IB settlement instructions

T

tonyzhou

Hi,

I saw "settlement instructions" in the IB account management. Just wondering how to use this feature. I can buy stock and settle my stocks somewhere else? And when I want to sell, I just transfer back? Anyone has experience like that? I think it is good idea for safety if I can put my stocks somewhere else, such as banks. Just do not know how to do it. Hope someone share his experience
 
It is for people with assets held at prime brokers. IB executes the trade, but it settles away at Goldman, Morgan, etc. You could probably do it too, but be prepared to pay fees to do so.
 
Hi, Traveller



So I need to open account with Goldman? Interested what is the possible fee if I want to do it? What type of account should I open? Thank you
 
If you have to ask, you can't afford it. Prime brokerage services usually start for 7 figure accounts. I'll defer to others here for the specifics.

If you have a few securities positions at IB and just want to move them to another account, just do an ACAT transfer.

What is it you are trying to accomplish?
 
Hi, traveller,

Is the ACAT transfer free? I think it might not be safe to put that in IB. But IB's low commission is very attractive to me. So I am thinking doing transaction with IB and put my share somewhere else under my name. If I am right, all the shares I buy is under IB name on behalf of me. If something bad happens, I think it is possible that my shares are gone. So I am looking for a way that the share I buy is under my name. I am also looking for a safe way for the unused cash part. As non-US person, it is hard to transfer money freely across the board.

Many US bank has problems now. Is there someone who has over the FDIC insured limit money in the bank? Their money are gone? And did this happen before that broker bankruptcy and client's money and stock are gone? I know Refco and etrade has problem, but do not know what happens to their customers
 
I read IB and the total Lloyd’s supplementary protection is 150M. That is so little. Say client over 1M, of which 500,000 is covered by SIPC, then this number can fully cover only 300 client. Am I right or miss something?
 
Quote from tonyzhou:

I read IB and the total Lloyd’s supplementary protection is 150M. That is so little. Say client over 1M, of which 500,000 is covered by SIPC, then this number can fully cover only 300 client. Am I right or miss something?
More...

The IB group is the largest non-bank broker/dealer. The group has over $4.6 BILLION in capital. Of course I'm biased but I do believe IB's financial strength and capital base makes us a secure place to hold your equity. You actually may be better off many of the banks which have large debt and questionable tier 2 capital. For more on the groups financial strength, take a look here:

http://www.interactivebrokers.com/en/general/about/ibgStrength.php
and
http://www.interactivebrokers.com/en/general/education/faqs/safetyFAQ.php?ib_entity=llc
 
Quote from tonyzhou:

Hi, traveller,

Is the ACAT transfer free? I think it might not be safe to put that in IB. But IB's low commission is very attractive to me. So I am thinking doing transaction with IB and put my share somewhere else under my name. If I am right, all the shares I buy is under IB name on behalf of me. If something bad happens, I think it is possible that my shares are gone. So I am looking for a way that the share I buy is under my name. I am also looking for a safe way for the unused cash part. As non-US person, it is hard to transfer money freely across the board.

Many US bank has problems now. Is there someone who has over the FDIC insured limit money in the bank? Their money are gone? And did this happen before that broker bankruptcy and client's money and stock are gone? I know Refco and etrade has problem, but do not know what happens to their customers
More...


I wouldn't worry about IB. They have a sound balance sheet, and SIPC protected backed by the US Government.

As for the fees, unless you are trading very large amounts, the fees per trade to clear your trades away from IB will dwarf the commission. Let's say you find a broker that will do this. Your commission at IB might be $5, but the broker actually holding your money and stocks is probably going to charge a per-transaction fee of $50 or more to do the paperwork.

I am not an expert about this, but I generally think it's just not worth it for individual investors unless they are doing a lot of size and volume.

You can look up any of IB's fees at their website. Pretty sure ACAT incoming is free. Not sure if they charge for outgoing transfers.

Fundamentally, DVP/RVP is different from transferring account positions via ACAT. Under DVP/RVP, money and stock transfers happen each time a position is bought or sold. ACAT is a one-way transfer. You initiate the transfer, then money/stocks move to another account, but the receiving account doesn't pay for them.

Good luck.
 
Hi, jef

I am happy to here answers from IB. But I have to say that the answer is standard and did not remove my concern.

As all I read, my understanding is that if I have account over $500,000, it is POSSIBLE that I cannot get my money back for the over $500,000 part.

I need to know clearly if my understanding is right or wrong. If I am right, I need to consider put additional money in another company for safety.

I do love IB's low commission. But I also need to consider the safety for my fund. Manage several accounts in different company is heavy work, and I also need to find out which way is better: paying high commission in other company or paying low commission with IB and then transfer stocks to other company.

Thank you.
 
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