Looking to switch from Interactive Brokers to a new broker dealer
- Thread starter bramnil
- Start date
I'd think long & hard before leaving IB. I'm not suggesting you should not make a switch but they are a well capitalized first rate firm that stays on top of technology and such firms are few and far between. I suggest you open up with your new firm and run them side by side for a month before you close the IB account.
I love the well capitalized comments. So was Kidder Peabody, Bear Sterns, Lehman Brother, etc....In the past larger has not been better. Not having a trading arm has provided more protection. IB has Timber Hill which is owned by the parent company.
def
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1245 - you need to compare apples to apples. While Timber Hill conducts proprietary trading, it is completely ring fenced into a separate company. As of March 31, IBLLC had over $2.6 billion in net capital and excess net capital of $2.4. Group Capital is over $5 billion but unlike the firms you mention above, the group doesn't mess around in hidden off balance sheet products.
You are not suggesting that I should take comfort in an undercapitalized firm? Kidder was so long ago that I don't remember the specifics of their failure but it was pretty clear in the weeks that led up to the Bear and Lehman collapses that they were in trouble. The advantage of capital is that there is usually a bit of time for the warning bells to be heard. The public quote also gives you a clue as to a large scale distribution. ABC securities in Jersey City with no quote and a million in capital can literally disappear overnight.
Capital is good, very good. No trading desk or a trading desk that takes very little risk is very good. I would suggest the Canadian banks are safer than most.
DEF, if I had an account at IB I would NOT be concerned about my capital. If I were a fiduciary for other funds like a hedge fund and those funds were substantial, I would multi-prime and use a bank for excess funds. That way I have at least three places where my clients funds rest.
From what I know of Timber Hill's trading, there is not a lot of risk. However, you can't guarantee they will NEVER have a rouge trader, have system problems like KCG or EVER lose more than than capital. That would effect the Group. Again, I don't have this concern but it still exists as long as Timber Hill is part of the parent company.