Financial stability of Interactive Brokers

[def]

We updated our strength and security page here: https://www.interactivebrokers.com/en/general/financial-strength.php
It also points to a video in where Thomas Peterffy, discusses our strong cash position, short duration of our portfolio, daily mark to markets and more. Don't underestimate that we have historically only invested excess funds in short term deposits and US Treasuries. That enables our ability to match changes in interest rates (currently paying 4.33% on USD) where other brokers are offering much less as many are either greedy or stretched out longer on the curve where they have no choice but to offer lower rates or operate at a loss.

https://www.cnbc.com/video/2023/03/...on-in-cash-says-chairman-thomas-peterffy.html

If the above links aren't clear, let me know.

 

[engineering]

I have discussed about IB's margin policy in my previous post. You obviously didn't read it so I am going to quote it here again:

No. I'm just not going the pretend that anyone is always going to predict all market moves. Sometimes people get caught out. It's the nature of the business.

IB has done that on several occasions. If you have an account with IB, you would know that because IB would send out margin rate change emails every time they change their margin rates for certain securities.

It you were more thoughtful you might consider the possibility that I have a cash account, rather than calling me a liar. Again, the emails are going to try to anticipate what might happen, but they just don't know everything. No one does.

That's not true.

Actually, loaning out shares is pretty much a default feature for any margin account.
You should learn more instead of just calling someone a liar when the facts don't match you pre-concieved notions.

Did you even stop to think for a second about why that feature is only available to those with a cash account?

" IBKR's Right to Loan/Pledge Client Assets: As permitted by law and without notice to Client, IBKR is authorized by Client to lend to itself or others Client securities or assets (generally, securities that may be held in a margin account) and pledge, or re-pledge (or, for margin accounts, hypothecate or re-hypothecate) Client's securities and assets, separately or together with those of other Clients, for any amount due in any IBKR account in which Client has an interest, without retaining in IBKR's possession or control a like amount of assets. IBKR may receive financial or other benefits by loaning Client securities and IBKR may retain such benefits without disclosing the amount of or otherwise accounting for such benefits to Client. "
https://gdcdyn.interactivebrokers.com/Universal/servlet/Registration_v2.formSampleView?formdb=3203

Again, it's not that I think IBKR is particularly shaky, just that it like to consider what could happen and how it might hurt me.

 

[murray t turtle]

We updated our strength and security page here: https://www.interactivebrokers.com/en/general/financial-strength.php
It also points to a video in where Thomas Peterffy, discusses our strong cash position, short duration of our portfolio, daily mark to markets and more. Don't underestimate that we have historically only invested excess funds in short term deposits and US Treasuries. That enables our ability to match changes in interest rates (currently paying 4.33% on USD) where other brokers are offering much less as many are either greedy or stretched out longer on the curve where they have no choice but to offer lower rates or operate at a loss.

https://www.cnbc.com/video/2023/03/...on-in-cash-says-chairman-thomas-peterffy.html

If the above links aren't clear, let me know.

%%
He[mr TP] did not define big banks that he has some of the money in;
but most anybody could figure he will do better than SVB.LOL
Even better he is not woke= broke.
IBKR used to have a rule about have 2 broker$, even if they changed that rule good rule anyway.
{Edit i could have gotten ripped off with a good chart like SLB, but not to badly because eventually i find out if they are woke broke.
Bad character\ good collateral\ bad capacity to pay\ bad conditions\bad concentration\bad cash }Maybe SVB could not help much tech concentration, but they sure an help the other \character, bad cash about 7% when industry standard was about13%.

 

[TheDawn]

No. I'm just not going the pretend that anyone is always going to predict all market moves. Sometimes people get caught out. It's the nature of the business.



It you were more thoughtful you might consider the possibility that I have a cash account, rather than calling me a liar. Again, the emails are going to try to anticipate what might happen, but they just don't know everything. No one does.




Actually, loaning out shares is pretty much a default feature for any margin account.
You should learn more instead of just calling someone a liar when the facts don't match you pre-concieved notions.

Did you even stop to think for a second about why that feature is only available to those with a cash account?

" IBKR's Right to Loan/Pledge Client Assets: As permitted by law and without notice to Client, IBKR is authorized by Client to lend to itself or others Client securities or assets (generally, securities that may be held in a margin account) and pledge, or re-pledge (or, for margin accounts, hypothecate or re-hypothecate) Client's securities and assets, separately or together with those of other Clients, for any amount due in any IBKR account in which Client has an interest, without retaining in IBKR's possession or control a like amount of assets. IBKR may receive financial or other benefits by loaning Client securities and IBKR may retain such benefits without disclosing the amount of or otherwise accounting for such benefits to Client. "
https://gdcdyn.interactivebrokers.com/Universal/servlet/Registration_v2.formSampleView?formdb=3203

Again, it's not that I think IBKR is particularly shaky, just that it like to consider what could happen and how it might hurt me.

How does loaning out shares have anything to do with the default risk of IB? Can you please explain? If the market crashes like what everybody is predicting supposedly because of these bank failures, the shares that you loaned out would've decreased in value and the borrowers would have even less problem returning them to you so where is the risk?? Where is the risk to IB?? You don't read my posts, you don't know how IB's margin policy works and you have no idea about how the stock yield enhancement program works or how it impacts IB or its supposed default risk. Whether you are a liar or not still needs to be determined (not that I care) but you certainly are a troll who has no idea how everything works and is just here for the attention.

Done talking to you.

 

[TheDawn]

We updated our strength and security page here: https://www.interactivebrokers.com/en/general/financial-strength.php
It also points to a video in where Thomas Peterffy, discusses our strong cash position, short duration of our portfolio, daily mark to markets and more. Don't underestimate that we have historically only invested excess funds in short term deposits and US Treasuries. That enables our ability to match changes in interest rates (currently paying 4.33% on USD) where other brokers are offering much less as many are either greedy or stretched out longer on the curve where they have no choice but to offer lower rates or operate at a loss.

https://www.cnbc.com/video/2023/03/...on-in-cash-says-chairman-thomas-peterffy.html

If the above links aren't clear, let me know.

Appreciated it. We have confidence in the prudence and the financial security of IB. Ignore @engineering, he/she is just a troll.

 

[engineering]

How does loaning out shares have anything to do with the default risk of IB? Can you please explain?

Simple. When you loan something to someone else, you might not get it back. That's something most of us figure out in grade school so I'm not sure why it's such a hard concept here.
I don't think it's a very likely scenario with IBKR, but it's a basic possibility any time you loan something out. The situation could be totally outside their control, for example sanctions against a country, market shutdown, etc.

you have no idea about how the stock yield enhancement program works or how it impacts IB or its supposed default risk.

Actually, I understand it perfectly. You don't seem to understand that margin accounts are loaned out as a matter of course at just about all brokers. This is why you can sign up for this program from a cash account but not a margin account.

I even posted the exact language from IBKR user agreement that specifically says they loan out margin accounts, with a link to the source.

Done talking to you.

Not surprised. Between being factually incorrect and the ad hominems, you're just embarrassing yourself.

 

[def]

Actually, I understand it perfectly. You don't seem to understand that margin accounts are loaned out as a matter of course at just about all brokers. This is why you can sign up for this program from a cash account but not a margin account.

To clarify and sightly correct: the shares can be lent out of margin account but they must be fully paid shares.

https://www.interactivebrokers.com/en/pricing/stock-yield-enhancement-program.php
The program is available to eligible IBKR clients who have been approved for a margin account, or who have a cash account with equity greater than USD 50,000 (or equivalent).

one other comment: when shares are lent out, cash collateral is provided to IB from the party borrowing. if the shares are not returned, we would keep the cash. There are certain risks, which are explained in the link above. We do our best to mitigate them of course but the end client can decide whether or not to enroll in the program. also not, enrolling in the program does not mean your shares will be lent out as it is supply demand driven.

 

[murray t turtle]

Simple. When you loan something to someone else, you might not get it back. That's something most of us figure out in grade school so I'm not sure why it's such a hard concept here.
I don't think it's a very likely scenario with IBKR, but it's a basic possibility any time you loan something out. The situation could be totally outside their control, for example sanctions against a country, market shutdown, etc........

%%
I learned something new about margin past 52 weeks, even if never affects me.
During bear of 2008or 2000-02\ TD Bank's Ameritrade had to auto sell some clients stocks, [usually@ a terrible panic price due to bear markets]........................................
But in AmeriTrades founder Joe's book he noted some did not get foreclosed on so to speak\ he said by the time they got the FDX mail /market had turned around/LOL.G ood point on market turn........
Lumber tariff$ on Canada helped overprice USa housing.
Like one lady said ,[ not to bright] said ''dont tell me worrying does no good most of the things i worried bout NEVER happened''LOL
I like IBKR Traders insights; but like Rich dennis wise quote even better ''do your own research''