IB Changes Futures Pricing
- Thread starter JackR
- Start date
My guess is the risk to them in the futures business. They have much greater risk as a clearing member ( I think) than they do on the equities side. IB is very risk averse and had no hesitation whatsoever in raising the "performance bond" requirements during the very high volatilty period in 08-09. I'm sure that lost them both income and accounts. How many other brokers require $10K to open an account?
I'm willing to bet they monitor futures trading volume versus account and keep track of the loss of futures traders and the types of accounts that go away. They can then weigh the account loss vs commission loss and adjust rates to maximize profit and minimize account loss.
Jack
I'm willing to bet they monitor futures trading volume versus account and keep track of the loss of futures traders and the types of accounts that go away. They can then weigh the account loss vs commission loss and adjust rates to maximize profit and minimize account loss.
Jack
Risk and losses due to customer futures trading are minimized by IB risk control practices. Shorting options is a riskier business than the futures business and IB has no problem going after options business by offering very low commissions.
IB clearly has the best risk controls of any futures broker. They have high intraday margins (no risky $500 or $1000 margin on ES/NQ/YM) and autoliquidation of positions at any time when margin is violated.
IB clearly lost futures account business during the high volatilty period in 08-09 when they raised intraday margins to overnight levels.
They aren't going to gain share in the futures business by keeping futures commissions too high. With IB's cost levels and automation the futures part of the business has to be very profitable for them.
IB clearly has the best risk controls of any futures broker. They have high intraday margins (no risky $500 or $1000 margin on ES/NQ/YM) and autoliquidation of positions at any time when margin is violated.
IB clearly lost futures account business during the high volatilty period in 08-09 when they raised intraday margins to overnight levels.
They aren't going to gain share in the futures business by keeping futures commissions too high. With IB's cost levels and automation the futures part of the business has to be very profitable for them.
I agree with jeb. A few threads to keep in perspective while discussing this and why a broker should not be chosen for commission only:
http://www.elitetrader.com/vb/showthread.php?s=&postid=2786065#post2786065
http://www.elitetrader.com/vb/showthread.php?s=&threadid=196397
http://www.elitetrader.com/vb/showthread.php?s=&threadid=192249
If you have any significant money in your account, please do not do business with a $500 per contract margin bucket shop. At $4 r/t it's less than 1/3 of a ES tick for crying out loud
. If they reduce the commission further down the line, it's just extra gravy that will make no impact whatsover on my trading career.
Need even cheaper prices because your volume is very high? IB's unbundled pricing is maximum of 85 cents down all the way to 25 cent one way. Rest is exchange fees. Get on with a exchange membership and knock those prices down!
Need even more security for your money? Move your money to a proper "wealth manager" (it has to be a pretty big nut) like Northern Trust et. al, and "trade away" to a cheap broker like... I don't know... whoever. Best of both worlds - super security for your money and cheapest commission you can get. But unless the trader has a big account and trades a lot, commision discussion is becoming mostly academic.
http://www.elitetrader.com/vb/showthread.php?s=&postid=2786065#post2786065
http://www.elitetrader.com/vb/showthread.php?s=&threadid=196397
http://www.elitetrader.com/vb/showthread.php?s=&threadid=192249
If you have any significant money in your account, please do not do business with a $500 per contract margin bucket shop. At $4 r/t it's less than 1/3 of a ES tick for crying out loud
. If they reduce the commission further down the line, it's just extra gravy that will make no impact whatsover on my trading career.Need even cheaper prices because your volume is very high? IB's unbundled pricing is maximum of 85 cents down all the way to 25 cent one way. Rest is exchange fees. Get on with a exchange membership and knock those prices down!
Need even more security for your money? Move your money to a proper "wealth manager" (it has to be a pretty big nut) like Northern Trust et. al, and "trade away" to a cheap broker like... I don't know... whoever. Best of both worlds - super security for your money and cheapest commission you can get. But unless the trader has a big account and trades a lot, commision discussion is becoming mostly academic.
Where are you getting the extra 9 cents from?
Over 1000 contracts is $1.14 CME fee, $0.01 NFA fee, $0.45 IB Execution fee and $0.20 IB Clearing fee for a total of $1.80. This is identical to the previous IB brokerage charge for over 1000 contracts.
I don't know any futures broker with published (or well known) rates that meet your criteria. IF you want to negotiate rates then MF Global is one possibility. All of the cheaper futures brokers are privately held.