Account holders are encouraged to routinely monitor their order submissions with the objective of optimizing efficiency and minimizing 'wasted' or non-executed orders. As inefficient orders have the potential to consume a disproportionate amount of system resources. IB measures the effectiveness of client orders through the Order Efficiency Ratio (OER). This ratio compares aggregate daily order activity relative to that portion of activity which results in an execution and is determined as follows:
OER = (Order Submissions + Order Revisions + Order Cancellations) / (Executed Orders + 1)
Outlined below is a list of considerations which can assist with optimizing (reducing) one's OER:
1. Cancellation of Day Orders - strategies which use 'Day' as the Time in Force setting and are restricted to Regular Trading Hours should not initiate order cancellations after 16:00 ET, but rather rely upon IB processes which automatically act to cancel such orders. While the client initiated cancellation request which serve to increase the OER, IB's cancellation will not.
2. Modification vs. Cancellation - logic which acts to cancel and subsequently replace orders should be substituted with logic which simply modifies the existing orders. This will serve to reduce the process from two order actions to a single order action, thereby improving the OER.
3. Conditional Orders - when utilizing strategies which involve the pricing of one product relative to another, consideration should be given to minimizing unnecessary price and quantity order modifications. As an example, an order modification based upon a price change should only be triggered if the prior price is no longer competitive and the new suggested price is competitive.
4. Meaningful Revisions – logic which serves to modify existing orders without substantially increasing the likelihood of the modified order interacting with the NBBO should be avoided. An example of this would be the modification of a buy order from $30.50 to $30.55 on a stock having a bid-ask of $31.25 - $31.26.
5. RTH Orders – logic which modifies orders set to execute solely during Regular Trading Hours based upon price changes taking place outside those hours should be optimized to only make such modifications during or just prior to the time at which the orders are activated.
6. Order Stacking - Any strategy that incorporates and transmits the stacking of orders on the same side of a particular underlying should minimize transmitting those that are not immediately marketable until the orders which have a greater likelihood of interacting with the NBBO have executed.
7. Use of IB Order Types - as the revision logic embedded within IB-supported order types is not considered an order action for the purposes of the OER, consideration should be given to using IB order types, whenever practical, as opposed to replicating such logic within the client order management logic. Logic which is commonly initiated by clients and whose behavior can be readily replicated by IB order types include: the dynamic management of orders expressed in terms of an options implied volatility (Volatility Orders), orders to set a stop price at a fixed amount relative to the market price (Trailing Stop Orders), and orders designed to automatically maintain a limit price relative to the NBBO (Pegged-to-Market Orders).
The above is not intended to be an exhaustive list of steps for optimizing one's orders but rather those which address the most frequently observed inefficiencies in client order management logic, are relatively simple to implement and which provide the opportunity for substantive and enduring improvements. For further information or questions, please contact the Customer Service Technical Assistance Center.
As a result of elevated risk concerns, the list of stocks below are subject to an increased 'house' margin requirement of 100% (i.e. no loan value). Note that this list may be subject to periodic updates.
|ISSUER NAME||SYMBOL||PRIMARY LISTING EXCHANGE|
|AAA ENERGY INC||AAV||FWB|
|ABRA MINING LTD||AII||ASX|
|ACORN INTERNATIONAL INC-ADR||ATV||NYSE|
|ACTIONS SEMICONDUCTOR CO-ADR||ACTS||NASDAQ|
|AGRIA CORP - ADR||GRO||NYSE|
|AIRMEDIA GROUP INC-ADR||AMCN||NASDAQ|
|AIRTAC INTERNATIONAL GROUP||1590||TAI|
|AMBOW EDUCATION HOLDING-ADR||AMBO||NYSE|
|ANDATEE CHINA MARINE FUEL SE||AF0||SWB|
|ANDATEE CHINA MARINE FUEL SE||AMCF||NASDAQ|
|APOLLO SOLAR ENERGY INC||FXA||SWB|
|A-POWER ENERGY GENERATION||APWR||NASDAQ|
|A-POWER ENERGY GENERATION||4OS||FWB|
|BCD SEMICONDUCTOR MANUFA-ADR||BCDS||NASDAQ|
|BIOSTAR PHARMACEUTICALS INC||7BN||SWB|
|BIOSTAR PHARMACEUTICALS INC||BSPM||NASDAQ|
|BITAUTO HOLDINGS LTD-ADR||BITA||NYSE|
|BODISEN BIOTECH INC||DZ9||FWB|
|BOHAI PHARMACEUTICALS GROUP||3B2||SWB|
|BONA FILM GROUP LTD-SPON ADR||BONA||NASDAQ|
|BOYUAN CONSTRUCTION GROUP IN||BOY||TSE|
|CAMELOT INFORMATION SYS-ADS||CIS||NYSE|
|CHARM COMMUNICATIONS INC-ADR||CHRM||NASDAQ|
|CHEMSPEC INTL LTD - ADR||CPC||NYSE|
|CHINA 3C GROUP||GXS||SWB|
|CHINA BAK BATTERY INC||B6J||FWB|
|CHINA BAK BATTERY INC||CBAK||NASDAQ|
|CHINA CABLECOM HOLDINGS LTD||CCUN||IBIS|
|CHINA CABLECOM HOLDINGS LTD||CABL||NASDAQ|
|CHINA CENTURY DRAGON MEDIA I||ZDR||SWB|
|CHINA CERAMICS CO LTD||CCCLU||NASDAQ|
|CHINA CERAMICS CO LTD||C9E||SWB|
|CHINA CGAME INC||CA6N||IBIS|
|CHINA CGAME INC||CCGM||NASDAQ|
|CHINA DASHENG BIOTECHNOLOGY||16D||FWB|
|CHINA DIGITAL TV HOLDING-ADR||STV||NYSE|
|CHINA DISTANCE EDUCATION-ADR||DL||NYSE|
|CHINA ENERGY CORP||ZCE||SWB|
|CHINA ENERGY RECOVERY INC||CNI||FWB|
|CHINA FINANCE ONLINE CO-ADR||JRJC||NASDAQ|
|CHINA GENGSHENG MINERALS INC||CGS||FWB|
|CHINA GRENTECH CORP LTD-ADR||GRRF||NASDAQ|
|CHINA INDUSTRIAL WASTE MANAG||GD9||TIQSSWB|
|CHINA KANGTAI CACTUS BIO-TEC||IWN1||FWB|
|CHINA LINEN TEXTILE INDUSTRY||C60||SWB|
|CHINA MASS MEDIA CORP-ADR||CMM||NYSE|
|CHINA MEDICAL TECH-SPON ADR||CMED||NASDAQ|
|CHINA MEDICINE CORP||XM2||SWB|
|CHINA NEPSTAR CHAIN DRUG-ADR||NPD||NYSE|
|CHINA NUOKANG BIO-PH-SP ADR||NKBP||NASDAQ|
|CHINA ORGANIC AGRICULTURE IN||4CA||FWB|
|CHINA POWER EQUIPMENT INC||5XP||TIQSSWB|
|CHINA REDSTONE GROUP INC||RS0||SWB|
|CHINA RITAR POWER CORP||YXC||SWB|
|CHINA RUNJI CEMENT INC||WRJ||SWB|
|CHINA SHENGDA PACKAGING GROU||0CH||FWB|
|CHINA SHENGDA PACKAGING GROU||CPGI||NASDAQ|
|CHINA SHENGHUO PHARMACEUTICA||54C||IBIS|
|CHINA SHENGHUO PHARMACEUTICA||KUN||AMEX|
|CHINA SHUANGJI CEMENT LTD||C99N||FWB|
|CHINA SOLAR & CLEAN ENERGY S||NCS2||FWB|
|CHINA SUN GROUP HIGH-TECH CO||BP7||FWB|
|CHINA SUNERGY CO LTD-ADR||CSUN||NASDAQ|
|CHINA TECHFAITH WIRELESS-ADR||CNTF||NASDAQ|
|CHINA TMK BATTERY SYSTEMS IN||T35||SWB|
|CHINA WATER GROUP INC||DI1||FWB|
|CHINA XD PLASTICS CO LTD||02Y||FWB|
|CHINA XINIYA FASHIO-SPON ADR||XNY||NYSE|
|CHINA ZENIX AUTO INTERNA-ADR||ZX||NYSE|
|CHINACACHE INTERNAT-SPON ADR||CCIH||NASDAQ|
|CLEANTECH SOLUTIONS INTERNAT||CLNT||NASDAQ|
|CLEANTECH SOLUTIONS INTERNAT||CWZN||FWB|
|CONCORD MEDICAL - SPON ADR||CCM||NYSE|
|COUNTRY STYLE COOKI-SPON ADR||CCSC||NYSE|
|DAQO NEW ENERGY CORP-ADR||DQ||NYSE|
|DEHAIER MEDICAL SYSTEMS LTD||J8D||FWB|
|DEHAIER MEDICAL SYSTEMS LTD||DHRM||NASDAQ|
|DUOYUAN PRINTING INC||DPT||FWB|
|EASTERN ENVIRONMENT SOLUTION||V5E||SWB|
|E-COMMERCE CHINA-SPON ADR||DANG||NYSE|
|EFUTURE INFORMATION TECHNOLO||4EF||FWB|
|ELONG INC-SPONSORED ADR||LONG||NASDAQ|
|ETERNAL TECHNOLOGIES GROUP||ETO||FWB|
|FORLINK SOFTWARE CORP||YNO1||FWB|
|FUNTALK CHINA HOLDINGS LTD||FTLK||NASDAQ|
|FUQI INTERNATIONAL INC||3F6A||IBIS|
|FUWEI FILMS HOLDINGS CO LTD||F4B||IBIS|
|GC CHINA TURBINE CORP||7GC||SWB|
|GLG LIFE TECH CORPORATION||GLG||TSE|
|GLOBAL EDUCATION & TECH-ADR||GEDU||NASDAQ|
|GOLD HORSE INTERNATIONAL INC||0GH||SWB|
|GUSHAN ENVIRONMENTAL ENE-ADR||GU||NYSE|
|HANGFENG EVERGREEN INC||HF||TSE|
|HARTCOURT COMPANIES INC||HCT||SWB|
|HIGHPOWER INTERNATIONAL INC||HKN||SWB|
|HIGHPOWER INTERNATIONAL INC||HPJ||NASDAQ|
|HISOFT TECHNOLOGY INT-ADR||HSFT||NASDAQ|
|HOLLYSYS AUTOMATION TECHNOLO||46H||FWB|
|HOLLYSYS AUTOMATION TECHNOLO||HOLI||NASDAQ|
|IFM INVESTMENTS LTD-ADS||CTC||NYSE|
|JA SOLAR HOLDINGS CO LTD-ADR||JASO||NASDAQ|
|JADE ART GROUP INC||JAC||SWB|
|JINGWEI INTERNATIONAL LTD||WJI||SWB|
|JINKOSOLAR HOLDING CO-ADR||JKS||NYSE|
|JINPAN INTERNATIONAL LTD||3QN||FWB|
|JINPAN INTERNATIONAL LTD||JST||NASDAQ|
|KANDI TECHNOLOGIES CORP||K8A||FWB|
|KINGTONE WIRELESSINFO SO-ADR||KONE||NASDAQ|
|KU6 MEDIA CO LTD-SPN ADR||KUTV||NASDAQ|
|LDK SOLAR CO LTD -ADR||LDK||NYSE|
|LEGEND MEDIA INC||LM2||SWB|
|LENTUO INTERNATI-SPON ADS||LAS||NYSE|
|LIZHAN ENVIRONMENTAL CORP||LZEN||NASDAQ|
|MECOX LANE LTD-ADR||MCOX||NASDAQ|
|MINCO SILVER CORPORATION||MSV||TSE|
|MINDRAY MEDICAL INTL LTD-ADR||MR||NYSE|
|NETQIN MOBILE INC - ADR||NQ||NYSE|
|NEW DRAGON ASIA CORP||BQ4||IBIS|
|NOAH EDUCATION HOLDINGS-ADR||NED||NYSE|
|ORIGIN AGRITECH LTD||39O||SWB|
|ORIGIN AGRITECH LTD||SEED||NASDAQ|
|ORSUS XELENT TECHNOLOGIES IN||O5X||FWB|
|ORSUS XELENT TECHNOLOGIES IN||ORS||AMEX|
|OSSEN INNOVATION CO-SPON ADR||OSN||NASDAQ|
|PHOENIX NEW MEDIA LTD -ADS||FENG||NYSE|
|PRIME ACQUISITION CORP||PACQ||NASDAQ|
|PRIME ACQUISITION CORP||PACQU||NASDAQ|
|QIAO XING MOBILE COMMUNICATI||F2A||IBIS|
|QIAO XING MOBILE COMMUNICATI||QXM||NYSE|
|QIAO XING UNIVERSAL RESOURCE||QXU||FWB|
|QIAO XING UNIVERSAL RESOURCE||NASDAQ|
|RDA MICROELECTRON-SPON ADR||RDA||NASDAQ|
|RECON TECHNOLOGY LTD||HRC||FWB|
|RECON TECHNOLOGY LTD||RCON||NASDAQ|
|SANCON RESOURCES RECOVERY IN||FTVA||SWB|
|SEARCHMEDIA HOLDINGS LTD||IDI||AMEX|
|SEARCHMEDIA HOLDINGS LTD-UTS||IDI U||AMEX|
|SGOCO GROUP LTD||SGOC||NASDAQ|
|SHENGTAI PHARMACEUTICAL INC||ESZ||SWB|
|SINO GAS & ENERGY HOLDINGS L||SEH||ASX|
|SINO GAS INTERNATIONAL HOLDI||QGS||SWB|
|SINOTECH ENERGY LTD-SPON ADR||CTE||NASDAQ|
|SINOVAC BIOTECH LTD||SVQ||FWB|
|SINOVAC BIOTECH LTD||SVA||NASDAQ|
|SKY DIGITAL STORES CORP||YN3||FWB|
|SKY-MOBI LTD-SP ADR||MOBI||NASDAQ|
|SUNTECH POWER HOLDINGS-ADR||STP||NYSE|
|SYSWIN INC-SPON ADS||SYSW||NYSE|
|TAL EDUCATION GROUP- ADR||XRS||NYSE|
|TAOMEE HOLDINGS LTD-SP ADR||TAOM||NYSE|
|TELESTONE TECHNOLOGIES CORP||MSOA||FWB|
|TIANLI AGRITECH INC||7TA||FWB|
|TIANLI AGRITECH INC||OINK||NASDAQ|
|TIBET PHARMACEUTICALS INC||TXP||SWB|
|TIBET PHARMACEUTICALS INC||TBET||NASDAQ|
|TRINA SOLAR LTD-SPON ADR||TSL||NYSE|
|TRI-TECH HOLDING INC||TTW||FWB|
|TRI-TECH HOLDING INC||TRIT||NASDAQ|
|TRUNKBOW INTERNATIONAL HOLDI||TBJ||IBIS|
|TRUNKBOW INTERNATIONAL HOLDI||TBOW||NASDAQ|
|U.S. CHINA MINING GROUP INC||RJ2B||SWB|
|VIMICRO INTERNATIONAL CO-ADR||VIMC||NASDAQ|
|VISIONCHINA MEDIA INC-ADR||VISN||NASDAQ|
|WSP HOLDINGS LTD-ADR||WH||NYSE|
|XINHUA CHINA LTD||X5R||IBIS|
|XINYINHAI TECHNOLOGY LTD||3XI||SWB|
|XINYUAN REAL ESTATE CO L-ADR||XIN||NYSE|
|YAYI INTERNATIONAL INC||8YJ||SWB|
|YINGLI GREEN ENERGY HOLD-ADR||YGE||NYSE|
|YOUKU.COM INC-SPON ADR||YOKU||NYSE|
|YUCHENG TECHNOLOGIES LTD||YCT||SWB|
|YUCHENG TECHNOLOGIES LTD||YTEC||NASDAQ|
|ZHENG HE GLOBAL CAPITAL LTD||ZHE||ASX|
|ZOOM TECHNOLOGIES INC||ZT2A||FWB|
|ZUOAN FASHION LTD-SPON ADR||ZA||NYSE|
Under Section 31 of the Securities Exchange Act of 1934, U.S. national securities exchanges are obligated to pay transaction fees to the SEC based on the volume of securities that are sold on their markets. Exchange rules require their broker-dealer members to pay a share of these fees who, in turn, pass the responsibility of paying the fees to their customers.
This fee is intended to allow the SEC to recover costs associated with its supervision and regulation of the U.S. securities markets and securities professionals. It applies to stocks, options and single stock futures (on a round turn basis); however, IB does not pass on the fee in the case of single stock futures trades. Note that this fee is assessed only to the sale side of security transactions, thereby applying to the grantor of an option (fee based upon the option premium received at time of sale) and the exerciser of a put or call assignee (fee based upon option strike price).
For the fiscal year 2013 the fee was assessed at a rate of $0.0000174 per $1.00 of sales proceeds, however, the rate is subject to annual and,in some cases, mid-year adjustments should realized transaction volume generate fees sufficiently below or in excess of targeted funding levels.1
Examples of the transactions impacted by this fee and sample calculations are outlined in the table below.
Subject to Fee?
Stock Sale (cost plus commission option)
Sell 1,000 shares MSFT@ $25.87
$0.0000174 * $25.87 * 1,000 = $0.450138
Sell 10 MSFT June ’11 $25 calls @ $1.17
$0.0000174 * $1.17 * 100 * 10 = $0.020358
Sell 10 MSFT June ’11 $25 puts @ $0.41
$0.0000174 * $0.41 * 100 * 10 = $0.007134
Exercise of 10 MSFT June ’11 $25 puts
$0.0000174 * $25.00 * 100 * 10 = $0.435
Assignment of 10 MSFT June ’11 $25 calls
$0.0000174 * $25.00 * 100 * 10 = $0.435
1Information regarding current Section 31 fees may be found on the SEC's Frequently Requested Documents page located at: http://www.sec.gov/divisions/marketreg/mrfreqreq.shtml#feerate
The following page has been created in attempt to assist traders by providing answers to frequently asked questions related to US security option expiration, exercise, and assignment. Please feel free to contact us if your question is not addressed on this page or to request the addition of a question and answer.
Click on a question in the table of contents to jump to the question in this document.
How do I provide exercise instructions?
Instructions are to be entered through the TWS Option Exercise window. Procedures for exercising an option using the IB Trader Workstation can be found in the TWS User's Guide.
Important Note: In the event that an option exercise cannot be submitted via the TWS, an option exercise request with all pertinent details (including option symbol, account number and exact quantity), should be created in a ticket via the Account Management window. In the Account Management window, click on "Inquiry/Problem Ticket". The ticket should include the words "Option Exercise Request" in the subject line. Please provide a contact number and clearly state in your ticket why the TWS Option Exercise window was not available for use.
In the case of exchange listed U.S. securities options, the clearinghouse (OCC) will automatically exercise all cash and physically settled options which are in-the-money by at least $0.01 at expiration (e.g., a call option having a strike price of $25.00 will be automatically exercised if the stock price is $25.01 or more and a put option having a strike price of $25.00 will be automatically exercised if the stock price is $24.99 or less). In accordance with this process, referred to as exercise by exception, account holders are not required to provide IB with instructions to exercise any long options which are in-the-money by at least $0.01 at expiration.
Important Note: in certain situations (e.g., underlying stock halt, corporate action), OCC may elect to remove a particular class of options from the exercise by exception process, thereby requiring the account holder to provide positive notice of their intent to exercise their long option contracts regardless of the extent they may be in-the-money. In these situations, IB will make every effort to provide advance notice to the account holder of their obligation to respond, however, account holders purchasing such options on the last day of trading are not likely to be afforded any notice.
What if I have a long option which I do not want exercised?
If a long option is not in-the-money by at least $0.01 at expiration it will not be automatically exercised by OCC. If it is in-the-money by at least that amount and you do not wish to have it exercised, you would need to provide IB with contrary instructions to let the option lapse. These instructions would need to be entered through the TWS Option Exercise window prior to the deadline as stated on the IB website.
What can I do to prevent the assignment of a short option?
The only action one can take to prevent being assigned on a short option position is to buy back in the option prior to the close of trade on its last trading day (for equity options this is usually the Friday preceding the expiration date). When you sell an option, you provided the purchaser with the right to exercise which they generally will do if the option is in-the-money at expiration.
Is it possible for a short option which is in-the-money not to be assigned?
While is unlikely that holders of in-the-money long options will elect to let the option lapse without exercising them, certain holders may do so due to transaction costs or risk considerations. In conjunction with its expiration processing, OCC will assign option exercises to short position holders via a random lottery process which, in turn, is applied by brokers to their customer accounts. It is possible through these random processes that short positions in your account be part of those which were not assigned.
Can IB exercise the out-of-the-money long leg of my spread position only if my in-the-money short leg is assigned?
No. There is no provision for issuing conditional exercise instructions to OCC. OCC determines the assignment of options based upon a random process which is initiated only after the deadline for submitting all exercise instructions has ended. In order to avoid the delivery of a long or short underlying stock position when only the short leg of an option spread is in-the-money at expiration, the account holder would need to either close out that short position or consider exercising an at-the-money long option.
What happens to my long stock position if a short option which is part of a covered write is assigned?
If the short call leg of a covered write position is assigned, the long stock position will be applied to satisfy the stock delivery obligation on the short call. The price at which that long stock position will be closed out is equal to the short call option strike price.
Am I charged a commission for exercise or assignments?
There is no commissions charged as the result of the delivery of a long or short position resulting from option exercise or assignment of a U.S. security option (note that this is not always the case for non-U.S. options).
What happens if I am unable to meet the margin requirement on a stock delivery resulting from an option exercise or assignment?
If an option exercise or assignment results in the delivery of a long or short stock position and the account holder does not maintain sufficient equity to meet the ensuing margin requirement, IB will act to liquidate positions to restore margin compliance. While IB retains the right to liquidate at any time in such situations, liquidations involving U.S. security positions will typically begin at approximately 9:40 AM ET as of the business day following expiration.
How to submit a contract search query
A combination order is a special type of order that is constructed of multiple separate positions, or ‘legs’, but executed as a single transaction. The legs of the combination may be comprised of the same position type (e.g. stock vs. stock, option vs. option or SSF vs. SSF) or different position types (e.g. stock vs. option, SSF vs. option or EFP). It’s important to note that many combination order types, while submitted via the IB trading platform as a combination, are not native to (i.e., supported by) the exchanges and therefore may not be guaranteed by IB. Accordingly, IB’s policy is to guarantee only Smart-Routed U.S. stock vs. option and option vs. option combination orders.
As combination orders which are not guaranteed are exposed to the risk of partial execution, both in terms of the quantity of legs and their balance, IB requires account holders to acknowledge the 'Non-Guaranteed' attribute at the point of order entry. There are two methods for setting this attribute:
The risk of such 'Non-Guaranteed' orders is illustrated through the example below:
Assume the following quotes for a Stock vs. Stock combination order to purchase shares of Microsoft (MSFT) and sell shares of Appl (AAPL).
MSFT - 26.30 bid, 26.31 offer
AAPL - 250.25 bid, 250.30 offer
A generic combination is created to buy 1 share AAPL and sell 1 share MSFT, the implied quote would be 223.94 bid, 224 offer.
The following order is entered:
Buy 200 AAPL, Sell 200 MSFT
Based on the current markets, the order would appear to be executable.
With a Non-Guaranteed combination, the 100 shares of AAPL would be placed in the client account, even though no MSFT shares were executed. The remainder of the combination order will continue to work until executed in its entirety or until it is canceled.
Order types which provide privacy by either hiding the entire order quantity (i.e., Hidden Orders) or allowing the display of only a specified portion of the submitted order quantity (i.e., Iceberg/Reserves) are not supported for all product types and venues.
Examples of venues for which Hidden and Iceberg/Reserve stock orders are not supported are Pink Sheet and OTCBB. Hidden or Iceberg/Reserve orders submitted to these venues will be rejected and will generate the following message: "Order quantity must be fully displayed for this instrument". Orders receiving this rejection message will require the removal of any hidden or display size attribute prior to resubmission.
Additional information regarding product types and venues for which these order types are supported is available through the links below:
Equity option exchanges define position limits for designated equity options classes. These limits define position quantity limitations in terms of the equivalent number of underlying shares (described below) which cannot be exceeded at any time on either the bullish or bearish side of the market. Account positions in excess of defined position limits may be subject to trade restriction or liquidation at any time without prior notification.
Position limits are defined on regulatory websites and may change periodically. Some contracts also have near-term limit requirements (near-term position limits are applied to the side of the market for those contracts that are in the closest expiring month issued). Traders are responsible for monitoring their positions as well as the defined limit quantities to ensure compliance. The following information defines how position limits are calculated;
The following examples, using the 25,000 option contract limit, illustrate the operation of position limits:
IB will send notifications to customers regarding the option position limits at the following times:
Position limits are set on the long and short side of the market separately (and not netted out).
Traders can use an underlying stock position as a "hedge" if they are over the limit on the long or short side (index options are reviewed on a case by case basis for purposes of determining which securities constitute a hedge).
Position information is aggregated across related accounts and accounts under common control.
IB considers related accounts to be any account in which an individual may be viewed as having influence over trading decisions. This includes, but is not limited to, aggregating an advisor sub-account with the advisor's account (and accounts under common control), joint accounts with individual accounts for the joint parties and organization accounts (where an individual is listed as an officer or trader) with other accounts for that individual.
Regulations permit clients to exceed a position limit if the positions under common control are hedged positions as specified by the relevant exchange. In general the hedges permitted by the US regulators that are recognized in the IB system include outright stock position hedges, conversions, reverse conversions and box spreads. Currently collar and reverse collar strategies are not supported hedges in the IB system. For more detail about the permissible hedge exemptions refer to the rules of the self regulatory organization for the relevant product.
OCC posts position limits defined by the option exchanges. They can be found here.
A NOBO refers to an account holder who provides its carry broker (i.e., IB) permission to release their name and address to the companies or issuers of securities they hold. These companies or issuers request this information in the event they need to contact shareholders regarding important shareholder communications such as proxies, circulars for rights offerings and annual/quarterly reports. IB, by default, classifies clients as a NOBO but allows client to have their classification changed to that of an Objecting Beneficial Owner (OBO). To do so, clients are required to provide formal notice of their request to be classified as an OBO through a Message Center ticket available via Account Management.
Account holders maintaining positions in American Depository Receipts (ADRs) should note that such securities are subject to periodic fees intended to compensate the agent bank providing custodial services on behalf of the ADR. These services typically, include inventorying the foreign stocks underlying the ADR and managing all registration, compliance and record-keeping services.
Historically, the agent banks were only able to collect the custody fees by subtracting them from the ADR dividend, however, as many ADRs do not regularly pay dividends, these banks have been unable to collect their fees. As a result, in 2009, the Depository Trust Company (DTC) received SEC approval to begin collecting these custody fees on behalf of the banks for ADRs which do not pay periodic dividends. DTC collects these fees from its participant brokers (such as IB) who hold the ADRs for their clients. These fees are referred to as pass-through fees as they are designed to be then collected by the broker from its clients.
If you hold a position in a dividend paying ADR, these fees will be deducted from the dividend as they have in the past. If you hold a position in an ADR which does not pay a dividend, this pass-through fee will be reflected on the monthly statement of the record date in which it is assessed. Similar to the treatment of cash dividends, IB will attempt to reflect upcoming ADR fee allocations within the Accruals section of the account statements as well. Once charged, the fee will be reflected in the Deposits & Withdrawals section of the statement with the description 'Adjustments - Other' along with the symbol of the particular ADR it is associated with.
While the amount of this fee will generally range from $0.01 - $0.03 per share, the amounts may differ by ADR and it is recommended that you refer to your ADR prospectus for specific information. An on-line search for the prospectus may be conducted through the SEC's EDGAR Company Search tool.