IB and SVXY in an IRA

K

Kirribilli

Questions on the email I just received from IB (below)

1. Why are they doing this? the upcoming fiduciary rule changes?
2. Brokers that will continue to allow SVXY options and SVXY in an IRA?

You are receiving this notice as your IRA account ******** currently holds option positions which must be closed or transferred prior to December 23, 2016. As background, these options deliver securities organized as publicly traded interests in limited partnerships, the holding of which IB will no longer support for retirement accounts. A list of the securities in which you hold positions is provided in the table below.


Symbol

SVXY


As a result of this decision, IB is no longer accepting opening orders for these options or their underlying securities and we ask that you either close or transfer these positions to an IRA account maintained with another broker at your earliest convenience and in no event later than the December 23, 2016 deadline.


Account Holders who fail to act by the December 23, 2016 deadline will be subject to forced liquidation of positions deemed ineligible including any securities delivered prior to that as a result of option exercise.
 
I haven't heard anything.

Perhaps, IBKR is concerned about their ability to pursue customer assets or (at least) the cost of pursuing your assets under that structure.
 
Kirribilli said:
Questions on the email I just received from IB (below)

1. Why are they doing this? the upcoming fiduciary rule changes?
2. Brokers that will continue to allow SVXY options and SVXY in an IRA?

You are receiving this notice as your IRA account ******** currently holds option positions which must be closed or transferred prior to December 23, 2016. As background, these options deliver securities organized as publicly traded interests in limited partnerships, the holding of which IB will no longer support for retirement accounts. A list of the securities in which you hold positions is provided in the table below.


Symbol

SVXY


As a result of this decision, IB is no longer accepting opening orders for these options or their underlying securities and we ask that you either close or transfer these positions to an IRA account maintained with another broker at your earliest convenience and in no event later than the December 23, 2016 deadline.


Account Holders who fail to act by the December 23, 2016 deadline will be subject to forced liquidation of positions deemed ineligible including any securities delivered prior to that as a result of option exercise.
More...
It's a paperwork pain and can trigger a bunch of taxable events if you have over a certain amount of gains. They probably just didn't think it was worth developing the software or hiring the people to handle it based on the numbers they had holding these in retirement accounts. I haven't received a similar notice for similar funds held at another brokerage so I'm guessing this is unique to IB.
 
Kirribilli said:
Questions on the email I just received from IB (below)

1. Why are they doing this? the upcoming fiduciary rule changes?
2. Brokers that will continue to allow SVXY options and SVXY in an IRA?
More...

I talked to customer service today, and they said that only way around this was to transfer position to another broker or close it out. However, the put options(on one security) I sold a few days ago were illiquid so not interested in getting reamed on that one. They said something about I could file a grievance or some BS like that to recover damages, but I am not hopeful on that. I already have another open(unfunded) IRA at Scottrade, and I think I can get the funds and puts tranferred before the 23rd but it will be close. I had to confirm with Scottrade that the MLP I have is eligible for IRA's, which they did. IB is supposed to call me again on Friday as the customer rep. wanted to be sure of what my options were.

I believe this was the only notice that they sent out on this, which is very strange as the customer rep. admitted that it gives me virtually no time to transfer the position out.

Like the other poster said I think they want to cut costs and from their experience with investors that get into these things, they create too many problems.
 
Possibly related... IB sent me an email today (their monthly "communique").. and in it was this:

IRA Account Updates
In the past, our IRA customers were responsible for a $7.50 quarterly fee charged by our trustee. Beginning in January 2017, IRA customers will no longer have to pay this fee.

Effective January 1, 2017, Interactive Brokers will be the trustee for IRA accounts previously supported by Equity Trust Company.
 
If you just want to hold the underlying, you might want to consider switching from SVXY to XIV or the somewhat different and currently tiny VMIN. I realize that this would not help much with options, as in steve3001's situation, because there are no options for XIV and only a minuscule options market for VMIN.
 
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