IB new forex spreads

Quote from J-Trade:

So to take advantage of this feature, one would need to duplicate any IDEALPRO currencies with their IDEAL "brother" & execute accordingly ? But then exiting the trade could be disadvantageous by a larger amount, as the IDEALPRO spreads are generally much better ?

Forgive me if I am not correctly grasping this feature...:confused:
I would very much like to switch my Fx trading to my IB account.

J.
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Consider the following

EUR.USD quoted 1.3110 - 1.3112 20Mx20M on the consolidated IDEALPRO order book (large order book).

There is a bid 1.3111 for 12'000 EUR, smaller than the 25K minimum order threshold on IDEAL (the small order book). To alert clients of the existence of this 'oddlot', we show a small 'book' symbol. If you rest your mouse on this symbol, you will see the details of the small improving order.

To trade against the small order, you will have to send in an order directly to IDEAL. We are still working on the automatic sweeping of small orders, i.e. tying together IDEAL and IDEALPRO seamlessly. I expect this to take another 4-6 weeks.

If all you are trading are these small balances, then yes, you are not guaranteed to be able to close at the I-PRO prices. The best way to think of this is that IDEALPRO is the regular order book and IDEAL is an oddlot book. As the commissions for small orders have a $2.50 minimum, it is usually not profitable to clean these up as standalone trades unless there is a 2-3 pip advantage. Once we have the new routing logic in place, sweeps will not sot anything additional to large orders; they will just get the better price on some part of the order.
 
IBj

Looks like quite an improvement on IB's part. Are you guys going to stop double margining crossrates? Crossrate margin is at 4%. That is the most uncompetitive thing about Ideal Pro. 2% is one thing. Tying up 2% on the EUR and 2%on the JPY is uncompetitive and expensive considering many crossess have less volatility.

I have posted about this before. it is the single largest complaint I get from traders using IdealPro. 2% on crosses is competitive and some companies charge 3% on large positions. But you are the only ones I know of that charge 4%.

Have you guys discussed this at all?
 
Quote from TGM:

IBj

Looks like quite an improvement on IB's part. Are you guys going to stop double margining crossrates? Crossrate margin is at 4%. That is the most uncompetitive thing about Ideal Pro. 2% is one thing. Tying up 2% on the EUR and 2%on the JPY is uncompetitive and expensive considering many crossess have less volatility.

I have posted about this before. it is the single largest complaint I get from traders using IdealPro. 2% on crosses is competitive and some companies charge 3% on large positions. But you are the only ones I know of that charge 4%.

Have you guys discussed this at all?
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It really isn't a 4% margin although it may end up feeling like one if you have large positions in many currencies. For example, say your base currency is USD and you put on a EUR.USD trade in 100K. We require you to have 2K EUR to do that, or 2% of the non-base currency position. No problem.

Say, however that you instead do the trade EUR.CHF, also in 100K EUR size @ 1.50. We say: client has 2% of +150K CHF, -100K EUR. We charge 2% on all non-base balances, so 3K CHF (=2K EUR) plus 2K EUR = 4K EUR. Looks like 4%. BUT: if client switches his base currency to EUR (or CHF) the cost to hold this position drops back to 2% since there is now only 1 position in a non-base currency. Of course, this means statements will come in EUR.

Our "margins" are charged on non-base currency balances, not on the FX pair itself. The problem arises from the fact we offer a multi-asset platform. You can trade German stocks in EUR without having EUR. So the risk on a German stock trade is not only in the stock but also in the currency. You can go through an ADR arbitrage example to prove it (buy stockA in USD, sell it in Germany in EUR, transfer the stock across clearing centers, etc).

What we need to do -- and is now possible as a result of releasing position based views on currency trades -- is to separate the risk component of the FX from the amount of money we will let you withdraw. In my above examples, we should continue to restrict the amount you can withdraw to the 2% times the absolute value of the non-base positions (in the above example 4K EUR or equiv in USD). But we should charge margin on something like the net of non-base positions, using the above example, something a bit more than 2% (the math is more complex than this but you get the idea).

The first part of our FX plan is now released (the new user interface). A revamp of the commission model is already out. We have some routing work to do to integrate the large and small order books. I think we will review the margin methods in Q1 2007.

Re: MarketSpace - we will watch to see how it develops. If it turns out to be a serious platform, we will certainly integrate it into our system.
 
IBj.

My base currency is currently in CAD. I do a lot of forex and forex futures trades. I noticed that for a 125K eur future contract my margin is about 4k. about the same for forex. would switching my base currency over to USD reduce my used margin down to 2K?
 
Quote from IBj:

It really isn't a 4% margin although it may end up feeling like one if you have large positions in many currencies. For example, say your base currency is USD and you put on a EUR.USD trade in 100K. We require you to have 2K EUR to do that, or 2% of the non-base currency position. No problem.

Say, however that you instead do the trade EUR.CHF, also in 100K EUR size @ 1.50. We say: client has 2% of +150K CHF, -100K EUR. We charge 2% on all non-base balances, so 3K CHF (=2K EUR) plus 2K EUR = 4K EUR. Looks like 4%. BUT: if client switches his base currency to EUR (or CHF) the cost to hold this position drops back to 2% since there is now only 1 position in a non-base currency. Of course, this means statements will come in EUR.

Our "margins" are charged on non-base currency balances, not on the FX pair itself. The problem arises from the fact we offer a multi-asset platform. You can trade German stocks in EUR without having EUR. So the risk on a German stock trade is not only in the stock but also in the currency. You can go through an ADR arbitrage example to prove it (buy stockA in USD, sell it in Germany in EUR, transfer the stock across clearing centers, etc).

What we need to do -- and is now possible as a result of releasing position based views on currency trades -- is to separate the risk component of the FX from the amount of money we will let you withdraw. In my above examples, we should continue to restrict the amount you can withdraw to the 2% times the absolute value of the non-base positions (in the above example 4K EUR or equiv in USD). But we should charge margin on something like the net of non-base positions, using the above example, something a bit more than 2% (the math is more complex than this but you get the idea).

The first part of our FX plan is now released (the new user interface). A revamp of the commission model is already out. We have some routing work to do to integrate the large and small order books. I think we will review the margin methods in Q1 2007.
.
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That is a good explanation. Yes, you are right we can switch base currencies. And yes you are right forex traders do not like to have to switch base currencies everytime to get a more appropriate margin for the position! You record the positions just like Interbank. It is just the margining of the position is not efficient for non base currency crosses. But the system was never designed for forex traders just currency switchers! Now it is getting designed for forex traders!

It sounds like you guys understand all this and heading in the right direction. With this first set of changes. I am sure you will see your business increase because of it. I consistently see good quotes on the crosses. But out of everyone I know that has an IB account many do not want to hold positions in "non base crosses" because it is such pain with all kinds of small balances left in the account in a handful of currencies etc etc. Plus the way the current system ties up margin. Well it just makes it unappealing for forex traders or at least a pain to forex traders. Very good for hedging portfolios and GREAT for trading vehicles in other base currencies.



I know you guys have heard all this and I cant wait to see all this rolled out.
 
You IB folks really know how to frustrate the hell out of us ;)

The roll out of the TWS Beta 865 was very welcome news. Worked great. Met most (of my) expectations. Then today -- KABOOM !!! Suddenly, after working perfectly with IE7, I get a message telling me that I can no longer log on unless I revert to IE6 -- Jeez Louise !!!

Why oh why do you do this to us. Talk about the proverbial rug getting pulled. Anyhow, I'm not about to revert back to IE6 having just updated all my systems to IE7.

So..... The ten thousand dollar question -- when is the standalone 865 going to be available so that we can once again have access to this wonderful tool (by tool, I'm referring to FX Trader).

Please say its soon. Please, pretty please...............
 
Quote from Turhovach:

You IB folks really know how to frustrate the hell out of us ;)

The roll out of the TWS Beta 865 was very welcome news. Worked great. Met most (of my) expectations. Then today -- KABOOM !!! Suddenly, after working perfectly with IE7, I get a message telling me that I can no longer log on unless I revert to IE6 -- Jeez Louise !!!

Why oh why do you do this to us. Talk about the proverbial rug getting pulled. Anyhow, I'm not about to revert back to IE6 having just updated all my systems to IE7.

So..... The ten thousand dollar question -- when is the standalone 865 going to be available so that we can once again have access to this wonderful tool (by tool, I'm referring to FX Trader).

Please say its soon. Please, pretty please...............
More...

I don't think this has anything to do with the TWS.

The TWS Beta 865 is now in production as the browser version (TWS 865.1). It works with IE7 - I'm using it now, along with Java 1.6.0

FYI...I can't see any tickets today from customers about this issue. (I presume the standalone 865 would be launched sometime next week)
 
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