The ScaleTrader is a sophisticated trading algorithm which allows one to enter a large quantity order that is executed in a series of increments or components, with each component being executed at a progressively better price.
Instruments handled by the ACATS system include the following asset classes: equities, options, corporate bonds, municipal bonds, mutual funds and cash. It should be noted; however, that ACATS eligibility does not guarantee that any given security will transfer as each receiving broker maintains its own requirements as to which asset classes as well as securities within a particular asset class it will accept.
Account holders are encouraged to use the Contract Search link on IB’s homepage to assess transfer eligibility prior to initiating a full account transfer request. In the case of mutual funds, please click here for a list of fund families and funds offered by IB.
The rejection of an ACATS transfer request is typically initiated by action of the delivering broker once that broker has had an opportunity to review the request and confirm the details of the account to be transferred. In the case of certain rejection notices (i.e., categories 1-5 and 10 below), the ACATS process affords the receiving broker (IB) a 24-hour window within which revised information may be transmitted and after which time the transfer request will require resubmission by the client. During this 24-hour window, IB will attempt to contact the transferring client in an effort to reconcile any discrepancies causing the initial rejection notice. Rejections generally fall into the following categories:
Rejections by the Receiving Broker:
10. Credit Violation - the result of the transfer if effected would be to place the account in margin deficit and subject to forced liquidation.
Virtually all countries apply withholding taxes when local companies seek to distribute dividends to externally based shareholders (whether those shareholders are corporate or not). The rate at which IB is obligated to withhold for a given payment depends largely upon whether there is a tax treaty in place between the US and the country of residence of the dividend recipient. .
The table below depicts certain the rates of withholding as applied by IB effective 6-1-2012.
||Jurisdiction #2||Withholding Rate|
|United States||Czech Republic||15.0%|
|United States||New Zealand||15.0%|
|United States||South Africa||15.0%|
|United States||Sri Lanka||15.0%|
|United States||Trinidad and Tobago||25.0%|
|United States||United Kingdom||15.0%|
|Canada||Papua New Guinea||15.0%|
|Canada||Trinidad and Tobago||15.0%|
Per Indian regulations, trading access to the Indian financial markets for individuals residing outside India is currently restricted to "Non-Resident Indians" ("NRIs") and "Financial Institution Intermediaries" ("FIIs") only.
NRIs are defined in the Indian Foreign Exchange Management Act of 1999 and the Indian Foreign Exchange Management Deposit Regulations of 2000.
In short, to qualify for NRI status you must:
a. Reside outside of India for more than 182 days per year, and;
b. Hold Indian citizenship, or;
c. Be a Person of Indian Origin as defined in the Indian Foreign Exchange Management Deposit Regulations of 2000.
Please note that applicants must satisfy criteria (a) and criteria (b) or (c) and will be prompted to review the aforementioned legislation and confirm their status at the point of application. To trade Indian products as a NRI, new or existing customers may apply for an account through the IB website.
Currently not supported.
An account holder who purchases a US stock outside of normal or regular trading hours (i.e., 9:30 a.m. to 4:00 p.m. Eastern time) but during the extended trading hours session (i.e., 4:00 p.m. to 8:00 p.m. Eastern time) on the day prior to that stock going ex-dividend is entitled to receive that dividend. The reasoning behind this is that trades executed during the extended trading hours session on Day 'T' settle at the same time ('T+3') as trades which are executed during regular trading hours on Day 'T'. All such trades will therefore settle within a timeframe sufficient for the purchaser to be recognized as an owner of the shares prior to the close of the Record Date.
Following the same logic, an account holder who sells and closes out a long US stock position during the extended trading hours session on the day prior to that stock going ex-dividend will not be entitled to receive that dividend. However, if the stock was sold stock (i.e. an opening trade), the account holder would be obligated to pay the dividend to the lender of the shares.
The TWS contains two checks to limit the possibility of customers entering trades at prices which are substantially inconsistent with that of the current market.
Under the first check, stock buy orders which are 10% above the prevailing NBBO ask price will be automatically rejected by IB as will stock sell orders which are 10% below the prevailing NBBO bid price. In the case of options, IB's automatic rejection threshold percentage for both buy and sell orders is 20%. When an order violating these parameters is transmitted, it will be rejected and a TWS pop-up window will be displayed with the following warning message: "Limit price too far outside NBBO".
The second check relates to orders which are transmitted at prices which do not violate the parameters set by IB as outlined above, but which do violate parameters established by the account holder. Here the account holder is able to establish Precautionary Settings by selecting the Order and then Configure Order Presets menu options from the TWS. This will open up a window providing for the creation of price thresholds set in terms of percentage or the number of ticks outside of the NBBO (settings may also be defined in terms of share/contract quantity or total dollar value of trade). When an order violating the account holder's parameters is transmitted, it will be rejected and a TWS pop-up window will be displayed with the following warning message: "The price specified would violate the percentage constraint specified in the default order settings. Do you really want to submit this order". Unlike in the case of the check set by IB, the account holder has the option of overriding their own settings and transmitting the order by clicking on the "Yes" button.
Accounts which have been set up as a 'Cash' type do not have access to the proceeds from the sale of securities until such time the transaction has settled at the clearinghouse and proceeds have been issued to IB. Securities settlement generally takes place on the third business day following the sale transaction. Providing access to the funds prior to settlement would constitute a loan, a transaction which is precluded from taking place within this account type.
The one exception is under the Free-Riding rule. Clients with a cash account can use the proceeds from the sale of a security to purchase a different security under the condition that the second security is held until settlement of the initial sale. If the client sells the second security prior to settlement of the initial trade, they will be in violation of the Free-Riding rule and will be locked for 90 days from utilizing this exception.
Account holders who wish to have access to settled funds prior to the settlement day may do so by electing an account type of 'Margin'. Under this account type unsettled funds may be used for trading purposes but may not be withdrawn until settlement. Account holders maintaining a 'Cash' account may request an upgrade to a 'Margin' type account by logging into Account Management and selecting the Trading Access and then Trading Configuration menu options. Upgrade requests are subject to a compliance review to ensure that the account holder maintains the appropriate qualifications.
IB does not accept or hold any physical stock certificates. As a matter of operational efficiency and costs, we hold all securities in street name meaning that they are registered electronically in the name of IB on the books of the issuer. IB, in turn, holds securities for clients in what is known in the industry as 'book entry' form which simply means that we maintain a record on our books that you are the beneficial owner of the securities.
Interactive Brokers offers its customers a software product referred to as "Smart" order routing. Smart Routing software continually scans competing markets and automatically routes orders directly to the best ECN or market center -- based on price but also taking into account factors such as the availability of automatic order execution.
Each ECN and market center administers its own set of trading rules. Accordingly, Customers that do not select Smart Routing should be sure to familiarize themselves with the various trading and order handling rules of those market venues to which they intend to direct route their orders. A complete listing of market venues along with website links is made available on the website under the Products and then Exchange Listings menu options.
In order to Smart Route your order, select SMART in the Destination field when placing the order.
For additional information regarding Smart Routing, select the Trading and then Smart Routing menu options from the website.