp://www.interactivebrokers.com/en/software/pdfhighlights/PDF-ChartTrader.php?ib_entity=llc
BasketTraderBasketTrader: Trade basket files or create : Trade basket files or create index based basketsindex based baskets
DepthTraderDepthTrader: Level II and NYSE Deep Book: Level II and NYSE Deep Book
PortfolioTrackerPortfolioTracker: Rebalance a portfolio based : Rebalance a portfolio based on percentageson percentages
VolTraderVolTrader: Create orders where the limit price : Create orders where the limit price is a volatilityis a volatility
Market ScannerMarket Scanner: Scan the market and filter : Scan the market and filter resultsresults
Options Intelligence ReportOptions Intelligence Report: : A daily report provides A daily report provides tables and commentary about the market’s expectations of future tables and commentary about the market’s expectations of future price movements. Includes seven volatility tables and is updated price movements. Includes seven volatility tables and is updated hourly between noon and the close. hourly between noon and the close.
IB SmartRoutingsm
US Equities and US Equity Options
• Sweeps all 6 US Options Exchanges
• Auto ReRoute
• SmartSpreads
• AutoRecoverysm
• Price Improvement
• Volatility Orders
Organization AccountTypes
IRA Account Typeshttp://individuals.interactivebrokers.com/en/p.php?f=accountConfig&p=i&ib_entity=llc
http://www.interactivebrokers.com/en/general/education/faqs/ira.php?ib_entity=llc
Traditional. Traditional. Tax-deferred retirement account to which an Tax-deferred retirement account to which an individual taxpayer can contribute. A spouse may also individual taxpayer can contribute. A spouse may also contribute, but must open a separate account. contribute, but must open a separate account. Contributions are tax deductible to certain limitations. Contributions are tax deductible to certain limitations. Earnings are not taxed until you start withdrawing the Earnings are not taxed until you start withdrawing the money. Withdrawals may not generally be made from an money. Withdrawals may not generally be made from an IRA prior to reaching age 59 1/2. If withdrawals are made IRA prior to reaching age 59 1/2. If withdrawals are made prior to this time, the amount of the withdrawal is subject prior to this time, the amount of the withdrawal is subject to a 10% penalty tax in addition to the normal tax liability. to a 10% penalty tax in addition to the normal tax liability. Distributions must begin by April 1 of the year following the Distributions must begin by April 1 of the year following the year in which the employee turns 70. Failure to withdraw year in which the employee turns 70. Failure to withdraw the required amount results in a 50% tax penalty.the required amount results in a 50% tax penalty.
IRA Account Types
RothRothRetirement account to which taxpayer can contribute. Retirement account to which taxpayer can contribute. A spouse may also contribute, but must open a separate A spouse may also contribute, but must open a separate account. Contributions are not tax deductible. Earnings account. Contributions are not tax deductible. Earnings are tax-free. Withdrawals of original contribution are tax-are tax-free. Withdrawals of original contribution are tax-free. Investors may continue to contribute to their Roth free. Investors may continue to contribute to their Roth IRA beyond age 70.IRA beyond age 70.
Simplified Employee Pension (SEP)Simplified Employee Pension (SEP)Plan in which the Plan in which the employee and employer contributes to an IRA. SEPs are employee and employer contributes to an IRA. SEPs are used by small employers and self-employed individuals. used by small employers and self-employed individuals. Each individual employee can set aside a percentage of his Each individual employee can set aside a percentage of his or her pre-taxed income into the plan. Contributions are or her pre-taxed income into the plan. Contributions are made by the employer (there are no employee made by the employer (there are no employee contributions). 100% immediate vesting of all plan contributions). 100% immediate vesting of all plan contributions.contributions.
IRA Account Types
Direct RolloverDirect RolloverUsed by investors when they are Used by investors when they are changing jobs or retiring. Allows the investor to changing jobs or retiring. Allows the investor to move assets from a 401K or other employee move assets from a 401K or other employee sponsored retirement plan or an existing IRA sponsored retirement plan or an existing IRA without paying taxes or penalties. Employees without paying taxes or penalties. Employees who contribute, transfer, or rollover IRA assets who contribute, transfer, or rollover IRA assets into this account, may not later transfer this into this account, may not later transfer this account back to a 401K or other employee account back to a 401K or other employee sponsored retirement plan.sponsored retirement plan.
IB Account Opening
