We can buy t-bills on IB now. I think everyone should be able to get interest on the 1st 10K from now on if they dont like the EFP risk.
IB no interest on first 10K rule, what do you do with the money?
- Thread starter Daal
- Start date
If I read the IB website correctly, initial and maintenance margin requirements, for t-bills, are only 1%, so in your example, your intraday buying power would be reduced from $200K down to $198K, and your overnite buying power would be reduced from $100K down to $99K.
If you instead shorted $50K of EFPs, your buying power would be much more drastically reduced, from $200K down to $150K intraday, and from $100K down to $50K overnite.
The disadvantage of T-bills is that their return is far less than that of EFPs.
1 thing to note that you will never get tagged with a credit balance and get charged a high interest rate by IB with t-bills as you would if you sell the EFP and the stock goes up. Also, t-bills is risk free while EFP is only back by the OCC which is AAA. With that being said, i still like EFP more than t-bills but will consider splitting between EFp and t-bills.
I last checked t-bills has not been rolled out yet. Only t-notes can be traded.
I last checked t-bills has not been rolled out yet. Only t-notes can be traded.
And guys, please vote for this EFP features on TWS. I think this is really good for EFP users.
http://www.interactivebrokers.com/en/general/poll/poll.php?sid=3860
Please vote for my suggestion on the feautre poll to add min nomial EFP $ amount. By adding the min amount, we can set a number between the max and min to scan for the desired month and filter out dividend paying stocks by setting the min to 0. Thank you!
http://www.interactivebrokers.com/en/general/poll/poll.php?sid=3860
Please vote for my suggestion on the feautre poll to add min nomial EFP $ amount. By adding the min amount, we can set a number between the max and min to scan for the desired month and filter out dividend paying stocks by setting the min to 0. Thank you!
If you're going to buy T-bills/notes (and who wouldn't want to pull that 1.75% down), you might be better off just using treasurydirect.gov (plus, they have a fun and amusing security system online - no one is getting your money out of there but you (same with IB though)).
Another thing - given the recent 'uncertainty' in the various financial institutions, I have moved my money around to more places and set up a backup brokerage (to IB, which I should have done long ago). More hassle but I'm taking a posture of paranoia for a while.
Another thing - given the recent 'uncertainty' in the various financial institutions, I have moved my money around to more places and set up a backup brokerage (to IB, which I should have done long ago). More hassle but I'm taking a posture of paranoia for a while.
Even investing in treasury bills / notes, wouldn't you still have the same basic problem where your last $10K will still earn $0? You would have to continually monitor your accounts to have your entire cash invested in T-bills to get full interest? Currently t-bills are yielding around 1.6% and IB is paying out 1.47%. but last month, IB was paying out more than the t-bill yield.
If you invest in Treasuries or EFPs, your entire investment will generate a full return, including the first $10K. The failure to pay interest on the first $10K refers only to interest paid by IB on cash in your account, not cash invested in Treasuries, EFPs, or anything else.
Fluctuations in your account equity would require monitoring and adjustments in the amount of your Treasuries or EFPs, in order to make sure that you are getting the full return you desire. It is easy and worth the effort to do so. It is far easier than trading profitably. If you can't manage it, then you aren't going to succeed as a trader, either.
I'm not sure you are aware of this, but IB's EFPs pay almost twice as much as IB pays on cash, or as Treasuries pay.
Say you are a futures trader. You use the t-bills for your collateral and earn interest on the full balance. Depending on how small your balance is, the return of 1.47% on the whole balance is still more than the return of 1.6% that doesnt pay on first 10K. With t-bills, you dont really have to monitor your accounts that frequently like you would with EFP. You are only adjusting for all your mark to market P/L and buy or sell t-bills depending on how much debit or credit balance you have.