Brokers With High Minimum Starting Balance

H

HappyTrader

This might seem odd, but please bear with me.

A lot of brokerages out there (including I think all the ones listed here on ET) have a modest starting balance (1k, 10k, 25k, etc.).

Are there brokerages that have starting balances that are much higher, say: 100k, 1M, 10M, etc.?

And if so, what would be the advantage of dealing with these firms?

For example, I know if you have a high balance with certain investment banks, you can get selected for IPO offerings. But that's more of how much you have deposited rather than them dealing only with higher net worth accounts.

In my mind, it's feasible there would be firms that deal only with customers that have a minimum balance of 1M, and in return there are certain advantages that you do not get from other retail banks (perhaps feature-rich applications, coupled banking services, etc?)

Thank you.
 
HappyTrader said:
This might seem odd, but please bear with me.

A lot of brokerages out there (including I think all the ones listed here on ET) have a modest starting balance (1k, 10k, 25k, etc.).

Are there brokerages that have starting balances that are much higher, say: 100k, 1M, 10M, etc.?

And if so, what would be the advantage of dealing with these firms?

For example, I know if you have a high balance with certain investment banks, you can get selected for IPO offerings. But that's more of how much you have deposited rather than them dealing only with higher net worth accounts.

In my mind, it's feasible there would be firms that deal only with customers that have a minimum balance of 1M, and in return there are certain advantages that you do not get from other retail banks (perhaps feature-rich applications, coupled banking services, etc?)

Thank you.
More...
Yes. Most serious PB (prime brokers) firms have a minimum of 5m$ to 10m$ with minimum monthly fees ranging from 10k$ to 25k$.

I've had experiences where a 15m$ account with SocGen took more than 6 months to open.

NewEdge (now SocGen), Goldman Sachs, JP Morgan, Morgan Stanley.... they all have a prime brokerage division where you can open such account.

The difference between a PB and a Broker are pretty big, including:
- With a PB you know what money is segregated and how, you can ask to have your non-margin off balance sheet.
- You have access to OTC products (e.g. trading after closing hours), block trades, etc.
- Lots of liquidity on smaller markets you can only get through a PB (90% of options on Cocoa is done through human market makers which you need access to, whereas brokers typically only give you access to the exchange).
- Access to credit lines, more useful in securities world than derivatives.
- You'd be surprised to see how many markets/exchanges a full-fledged brokerage house such as Interactive Brokers doesn't offer you... in most case you won't care but there are plenty of arbitrage strategies that require you to be able to execute somewhere and clear somewhere else.

A PB effectively gives you some of their balance sheet, whereas a broker is more direct-market-access kind of guy.

That being said, if you have 1m$ with IB, or even better.... say... 5m/10m$, you can receive give-ups (I believe), which solves most of the problems above, as you can always do OTC somewhere else and give-it up
 
Last edited:
wintergasp said:
That being said, if you have 1m$ with IB, or even better.... say... 5m/10m$, you can receive give-ups (I believe), which solves most of the problems above, as you can always do OTC somewhere else and give-it up
More...


Good post, thanks WG., can you explain the part above, what is a give up ? ?
I'm very much interested because i did have a try a while ago with Newedge and ABNamro, looking to set up and account with slightly higher than required minimums at least for New Edge, but they were not interested.
Now not quite as active as a couple of years ago but still interested in several markets IB doesn't offer ( some can be accessed via local banks and brokers , but those are usually not great vehicles to invest money in markets, and it's far less practical than have all the markets accessible though a single platform )
 
Last edited:
OP, about IPO I don't really know what's the best way or how it works, I don't think I ever received a single IPO notice through IB, whereas I receive a bunch of them regulary from banks - stock and bond IPOs, not in the US though,where those banks are not strong.

I'm even more afraid of negative selection when it comes to company IPO's than established companies new bond offerings and haven't subscribed to a single stock IPO so far.
 
Last edited:
Thank you kindly Wintergasp.

So the 'step up' so to speak, from 'Discount Brokerage' firms would be 'Prime Brokers'. And the main benefits of Primer Brokers would be additional markets and instruments. So a good choice for Hedge Funds or Institutions, but perhaps less attractive to individuals who only trade mainstream products.

I.e., if you are only trading S&P 500 listed equities and do not use margin, you really aren't going to gain much/anything from a Prime Broker.

Are there other options out there, or am I looking for something that doesn't exist?
 
luisHK said:
Good post, thanks WG., can you explain the part above, what is a give up ? ?
I'm very much interested because i did have a try a while ago with Newedge and ABNamro, looking to set up and account with slightly higher than required minimums at least for New Edge, but they were not interested.
Now not quite as active as a couple of years ago but still interested in several markets IB doesn't offer ( some can be accessed via local banks and brokers , but those are usually not great vehicles to invest money in markets, and it's far less practical than have all the markets accessible though a single platform )
More...

Well, I should have googled it earlier :

http://www.investopedia.com/terms/g/giveup.asp

And about IB's give up offering :

https://www.google.com.tw/search?q=...&oe=utf-8&gws_rd=cr&ei=-TcrWaqMI8SE8wW27YGQAQ

I'll probably add a couple of questions after reading more of the google links.
 
Last edited:
HappyTrader said:
Thank you kindly Wintergasp.

So the 'step up' so to speak, from 'Discount Brokerage' firms would be 'Prime Brokers'. And the main benefits of Primer Brokers would be additional markets and instruments. So a good choice for Hedge Funds or Institutions, but perhaps less attractive to individuals who only trade mainstream products.

I.e., if you are only trading S&P 500 listed equities and do not use margin, you really aren't going to gain much/anything from a Prime Broker.

Are there other options out there, or am I looking for something that doesn't exist?
More...
I would say a broker that is specific to what you do. If you're doing futures / options, try to look at ADM Investor Services, RJO Brien, etc.
They have a 100k-ish minimum and you'll have at least 1 point of contact who takes you out to the pub and who you can chat about trading with. Not saying this is a huge service, but compared to a "call the helpline" discount brokerage firm, at least here you can call a guy at 2am, say "my platform doesn't work what do I do?".

@HappyTrader you're correct. If you start to trade sizes though, it will be different, because you don't do a clip of 10,000 contracts without either limit orders optimization or OTC block trades. I'd say really having a central point of contact is still a very valuable service... and these guys are competitive pricing wise.

Dumb example, I have an account with ADMis, the guy reminded me that today is early-close due to bank holiday, he knows I only do intraday and that this might cause my cut-off time to be after the actual close of the market.

@luisHK Put 1m$ + on IB, call the broker you want for the market you want (e.g. a polish inter dealer broker if you want to trade a particular polish security) and organise a give-up between your polish broker and IB. This way you call your polish broker, tell him to buy 1M worth of XXX and at the end of the day the security is on your IB account.

PS: I know that Robert from Lightspeed Trading is around, so to be fair they would also offer the same premium-ish service that ADMis and RJO offer, probably at a better rate.
 
  • Like
Reactions: aex
You must log in or register to reply here.
Back
Top