IB in Australia

I heard some Australians complaining about the forex transaction costs charged by the big Aussie banks. IBKR charges close to spot rates while the Aussie banks charge around 3% based on what I heard. That is a rip-off if true. The really skeptical are raising conspiracy theory as to whether the regulator is getting too cosy with the big banks at the expense of consumers by denying consumers better priced competition. Anyway, I am not Australian and it is not my place to rant. I am getting worried whether the same thing can happen to my country (Singapore). Certainly, I hope not.

Epicurus said:
Help_me please, I don't know the details on this and curious if someone is more informed than me. However, I suggest it's not related to IBKR company issues. A number of large US brokers left the Australian market some years ago and we are quite poorly serviced here for the Options that I trade. I believe it's simply that the cost and compliance work here isn't justified by the size of the market. I doubt that relates to protection of local businesses, although possible, but mostly I think just an outcome of previous financial scandals and collapses over the years that have built up the regulations we have.

Our main local brokers have generally ended up owned by the biggest banks, which already have stringent compliance obligations anyway. We also have an active CFD market so get the UK based platforms operating here in cfds and forex. As the US doesn't allow CFD's, US brokers I believe are geared more to Options, which is miniscule in Australia compared to US, so they are left competing for Forex, Equity and other customers basically against some strong competitors in a limited size market. The main users of IB in Australia would be traders wanting access to the US market, so I guess they're just now getting around to setting up properly to pick up these customers.
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Yeah, I think it's cost related... and probably a push from the domestic brokers (that are expensive) to kick out the others.

I don't think IB clients necessarily want to trade options on the Australian market, since those are shit... to wide, not liquid... but they (me ;) ) want global coverage.

Also, I think lot's of people in Australia trade FX, in which IB had issues with the ASIC. ASIC accused them of making markets in FX for clients without a MM license, which I believe is BS, since they provide the true market... and they kinda shrug their shoulders and left. And portfolio margin was an issue as well. Apparently it's fine for Australians to throw away millions at the Pokies or horse/dog racing... but when it comes to margin in a sophisticated trading risk-setup... that's not allowed.

Fact is, IB is the only one that provides global trading and is relatively cheaper in fees. None of the brokers in Oz want that competition....
 
helpme_please said:
I heard some Australians complaining about the forex transaction costs charged by the big Aussie banks. IBKR charges close to spot rates while the Aussie banks charge around 3% based on what I heard. That is a rip-off if true. The really skeptical are raising conspiracy theory as to whether the regulator is getting too cosy with the big banks at the expense of consumers by denying consumers better priced competition. Anyway, I am not Australian and it is not my place to rant. I am getting worried whether the same thing can happen to my country (Singapore). Certainly, I hope not.
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Rant is right on the mark :fistbump:
 
I take your point about AUS not being a big market for IB .. but that depends upon which product... Infact ASX share trading with AUS brokers is so expensive and IB can kill that market segment with lower fees... or in the FX CFD space they can come is also! any way at the end of the day it has certainly left a bad test in mouth and IT DOES NOT LOOK GOOD FOR THEM . ASIC is a respected regulator (although many believe it it sometimes acts like a toothless watchdog)
Many aspects of AUS financial and other services market is dominated by duopoly/ monopoly or a group of 4.. and consumers are hungry for alternatives... IN IB case their customer service cost are distributed as they have staff spread across the globe so all they have to have is a skeleton staff in AUS.. so if IB is listening get your act together.. I rest my case :sneaky:
 
JackRab said:
Yeah, I think it's cost related... and probably a push from the domestic brokers (that are expensive) to kick out the others.

I don't think IB clients necessarily want to trade options on the Australian market, since those are shit... to wide, not liquid... but they (me ;) ) want global coverage.

Also, I think lot's of people in Australia trade FX, in which IB had issues with the ASIC. ASIC accused them of making markets in FX for clients without a MM license, which I believe is BS, since they provide the true market... and they kinda shrug their shoulders and left. And portfolio margin was an issue as well. Apparently it's fine for Australians to throw away millions at the Pokies or horse/dog racing... but when it comes to margin in a sophisticated trading risk-setup... that's not allowed.

Fact is, IB is the only one that provides global trading and is relatively cheaper in fees. None of the brokers in Oz want that competition....
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Keeping aside the conspiracy theory of ASIC protecting local boys

- When you say "clients without a MM license, which I believe is BS, since they provide the true market."
What you mean? Everybody who provides FX trading in AUS/ IG/Oanda etc has a AFSL
be it MM or ECN
Not rocket science and why is it BS?

- Margin trading IS allowed in Australia for shares and for CFD ( built in margin)
It is even more leveraged than T50 on quality stock it is 1:3 not 1:1

Infact more innovative and sophisticated use of margin was turned in to a product few years ago called "Protected Equity Loan"
Borrow 100%
NO Margin Call
NO prior trading history
Retain ownership for dividend purpose
Wonder how this would work ! do a search "Protected Equity Loan"
US does not have such a product
 
helpme_please said:
I too believe that IB is safe. I am more inclined to believe that it was a business decision IB made. I suspect IB reached the conclusion that Australian customers are not profitable enough to be worth its attention after compliance cost. Nevertheless, if IB were to take the long-term view, it should have just bitten the bullet. It has left a bitter taste on Australian customers after this ugly episode. If IB wants to take back this Aussie market after the regulatory issues have been resolved, it will be a uphill task now. For the sake of customers, I think IB should put aside its unhappiness with the regulator and bite the bullet. Australia is after all an amazing country with 25 years of uninterrupted economic recession. Certainly not to be ignored. By the way, I'm not Australian but an admirer of the lucky country.
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helpmeplease, appreciate that you like the country, but we can be a bit of a provincial backwater when it comes to trading services. IB won't have any problems picking up customers here if they offer decent service.

OptionsXpress are in the process of transferring their platform over the Charles Swaab branding I understand, but they are basically the only other real competition here for traders wanting to access the US options market. They have been too expensive previously for local options trading in my view.

I trade local ASX options through ANZ Bank, which bought out the earlier Etrade Australia operations, but I'd love IB and Swaab competing hard here to provide US market access.
 
JackRab said:
@traderjo you can still trade with IB... you're just signed up to their USA office and can't trade spot-FX and on margin.

@Epicurus, where did you read that IB resolved issues with ASIC?
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I know I can trade with IB but my point is why are they not offering all the services to AUs consumers that they offer to retail clients around the world and US brokers liek OE do offer these services within AUS with ASIC compliance done and dusted
 
traderjo said:
I know I can trade with IB but my point is why are they not offering all the services to AUs consumers that they offer to retail clients around the world and US brokers liek OE do offer these services within AUS with ASIC compliance done and dusted
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For the same reason we get charged more for online goods and services... and we pay amongst the highest energy rates... etcetc..

The 'regulators' are pencil pushing idiots who get blowjobs under the table by any domestic party with a large interest in keeping competition out.

Progress is held back in Australia... the only progress that's possible is when you deliver a big sack of money to the right people....
 
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