The regulation of securities and commodities products and brokers1 in the U.S. is administered by two distinct federal agencies, the Securities and Exchange Commission (SEC) for securities including stocks, ETFs, bonds, options and mutual funds and the Commodities Futures Trading Commission (CFTC) for commodities including futures and options on futures.2 While both agencies seek to safeguard customer assets by restricting their use and “segregating” them from assets of the broker, the regulations and manner in which they accomplish this differs. The following article provides a basic overview of two segregation models and additional considerations relating to IB accounts.
Differences between the CFTC and SEC segregation models originate largely from the products themselves, whose characteristics are fundamentally unique. Commodity products, by nature, do not involve an extension of credit by the broker to the customer as a futures contract is not an asset but rather a contingent liability which is marked-to-market and a long futures option, while an asset, must be paid for in-full. Consequently, non-option assets in a commodities account are generally comprised of funds deposited as margin to secure performance on the contracts therein. Since the broker may not use the funds of one customer to margin or guarantee the transactions of another, the commodities segregation requirement (CFTC Rules 1.20 – 1.30) is equal to the gross assets of all customers and the broker needs to add its own funds to segregation to cover customers whose net equity is in deficit.
A securities margin account, in contrast, can facilitate the extension of credit for the purpose of long securities (e.g., stocks, bonds) purchases or short securities sales on a secured basis. The segregation or reserve requirement rules recognize this through special provisions for the protection of each of the cash and securities components, further distinguishing fully-paid securities from those whose purchase the broker has financed and maintains a lien upon. Here, the broker must deposit into a separate bank account the net amount of customer cash balances3, in accordance with a formula set forth in SEC Rule 15c3-3. In addition, the broker must identify and segregate in a good control location (e.g., depository, bank) customer securities which meet the definition of “fully paid” or “excess margin”.
The table below provides a comparison of the main principals of each model.
|COMPARISON OF CFTC & SEC SEGREGATION MODELS|
Separation of Customer Balances
|Commodity customer balances must be maintained separate from firm assets and cannot be used to finance proprietary business activities or to satisfy firm debts.
Funds used for trading on non-US commodity exchanges must be kept separate from those used for trading on U.S. exchanges (even for the same customer).
Commodity customer balances must also be maintained separate from securities customer balances (even for the same customer).
Securities customer balances must be maintained separate from firm assets and cannot be used to finance proprietary business activities or to satisfy firm debts.
Securities customer balances must also be maintained separate from commodity customer balances (even for the same customer).
Priority in the Event of Broker Default
|Commodity customers maintain priority and equal claim over assets in each their respective U.S. segregated and non-U.S. secured pools.
No claim on assets in a commodity pool in which one is not a participant and no claim on securities customer assets.
If commodity segregated assets are insufficient to meet claims and broker is insolvent, customers share equally in shortfall and become general creditors for residual claims.
|Securities customers maintain priority and equal claim over assets.4
No claim on commodity segregated assets.
If securities segregated assets are insufficient to meet claims, broker is insolvent and claims exceed SPIC coverage, customers share equally in shortfall and become general creditors for residual claims.
Gross – the broker may not use the funds of one customer to margin or guarantee the transactions of another and must segregate assets in an amount at least equal to the sum of all customer credit balances.
|Net – broker may use customer cash credit balances to finance, on a secured basis, margin loans to other customers and may lend or pledge a portion of customer securities purchased on margin to other customers selling short.
|Investment of Cash Balances||
Broker is allowed to reinvest commodity customer’s cash balances and retain an interest in the income generated.
Permissible investments include: U.S. government securities, municipal securities, government sponsored enterprise securities, bank CDs, corporate obligations (commercial paper, notes and bonds) fully guaranteed as to principal and interest by the U.S. under the Temporary Liquidity Guarantee Program and money market mutual funds.Securities which are the subject of reinvestment must be maintained in segregated account.
Broker is allowed to reinvest securities customer’s cash balances and retain an interest in the income generated.
Permissible investments limited to “qualified securities” defined as securities which are guaranteed as to both interest and principal by the U.S. government.Securities which are the subject of reinvestment must be held in Special Reserve Bank Account (i.e., segregated).
|Insurance||None||Securities Investor Protection Corporation (SIPC) provides insurance of up to USD 500,000 with a cash sublimit of USD 250,000.|
In addition to the safeguards afforded through segregation, IB employs a number of policies and practices which serve to enhance the safety and security of accounts beyond that outlined above. These include the following:
- IB computes its securities segregation or reserve requirement on a daily rather than weekly basis as allowed by regulation, thereby ensuring timely determination as to the amount required to be reserved and the deposit of funds necessary to satisfy the requirement.
- IB’s does not avail itself of the generally more permissive rules with respect to the investment of commodity customer cash balances. These balances are instead invested in a manner similar to that of securities cash balances (i.e., U.S. government securities) with the exception of an occasional investment in money market funds.
- All customer securities positions are held in the securities segment of the Universal Account as opposed to the commodities (commodities margin met with cash and/or futures options), thereby limiting their hypothecation to the more restrictive rules of the SEC.
- In addition to SIPC coverage, IB maintains an excess SIPC policy with Lloyd's of London which, in aggregate with SIPC, offers insurance totaling $30 million (with a cash sublimit of $900,000), subject to an aggregate firm limit of $150 million.
- IB offers account holders the ability to sweep cash balances in excess of that required for margin purposes in either the securities or commodities segment to the other segment. Details as to this feature may be found in KB1851.
- For additional information regarding IB strength and security, please review the following website page.
Other Relevant Knowledge Base Articles:
1The term broker as used in this article is intended to refer to an organization registered with both the SEC as a Broker-Dealer and the CFTC as a Futures Commission Merchant for the purpose of conducting customer transactions
2Single stock futures are a hybrid product jointly regulated by the SEC and CFTC and allowed to be carried in either account type.
3Including cash obtained through the use of customer securities such bank pledges or stock loans less cash required to finance customer transactions (e.g., stock borrows, customer fails to deliver of securities, or margin deposited for short option positions with OCC).
4Assets, or customer property, which securities customers share in proportion to their net equity claim, include cash, margin securities and fully-paid securities held in “street name”. IB does not hold securities in the customer’s name which are not considered bulk customer property.
- 提供更长时间（21天 ：临时码2天）的保护，能重新激活永久设备，之后便可以弃用；
5、找出图片上与第一个序号对应的三位字母 - 数字密码，将其输入到“卡片值”区域，第二个序号采取相同的做法，两组密码间不留空格。
If you are not a U.S. citizen or entity formed within the U.S. and have an account with Interactive Brokers, you are requested to declare your citizenship or country of formation with the US tax authority (IRS). This declaration can be done online by correctly filling out the W-8BEN form. Filling out this form is an easy process that only takes a few minutes. In the short movie below, we show you where to find the W-8BEN in your IB account management and how to fill it out.
If you fail to declare your foreign citizenship or country of formation, and IB does not have a valid W-8BEN form on file, you are presumed to be a US person/entity without a proper tax certification. As a US person/entity, you will be subject to backup withholding at a rate of 28% on interest, dividends, and substitute payments in lieu; as well as gross proceeds.
Every 3 years the IRS requires a re-certification of the W-8BEN form. IB will ask the beneficial account owner to re-certify their foreign status by re-signing the W8-BEN in order to continue their status as a foreign person and claim the tax treaty benefits. If you experience any problems or have questions regarding the W-8BEN form or how IB handles Non-US persons and entities, select this Tax Information and Reporting link and choose the tab Non-US Persons and Entities or consult the following IRS information page for more details: www.irs.gov/instructions/iw8/ch02.html
The Online Security Code Card serves as a transitional security device, available to users who do not have their permanent device in their possession and who have therefore been issued a temporary passcode for account login purposes. Upon issuance of the temporary passcode IB strongly encourages recipients to log into Account Management and request the Online Security Card with the principal benefits of doing so as follows:
- Enhanced protection from Internet hackers through the assignment of random passcodes at login;
- Provides extended window (21 days vs. 2 for temporary passcode) to secure and reactivate the permanent device, after which it can then be discarded;
- Allows for withdrawals and information changes without the restrictions imposed upon temporary passcode users;
- Can be obtained and printed directly from Account Management and allows for re-activation of the permanent device without Customer Service contact.
The steps for obtaining the card within Account Management are as follows:
1. Select the Manage Account, Security and then Secure Login System menu options;
2. Click 'Yes, I want to participate in the Secure Login System' and then 'Continue'
3. You will be presented with an image of the Online Security Card. Click on the 'Print' option located in the upper right-hand corner (or right click the mouse button to save image to desktop).
4. Click on the 'Confirm' option to activate the card. Two card index values will appear on screen.
5. Reference the three-digit alpha numeric code on the image which corresponds to the first index number and enter into the 'Card Values' field and repeat for the second index number leaving no spaces in between.
6 Click 'Submit'
7. Once you have successfully activated your card you will be provided with the card expiration date along with options to proceed with other tasks.
See KB1042 for video instructions on logging in with the Secure Code Card.
See KB1942 for instructions on re-activating the permanent Secure Login Device
See KB1943 for instructions on requesting a replacement Secure Login Device
How to request trading permissions for IB U.K. Contracts for Difference (CFD's)
Q: Which accounts are eligible for linkage?
A: Eligible accounts include Independent individual and IRA accounts which have matching country and state of legal residence and account title. Accounts held under a Financial Advisor or Introducing broker Broker client accounts may not be linked to accounts held outside that structure.
Q: What are the benefits of linkage?
A: The principal benefits of linkage are ease of access and potential savings in market data subscription fees. Following linkage, all accounts will be accessed via a single User Name, password and SLS device. After login to the trading platform or Account Management you will be provided with a drop-down window for selecting the account you wish to trade or perform administrative tasks thereby eliminating the need to memorize multiple login information or maintain additional security devices.
In addition, as market data subscriptions are billed at a session level (i.e., User Name) and only a single TWS session can be viewed for any one user at a given time, account holders previously maintaining duplicate market data subscriptions for multiple accounts have the opportunity to consolidate those following linkage.
Q: If I link two accounts enrolled in SLS, are there any restrictions with respect to the security device which will remain following linkage?
A: Yes. In the case of a linkage request where the two accounts are SLS enrolled but maintain different devices, IB requires that the account holder retain the device having the highest protection rating as noted at the time of your request.
Q: What do I do with security devices which no longer are operable following linkage?
A: In the case of Security Code Cards, you may discard of the device once the linkage has been processed. For all other devices, you will need to return the device to IB to ensure that your account is not assessed a lost device fee. Click here for additional information regarding returning your device.
Q: Can I maintain multiple groups of linked accounts?
A: No. Once an account linkage has been requested and processed, all subsequent requests must be linked to that original grouping
Q: Can I unlink accounts which have already been linked?
A: No. Once a link has been established it is permanent and cannot be undone.
Q: Does linkage impact the calculation of Minimum Monthly Activity Fees?
A: No. Just as is the case with unlinked accounts, linked accounts are each required to generate a minimum level of commissions each month or be charged the difference as an activity fee. This fee will be assessed to the account in which it was occurred. Please review the website for information regarding Minimum Monthly Activity Fees.
Q: Why has the linkage request which I submitted not been processed?
A: Linkage requests are automatically processed as of the close of business on the day submitted when accounts are SLS enrolled and the individual information on record identical (e.g. mailing address, telephone numbers, email address, etc.). If any of these conditions are not met, the linkage request will not be processed until SLS enrollment is complete and/or Compliance review of the information changes and any supporting documentation necessary to evidence the change has been received.
Q: Once linked, from which account will market data subscription fees be deducted?
A: Account holders are allowed to designate a billing account from which all market data fees may be deducted. We recommend that you select the account which generates the greatest level of commission activity if your subscription provides for fee waiver should your monthly commissions reach a minimum threshold (e.g., U.S. Securities & Commodities Market Data Bundle). IB will only look to the activity conducted in the billing account to determine waiver eligibility rather than aggregating the commission activity across all linked accounts. In selecting the billing account, consideration should also be given to selecting an account having the greatest level of equity as well as cash. This will minimize situations where the account has insufficient cash and the billing serves to increase the margin debit balance or where the account does not have margin permissions or maintains insufficient equity with loan value which, in both cases, will result in the liquidation of positions to cover the fees. IB will not act to automatically transfer cash across linked accounts to meet subscription obligations.
Understanding the basic facts about transferring accounts between US brokerage firms can be help to avoid delays. Through this article and other Knowledge Database resources, Interactive Brokers seeks to assist with your incoming and outgoing ACATS requests.
US brokerage firms utilize a standardized system to transfer customer accounts from one firm to another. Known as the Automated Customer Account Transfer Service or ACATS, the process allows assets to move seamlessly between brokerage firms in a unified time frame. ACATS transfers are facilitated by a third party, the National Securities Clearing Corporation (NSCC), to assist participating members with timely asset transfers.
The majority of assets may be transferred between US brokerage firms and some banks through ACATS. This standardized system includes stocks, US corporate bonds, listed options, unit investment trusts, mutual funds, and cash. Information on assets eligible for transfer is provided at "Assets Eligible..." Though impacted by multiple factors and time constraints, the accepted or rejected transfers finalize within 10 business days in most cases.
4 simple steps of the ACATS process will help you understand the flow and minimize delays. Familiarizing yourself with the transfer process helps to ensure a successful transition.
The financial institution that is receiving your assets and account transfer is known as the "receiving firm." Investors always work with and through the "receiving firm" to move full or partial account assets into a new broker.
Contact the "receiving firm" (Interactive Brokers) to review the firm's trading policies and requirements. You should verify that your assets are eligible for trading at the "receiving firm" before initiating the transfer request. Not all ACATS transferable assets are acceptable for trading at every brokerage firm.
All outgoing ACATS transfers, full or partial, must be approved by the "delivering firm." Investors, however, should work with and through the "receiving firm" in order to begin the the transfer process or to status the progress of the request.
Investors must always begin the ACATS transfer with the "receiving firm." An ACATS transfer form or Transfer Initiation Form (TIF) must be submitted. The "receiving firm" takes your reqeust and communicates with the "delivering firm" via ACATS. The process begins with this request for transfer of the account.
For your Interactive Brokers Account, the transfer is usually submitted online. Video instruction on submitting the transfer is provided at "How to deposit funds via a full ACATS/ATON Transfer." or through Step-by-step instructions.
Note: Outgoing account transfers from your IB account should be directed to the other broker. Your request will be submitted to IB from the other broker through the ACATS electronically.
Brokers ensure the safety and security of transfer requests by only authorizing requests between open accounts that meet the following criteria:
Ultimately responsible for validating the transfer, the "delivering firm" may accept information from the "receiving firm" correcting data originally entered. Approved or validated requests result in the delivery of positions to the "receiving firm" for their acceptance. Assets may not be accepted by the "receiving firm" for the following:
Note: The most common reasons for ACATS rejections are outlined by clicking here.
The processing time for each transfer request is fixed. In general, approved transfers complete within 4 to 8 business days. Almost all transfers complete within 10 business days. Each firm is required to perform certain steps at specific intervals in the process. Feel free to review the Full ACATS transfer process flow.
While Interactive Brokers does not charge a fee to transfer your account via ACATS, some brokers do apply a fee for full and partial transfers. Prior to initiating your transfer, you should contact the "delivering firm" to verify any charge.
Interactive Brokers Customer Service stands poised to assist with your incoming ACATS transfer reqeust. Click here for Customer Service contact resources.
Note: Outgoing or ACATS transfers sending accounts to another broker should be directed to the "receiving firm." Their Account Transfer Group will work with Interactive Brokers directly to complete your outgoing request.
How to use the IB Market Data Assistant
Account linkage allows for individual account holders maintaining multiple existing accounts or seeking to open a new account the ability to group those accounts together. In the case of a new account, linkage afffords the opportunity to open the account without having to complete a full application, with the account holder providing solely that additional information which is specific to the new account. New account linkages are initiated either from the Account Management of the existing account (via Account Administration and then Create Additional Account menu options) or automatically when initiating a new application from the website. The following article outlines the steps for linking one or more existing accounts.
To consolidate accounts, the account holder should start by logging into Account Management with the user name of that account he/she wishes to consolidate all the other qualifying accounts to. This will be the surviving user name and is restricted to that account which has the highest level security device if different devices are in place (if the account holder wishes to retain a user name which is not associated with the highest level security device they will need to share the highest level device of that user). Once logged in, the account holder should select the Account Administration and then Link Existing Account menu options (Exhibit 1).
The next screen (Exhibit 2) will list the user names eligible for consolidation. Note that there is no ability to consolidate a subset of the accounts. If a decision is made to consolidate, it must include all. In addition, while an account holder may place the consolidation request at any time, the actual consolidation takes place as of the close of business each Friday. If the account holder attempts to initiate the process from an account which has a user name they wish to retain but which does not maintain the highest level device, they will be provided the oportunity to share that highest level security device with this account (Exhibit 2a). To proceed, click on the Link Accounts button.
The account holder will then be prompted to confirm the user name and password for the first user name to be consolidated (Exhibit 3) and will be prompted to repeat this confirmation an authentication step for each user name to be consolidated.
If your accounts maintain personal information (e.g., phone number, address, DOB), financial information or investment experience which differs between the accounts you will be presented with a screen which allows you to select the information on hand which is accurate and which will be updated to all accounts.
Once step 3 has been completed for all eligible user names the following screen (Exhibit 5) will be displayed which allows the user to cancel the consolidation request. Note that this screen will be displayed only up until the time that request has been processed as of the close of business on the Friday following entry. After that time, the consolidation becomes final and irrevocable and the linked user names disabled. In addition, the cancellation option is provided solely when logging in with the surviving user name. If the account holder logs into Account Management with one of the non-surviving user names and selects Link Existing Account menu option the screen view will be similar to that of Exhibit 6. In addition, the status of your request will be shown as a Pending Request upon Account Management login until complete (Exhibit 7).
* Once linked, account access to Account Management and the trading platform is accomplished using a single user name and password each of which will contain a drop-down window for selecting the account that the owner wishes to act upon.
* Consolidating accounts has no impact upon the Monthly Minimum Activity fee, that is, each account ID is obligated to generate a minimum of USD 10, or equivalent, in commissions for a given month or be charged the difference.
* Account holders maintaining multiple security devices are required to consolidate to the user name associated with the highest level device. The hierarchy of security devices from highest level to lowest level is as follows: Platinum, Gold, Alpine and Security Code card (Bingo). If two or more user names have the device considered highest, the account holder may choose among those. In the event the account holder wishes to retain a particular user name which is not associated with the highest level device, the account holder must initiate the link request by logging into that account and requesting that the higher level device be shared (Exhibit 2a).
Note that device sharing requests initiated prior to 5:00 PM ET will not take place the following day. Until that time login access will continue using the existing authentication process and devices. Also note that depending upon the timing of this request, the token share may take effect prior to the the linkage request (processed after the close of business each Friday).
* As market data subscriptions are billed at a session level (i.e., user name) and only a single TWS session can be open for any one user at a given time, account holders previously maintaining subscriptions for multiple users have the opportunity to consolidate subscriptions to a single user. Account holders wishing to view multiple TWS sessions simultaneously may add additional users (subject to separate market data subscribtions). In addition, only those market data subscriptions already associated with the surviving user name will remain in effect following consolidation. Account holders maintaining different subscriptions across multiple users are advised to review those subscriptions subject to cancellation in order to determine which they wish to resubscribe to under the surviving user name. Also note that the market data subscriptions either terminated or initiated mid-month are subject to billing as if they were provided for the entire month (i.e., fees are not prorated).