Disclosure Regarding Interactive Brokers Price Cap Notices
Regulators expect brokerage firms to maintain controls designed to prevent the firm from submitting orders to market centers that create a risk of disruptive trading (e.g., the risk of sudden, transient price moves).
To comply with these expectations, Interactive Brokers implements various price filters on customer orders. Those price filters may, in certain circumstances, price cap customer orders in order to avoid market disruption, and those Price Caps will generally be in a % range from a reference price range calculated by IB. (The range of the Price Cap varies depending on the type of instrument and the current price.)
Although the price caps are intended to balance the objectives of trade certainty and minimized price risk, a trade may be delayed or may not take place as a result of price capping. More information is available in Interactive Broker’s Order Routing and Payment for Order Flow Disclosure.
If a customer’s order(s) are price capped by IB’s systems, that customer will either receive (i) real-time notification of those price cap(s) in Trader Workstation or via the API or FIX tag 58 (for FIX users); and/or (ii) a daily FYI message containing a digest of the first 10 order(s) that were price capped the prior day, the initial price cap(s) for those order(s) (if applicable), and the Price Cap Range(s) for further Price Cap(s) of those order(s).
Customers may opt out from receiving future FYI Messages by clicking the relevant opt-out link within an FYI Message. By opting out from receiving these future FYI Messages, a customer:
- Agrees to waive any further notifications from Interactive Brokers about the application of the firm’s Price Caps to that customer’s order(s); and
- Acknowledges that he or she understands that his or her orders may be price-capped in the future, but that the customer does not wish to be notified again about the application of any Price Caps to any of his or her orders.
Fractional Share Trading
Overview:
Trading fractional shares allows you to invest in companies which you may not be able to afford the full share price. It also makes it easier for you to diversify your portfolio by allowing you to purchase fractional amounts in multiple companies when you otherwise may have only been able to purchase whole shares in one or two companies.
If you enable your account to trade in fractions, we will buy or sell a fraction of a share based on the amount of cash you specify. For example, if you want to spend $500 but one share of the stock you want to buy is currently $1000 you would end up with 0.5 shares.
Who is eligible for fractional share permissions?
All individual, standalone accounts (except those who reside in Israel, Canadian RRSP/TFSA accounts and Interactive Brokers Securities Japan Inc. ("IBSJ") entity accounts) are eligible for fractional share permissions.
Financial Advisors, Money Managers, and Introducing Brokers may enable their clients on an all-or-none basis.
How do I enable fractional shares?
If you are eligible then you can enable fractional share trading in Client Portal. Click the User menu (head and shoulders icon in the top right corner) followed by Settings. Under Account Settings find the section Trading and click on Trading Permissions. Scroll to "Stocks", click +Add and check the box next to "Global (Trade in Fractions)" and click on SAVE. Then click CONTINUE and follow the prompts on screen. You will then be able to trade in fractions in eligible stocks for which you have permission to trade. To trade fractions of eligible U.S. stocks, you will need to sign up to trade U.S. stocks, and to trade fractions of eligible European stocks, you will need to sign up to trade European stocks.
Please note, TWS Build Version 979 or later is required to trade fractional shares. This feature currently supports most order types.
What products can I trade in fractions?
We offer fractional share trading on eligible U.S., Canadian and European stocks and ETFs*.
A list of eligible stocks that can be traded in fractional shares is available via the following link. Please note, this list is subject to change without notice:
http://www.ibkr.com/download/fracshare_stk.csv
*Under EU regulations, EU retail clients generally cannot trade U.S. ETFs, in whole or fractional increments.
Can I short fractional shares?
IBKR does support short sales in fractional shares of eligible stocks as long as you have margin and approved trading permissions to trade fractional shares of stocks listed in the U.S. or in Europe.
What are the fees associated with fractional shares?
There is no additional fee to use fractional share trading. Standard commission rates (both IBKR Lite and IBKR Pro, where applicable) apply.
What order types can I choose for fractional trading?
IBKR will only accept certain types of orders for fractional shares (e.g., market orders, limit orders, stop orders, stop limit orders, etc.). If you choose to place an unmarketable limit order with a fractional share component, the fractional component may not execute until the order becomes marketable (and therefore may not execute at all), even if the order might have executed earlier if submitted for a whole share quantity.
How does IBKR handle fractional shares orders in European stocks?
Depending on the size and nature of the order, IBKR will direct orders in European stocks that include a fractional share component to a pool of execution venues which might be different than those utilized for other order types. You should review the applicable order execution policy for more details.
Can I transfer fractional shares to IBKR?
IBKR does not accept fractional shares through a position transfer.
Are fractional shares eligible for the Dividend Reinvestment Program (DRIP)?
Yes, it is possible to receive fractional shares for a reinvested dividend through the Dividend Reinvestment Program (DRIP) if the account has fractional share permissions.
Please note the above does not apply in the event of mutual fund dividends, which can be re-invested and may result in holding fractional shares of the fund.
Will I receive a fractional share position from a corporate action?
If your account has been approved for trading fractions and a US or European corporate action issues fractional shares, the fractional shares will remain in your account. However, if your account does not have permissions to trade in fractions or the corporate action is issuing non-eligible shares, the fractional shares will be liquidated.
Will I have voting rights for fractional shares in my account?
You will not have voting rights for any of the fractional shares held in your account, you will not be able to make voluntary elections on any corporate action (including, without limitation, any tender offers or rights offerings) with respect to such fractional shares, and we cannot provide you any other shareholder documentation for any holdings of less than one share.
Do I receive dividends on my fractional shares?
Your fractional shares positions are eligible to receive dividends in the same manner as your full positions on the same stocks.
Is fractional trading available for the API?
Fractional trading is supported via FIX/CTCI but not via API at this time.
Presentación de los productos empaquetados o basados en seguros
ANTECEDENTES
En 2018 entró en vigor un reglamento europeo que tiene por objeto la protección de los clientes "minoristas" por medio de la divulgación de información adecuada en el momento de comprar determinados productos. Este reglamento, conocido como el Reglamento sobre los productos de inversión minorista vinculados y los productos de inversión basados en seguros (MiFID II, Directiva 2014/65/EU), abarca cualquier inversión en la que el importe reembolsable al cliente esté sujeto a fluctuaciones debido a la exposición a valores de referencia o a la evolución de uno o más activos no adquiridos directamente por el inversor minorista. En este tipo de productos se encuentran opciones, futuros, CFD, ETF, ETN y otros tipos de productos estructurados.
Es importante tener en cuenta que los brókeres no pueden permitir que los clientes minoristas compren productos empaquetados o basados en seguros salvo si el emisor de dichos productos proporciona el documento de advertencia correspondiente con el fin de que los brókeres lo puedan facilitar a los clientes. Este documento, denominado 'documento de datos fundamentales', contiene información de referencia sobre la descripción, perfiles de riesgos y rentabilidad, y posibles escenarios de rentabilidad. Los clientes estadounidenses no están afectados por los productos empaquetados o basados en seguros y, por tanto, los emisores de algunos ETF cotizados estadounidenses más populares normalmente optan por no elaborar documentos de datos fundamentales. Es por esto por lo que los clientes minoristas EEE no pueden comprar dicho producto.
CLASIFICACIÓN DE CLIENTES
IBKR clasifica los clientes particulares como clientes "minoristas" de manera predeterminada, dado que esta clasificación les permite obtener el nivel de protección más amplio ofrecido por el MiFID. Los clientes clasificados como “profesionales” no obtienen el mismo nivel de protección que los clientes minoristas, pero no están sujetos a los requisitos expuestos en los documentos de datos fundamentales. De conformidad con lo dispuesto en el MiFID II, en la categoría de clientes "profesionales" se incluyen entidades reguladas, grandes empresas y particulares que hayan solicitado su reclasificación como clientes profesionales electivos ('elective professionals') y que cumplen los requisitos establecidos en el MiFID II sobre conocimientos, experiencia y competencias financieras.
IB proporciona un proceso en línea que permite que los clientes minoristas soliciten su reclasificación como profesionales. En el artículo KB3298 se proporciona información relacionada con los requisitos de reclasificación, junto con los pasos a seguir para realizar revisión de la clasificación. Para solicitar directamente el cambio de su clasificación, puede encontrar el cuestionario en Client Portal/Gestión de cuenta.
PRIIPs Overview
BACKGROUND
In 2018, an EU regulation, intended to protect “Retail” clients by ensuring that they are provided with adequate disclosure when purchasing certain products took effect. This disclosure document is referred to as a Key Information Document, or KID, and it contains information such as product description, cost, risk-reward profile and possible performance scenarios.
This regulation is known as the Packaged Retail and Insurance-based Investment Product Regulation (MiFID II, Directive 2014/65/EU), or PRIIPs, and it covers any investment where the amount payable to the client fluctuates because of exposure to reference values or to the performance of one or more assets not directly purchased by such retail investor. Common examples of such products include options, futures, CFDs, ETFs, ETNs and other structured products.
The UK Financial Conduct Authority (FCA) has equivalent requirements for UK residents.
It’s important to note that a broker cannot allow a Retail client to purchase a product covered by PRIIPs unless the issuer of that product has prepared the required disclosure document for the broker to provide to the client. U.S. clients are not impacted by PRIIPs, so the issuers of U.S. listed ETFs do not as a rule create KIDs. This means that EEA and UK Retail clients may not purchase the product. Clients nevertheless have several options:
- Many US ETF issuers have equivalent ETFs issued by their European entities. European-issued ETFs have KIDs and are therefore freely tradable.
- Clients can trade most large US ETFs as CFDs. The CFDs are issued by IBKRs European entities and as such meet all KID requirements.
- Clients may be eligible for re-classification as a professional client, for whom KIDs are not required.
CLIENT CATEGORISATION
We categorize all individual clients as “Retail” by default as this affords clients the broadest level of protection afforded by MiFID. Client who are categorised as “Professional” do not receive the same level of protection as “Retail” but are not subject to the KIDs requirement. As defined under MiFID II rules, “Professional” clients include regulated entities, large clients and individuals who have asked to be re-categorised as “elective professional clients” and meet the MiFID II requirements based on their knowledge, experience and financial capability.
We provide an online step-by-step process that allows “Retail” to request that their categorisation be changed to “Professional". The qualifications for re-categorisation along with the steps for requesting that one’s categorisation be considered are outlined in KB3298 or, to directly apply for a change in categorisation, the questionnaire is available in the Client Portal/Account Management.
Información relacionada con el vencimiento de VXX y VXZ
INTRODUCCIÓN
Los pagarés cotizados (ETN, por sus siglas en inglés) iPath S&P 500 VIX Short-Term Futures (VXX) y Mid-Term Futures (VXZ) presentan una fecha de vencimiento prevista para el 30 de enero de 2019. En previsión de dicho vencimiento, el emisor de estos ETN, Barclays Bank PLC, ha emitido los ETN de "serie B" iPath S&P 500 VIX Short-Term Futures (VXXB) y Mid-Term Futures (VXZB), los cuales empezarán a operarse en enero de 2018 y presentan una fecha de vencimiento prevista en 2048.
Los clientes que mantengan posiciones de estos ETN a punto de vencer o de sus productos derivados deben familiarizarse con los próximos acontecimientos y posibilidades ofrecidas, así como de las cuestiones relativas al margen y riesgo. El hecho de no tomar ninguna decisión o tomar alguna medida sin tener presente las cuestiones relativas al margen puede resultar en una infracción de los requisitos de cumplimiento relativas al margen, lo que provocaría liquidaciones forzosas.
A continuación se presentan una serie de preguntas y respuestas en las que se resuelven cuestiones relacionadas con este asunto.
Preguntas frecuentes
P: ¿Cuándo está previsto el vencimiento de los ETN VXX y VZX?
R: La fecha de vencimiento de los ETN VXX y VXZ está prevista para el 30 de enero de 2019. Su exclusión tendrá efecto en la apertura del mercado de este día.
P: ¿Cuál es el último día para realizar operaciones con VXX y VXZ?
R: El último día de negociación y, consecuentemente, la última fecha de valoración para los ETN a punto de vencer será el 29 de enero de 2019.
P: ¿Qué ocurre con los VXX y VXZ en el momento de su vencimiento?
R: El emisor ofrece a los titulares de los ETN VXX y VXZ la opción de redimirlos por efectivo, o por sus equivalentes de serie B, cambiando 1 acción por 1 acción. Los titulares de estos pagarés a punto de vencer también pueden optar por cerrar y sustituir las posiciones por su equivalente de la serie B en el mercado secundario antes del 30 de enero de 2019.
P: En caso de que los pagarés a punto de vencer se canjeen por efectivo, ¿cuál será la cantidad exacta que recibiré?
R: En caso de que opte por canjear los pagarés a punto de vencer por efectivo, recibirá un pago al contado por ETN igual al valor indicativo del cierre aplicable el 29 de enero de 2019 (es decir, a la fecha de valoración final)
P: ¿Cuándo se reflejará el reembolso en mi cuenta?
R: Los reembolsos, tanto por efectivo como por los pagarés de la serie B, se procesarán tras el cierre del 29 de enero de 2019 y se reflejarán en su cuenta antes de la apertura del mercado del 30 de enero de 2019.
P: ¿Cómo puedo notificar mi decisión a IBKR?
R: Los clientes que dispongan de posiciones largas a punto de vencer recibirán una notificación en el centro de mensajes y en su correo electrónico, en la que se les informará la fecha de apertura del periodo de elección. En la notificación también se incluirán instrucciones acerca del envío de su decisión mediante la herramienta de acciones corporativas voluntarias, ubicada en Client Portal/Gestión de cuenta.
P: ¿Puedo optar por una amortización anticipada?
R: Los clientes también tendrán la opción de amortizar los pagarés a punto de vencer y tomar posición de los pagarés de serie B o de efectivo antes de su vencimiento (es decir, se podrá llevar a cabo una amortización anticipada) por el precio de $500.00. El reembolso al vencimiento es totalmente gratuito.
P: ¿Puedo revocar una decisión?
R: Las decisiones de amortización anticipadas son irrevocables. La opción de redimir al vencimiento puede revocarse hasta el cierre del periodo de elección.
P: ¿IBKR prestará soporte para realizar amortizaciones combinadas de efectivo y pagarés de serie B? R: No. No obstante, los clientes podrán optar por canjear por efectivo o redimir por pagarés de serie B. P: ¿Qué ocurre si no tomo una decisión antes del plazo establecido?
R: En caso de no tomar ninguna decisión al respecto antes del plazo establecido, las posiciones se canjearán por efectivo.
P: ¿Qué ocurre si dispongo de una posición en corto en un pagaré a punto de vencer antes del último día de negociación?
R: En caso de disponer de una posición en corto en un pagaré a punto de vencer antes del último día de negociación, el prestador de las acciones tiene derecho a liquidar su posición en corto, lo que le fuerza a entregarle o efectivo o el equivalente en pagarés de la serie B. En caso de que no disponga de una posición larga para el equivalente de ETN de serie B en el momento de la entrega, se le asignará una posición en corto y podrá liquidarse si dicho ETN no está disponible para prestarse.
P: ¿Qué ocurre si dispongo de una posición en corto en un pagaré a punto de vencer después del último día de negociación establecido?
R: En caso de que disponga de una posición en corto en un pagaré a punto de vencer tras el último día de negociación establecido, estará obligado a entregar efectivo.
P: ¿Cuáles son las consideraciones relativas al margen en este acontecimiento?
R: Los clientes que dispongan de ETN a punto de vencer en cuentas de margen de cartera deben tener en cuenta el impacto que puede provocar dicho vencimiento y la decisión de reembolso en sus requisitos de margen. Mientras que los VXX, VXZ y sus derivados asociados están incluidos en el archivo de Customer Portfolio Margin de la OCC e IB ofrece tratamiento de margen de cartera para estos productos, los ETN de serie B y sus derivados no se incluyen en los archivos de margen de cartera de la OCC, e IBKR no ofrece tratamiento de margen de cartera para ellos. En cambio, el margen de dichos productos ETN de serie B y sus derivados se calculan de conformidad la metodología Reg. T.
Consecuentemente, las compensaciones de margen actualmente ofrecidas en los márgenes de cartera entre VXX y otros productos con volatilidad corta, tales como VIXY, VIIX, UVXY, TVIX y SVXY, no estarán disponibles para VXXB. De forma análoga, las compensaciones de margen ofrecidas entre VXZ y otros productos de volatilidad larga, tales como VIXM y ZIV, no estarán disponibles para VXZB. Asimismo, dado que la Reg. T. solo ofrece reducciones de margen en casos de estrategias de opciones muy concretos, los clientes que dispongan de posiciones de opciones complejas en los que se incluyan VXXB o VXZB pueden estar sujetos a requisitos de Reg. T más altos que los que se aplicarían en las posiciones VXX o VXZ equivalentes en Portfolio Margin.
Los clientes pueden simular el impacto del vencimiento de VXX y VXZ y su correspondiente decisión de reembolso mediante una cartera hipotética ('what-if') en Risk Navigator.
NOTA: IBKR se reserva el derecho de prohibir el reembolso de los ETN a punto de vencer mencionados a sus equivalentes de serie B, y puede forzar un reembolso en efectivo en caso de que dicho rembolso conllevara que la cuenta se quedara en déficit de margen.
Restricciones de cámaras de compensación para valores de cannabis
Boerse Stuttgart y Clearstream Banking han anunciado que ya no proporcionarán servicios para emisiones cuyo negocio principal esté conectado directa o indirectamente con el cannabis y otros productos narcóticos. En consecuencia, estos valores ya no operarán en las bolsas de Stuttgart (SWB) o Frankfurt (FWB). Con efecto al cierre del 19 de septiembre de 2018, IBKR llevará a cabo las siguientes acciones:
- Cierre forzoso de todas las posiciones impactadas para las que los clientes no hayan actuado para cerrarlas y que no sean eligibles para transferencia a una cotización estadounidenses; y
- Transferencia forzosa a un mercado estadounidenses de todas las posiciones impactadas para las que los clientes no hayan actuado para cerrarlas y que sean eligibles para dicha transferencia.
En la tabla siguiente se indican las emisiones afectadas según han anunciado Boerse Stuttgart y Clearstream Banking a fecha del 7 de agosto de 2018. Esta tabla incluye una nota indicando si las emisiones afectadas son elegibles para transferencia a un mercado estadounidense. Tenga en cuenta que las cámaras de compensación han indicado que esta lista podría no estar completa y se aconseja a los clientes que revisen sus páginas web respectivas para la información más actualizada.
| ISIN | NOMBRE | MERCADO | ¿ELEGIBLE PARA TRANSFERENCIA EE.UU.? |
SÍMBOLO EE. UU. |
| CA00258G1037 |
ABATTIS BIOCEUTICALS CORP |
FWB2 | SÍ |
ATTBF |
| CA05156X1087 |
AURORA CANNABIS INC |
FWB2, SWB2 | SÍ |
ACBFF |
| CA37956B1013 |
GLOBAL CANNABIS APPLICATIONS |
FWB2 | SÍ |
FUAPF |
| US3988451072 |
GROOVE BOTANICALS INC |
FWB | SÍ |
GRVE |
| US45408X3089 |
INDIA GLOBALIZATION CAPITAL |
FWB2, SWB2 | SÍ |
ICG |
| CA4576371062 |
INMED PHARMACEUTICALS INC |
FWB2 | SÍ |
IMLFF |
| CA53224Y1043 |
LIFESTYLE DELIVERY SYSTEMS I |
FWB2, SWB2 | SÍ |
LDSYF |
| CA56575M1086 |
MARAPHARM VENTURES INC |
FWB2, SWB2 | SÍ |
MRPHF |
| CA5768081096 |
MATICA ENTERPRISES INC |
FWB2, SWB2 | SÍ |
MQPXF |
| CA62987D1087 |
NAMASTE TECHNOLOGIES INC |
FWB2, SWB2 | SÍ |
NXTTF |
| CA63902L1004 |
NATURALLY SPLENDID ENT LTD |
FWB2, SWB2 | SÍ |
NSPDF |
| CA88166Y1007 |
TETRA BIO-PHARMA INC |
FWB2 | SÍ |
TBPMF |
| CA92347A1066 |
VERITAS PHARMA INC |
FWB2 | SÍ |
VRTHF |
| CA1377991023 |
CANNTAB THERAPEUTICS LTD |
FWB2 | NO | |
| CA74737N1042 |
QUADRON CANNATECH CORP |
FWB2 | NO | |
| CA84730M1023 |
SPEAKEASY CANNABIS CLUB LTD |
FWB2, SWB2 | NO | |
| CA86860J1066 |
SUPREME CANNABIS CO INC/THE |
FWB2 | NO | |
| CA92858L2021 |
VODIS PHARMACEUTICALS INC |
FWB2 | NO |
NOTAS IMPORTANTES:
- Tenga en cuenta que las cotizaciones estadounidenses generalmente operan de forma extrabursátil (PINK) y están denominadas en USD, no EUR, lo cual le expone al riesgo de cambio de divisas, además del riesgo de mercado
- Los titulares de cuenta que mantengan valores PINK Sheet requieren permisos de negociación para Estados Unidos (Penny Stocks) para poder introducir órdenes de apertura.
- Todos los usuarios con cuentas que mantengan permisos de negociación para Estados Unidos (Penny Stocks) deben tener protección de 2 factores cuando se conecten a la cuenta.
Clearinghouse Restrictions on Cannabis Securities
Boerse Stuttgart and Clearstream Banking have announced that they will no longer provide services for issues whose main business is connected directly or indirectly to cannabis and other narcotics products. Consequently, those securities will no longer trade on the Stuttgart (SWB) or Frankfurt (FWB) stock exchanges. Effective as of the 19 September 2018 close, IBKR will take the following actions:
- Force close any impacted positions which clients have not acted to close and that are not eligible for transfer to a U.S. listing; and
- Force transfer to a U.S. listing any impacted positions which clients have not acted to close and that are eligible for such transfer.
Outlined in the table below are impacted issues as announced by the Boerse Stuttgart and Clearstream Banking as of 7 August 2018. This table includes a notation as to whether the impacted issue is eligible for transfer to a U.S. listing. Note that the clearinghouses have indicated that this list may not yet be complete and clients are advised to review their respective websites for the most current information.
| ISIN | NAME | EXCHANGE | U.S. TRANSFER ELIGIBLE? | U.S. SYMBOL |
| CA00258G1037 |
ABATTIS BIOCEUTICALS CORP |
FWB2 | YES |
ATTBF |
| CA05156X1087 |
AURORA CANNABIS INC |
FWB2, SWB2 | YES |
ACBFF |
| CA37956B1013 |
GLOBAL CANNABIS APPLICATIONS |
FWB2 | YES |
FUAPF |
| US3988451072 |
GROOVE BOTANICALS INC |
FWB | YES |
GRVE |
| US45408X3089 |
INDIA GLOBALIZATION CAPITAL |
FWB2, SWB2 | YES |
ICG |
| CA4576371062 |
INMED PHARMACEUTICALS INC |
FWB2 | YES |
IMLFF |
| CA53224Y1043 |
LIFESTYLE DELIVERY SYSTEMS I |
FWB2, SWB2 | YES |
LDSYF |
| CA56575M1086 |
MARAPHARM VENTURES INC |
FWB2, SWB2 | YES |
MRPHF |
| CA5768081096 |
MATICA ENTERPRISES INC |
FWB2, SWB2 | YES |
MQPXF |
| CA62987D1087 |
NAMASTE TECHNOLOGIES INC |
FWB2, SWB2 | YES |
NXTTF |
| CA63902L1004 |
NATURALLY SPLENDID ENT LTD |
FWB2, SWB2 | YES |
NSPDF |
| CA88166Y1007 |
TETRA BIO-PHARMA INC |
FWB2 | YES |
TBPMF |
| CA92347A1066 |
VERITAS PHARMA INC |
FWB2 | YES |
VRTHF |
| CA1377991023 |
CANNTAB THERAPEUTICS LTD |
FWB2 | NO | |
| CA74737N1042 |
QUADRON CANNATECH CORP |
FWB2 | NO | |
| CA84730M1023 |
SPEAKEASY CANNABIS CLUB LTD |
FWB2, SWB2 | NO | |
| CA86860J1066 |
SUPREME CANNABIS CO INC/THE |
FWB2 | NO | |
| CA92858L2021 |
VODIS PHARMACEUTICALS INC |
FWB2 | NO |
IMPORTANT NOTES:
- Note that the U.S. listings generally trade over-the-counter (PINK) and are denominated in USD not EUR thereby exposing you to exchange rate risk in addition to market risk.
- Account holders maintaining PINK Sheet securities require United States (Penny Stocks) trading permissions in order to enter opening orders.
- All users on accounts maintaining United States (Penny Stocks) trading permissions are required use 2 Factor login protection when logging into the account.
China Connect Northbound Investor ID Model
Background
In November 2017, the Securities and Futures Commission (SFC) and China Securities Regulatory Commission (CSRC) announced an agreement to introduce an investor identification regime for Northbound trading under Mainland-Hong Kong Stock Connect. This regime is intended to enhance regulatory surveillance of mainland-listed stock trading from Hong Kong and requires brokers to report the identity of clients submitting orders to either the Shanghai or Shenzhen Stock Exchange. This regulation will be effective as of September 26, 2018. Additional information is provided in the series of FAQs below.
In November 2017, the Securities and Futures Commission (SFC) and China Securities Regulatory Commission (CSRC) announced an agreement to introduce an investor identification regime for Northbound trading under Mainland-Hong Kong Stock Connect. This regime is intended to enhance regulatory surveillance of mainland-listed stock trading from Hong Kong and requires brokers to report the identity of clients submitting orders to either the Shanghai or Shenzhen Stock Exchange. This regulation will be effective as of September 26, 2018. Additional information is provided in the series of FAQs below.
What is the Stock Connect?
The Stock Connect is a collaboration between the Hong Kong, Shanghai and Shenzhen Stock Exchanges which allows international and Mainland Chinese investors to trade securities in each other's markets through the trading and clearing facilities of their home exchange.
The Stock Connect is a collaboration between the Hong Kong, Shanghai and Shenzhen Stock Exchanges which allows international and Mainland Chinese investors to trade securities in each other's markets through the trading and clearing facilities of their home exchange.
What is Northbound trading?
Northbound trading refers to the trading of mainland-listed stocks (e.g., Shanghai and Shenzhen Stock Exchanges) from the Hong Kong Stock Exchange.
Northbound trading refers to the trading of mainland-listed stocks (e.g., Shanghai and Shenzhen Stock Exchanges) from the Hong Kong Stock Exchange.
What information is being collected and reported?
The information collected and reported depends upon the client classification. In the case of individuals, the information is as follows:
The information collected and reported depends upon the client classification. In the case of individuals, the information is as follows:
- Name in English and Chinese
- ID issuing country/jurisdiction
- ID type (Hong Kong ID card, ID card issued by the government authority of relevant country/region, passport, or any other official identity document e.g. driver's license)
- ID number (number of ID document)
For Institutional investors, the information is as follows:
- Entity name
- Other official incorporation documents (IBKR will attempt to us the documents clients provided at the point of account opening, whenever possible).
- Legal Entity Identifier (if you do not already have an LEI, you can order one through IBKR when requesting trading permissions for China Connect. Note that obtaining a LEI can take up to three days, is associated with an application fee imposed by the LEI issuing organization, and an annual renewal fee thereafter).
Each Northbound trading client will be assigned a Broker-to-Client Assigned Number (BCAN) which will be associated with the identification information collected and will be tagged to every Northbound order on a real-time basis.
Who is IBKR authorized to share this information with?
Clients who wish to access the Stock Connect must provide IBKR with consent to provide their information to the Hong Kong Exchanges and Clearing Ltd and the Chinese regulatory bodies such as:
Clients who wish to access the Stock Connect must provide IBKR with consent to provide their information to the Hong Kong Exchanges and Clearing Ltd and the Chinese regulatory bodies such as:
- Shanghai and Shenzhen Stock Exchanges
- China Securities Depository and Clearing (Hong Kong) Company Limited
- Mainland regulatory authorities and law enforcement agencies
How will IBKR collect this information?
Clients with existing Northbound trading permissions will be presented with the online form upon log in to Client Portal. This form will allow IBKR to collect the required information and consent to submit this information upon order submission.
Clients with existing Northbound trading permissions will be presented with the online form upon log in to Client Portal. This form will allow IBKR to collect the required information and consent to submit this information upon order submission.
When will the identification take place?
The Northbound Investor ID model will be effective as of October 22, 2018.
The Northbound Investor ID model will be effective as of October 22, 2018.
Will there be a Southbound Investor ID model?
The SFC and the CSRC also agreed to introduce a similar investor identification regime for Southbound trading as soon as possible after the regime for Northbound trading is implemented.
The SFC and the CSRC also agreed to introduce a similar investor identification regime for Southbound trading as soon as possible after the regime for Northbound trading is implemented.
What happens if I do not provide the required information?
Once the Northbound Investor ID model is in effect, clients who either fail to provide the required information or elect not to provide consent to report the required information will not be allowed to submit opening Northbound orders but will be allowed to close existing positions.
Once the Northbound Investor ID model is in effect, clients who either fail to provide the required information or elect not to provide consent to report the required information will not be allowed to submit opening Northbound orders but will be allowed to close existing positions.
How can I trade China Connect Stocks?
In order to trade China Connect stocks clients are required to login to Client Portal and request the necessary trading permissions. To do so:
In order to trade China Connect stocks clients are required to login to Client Portal and request the necessary trading permissions. To do so:
- Log into Client Portal
- Click the User menu (head and shoulders icon in the top right corner) followed by Manage Account
- If you manage multiple accounts, select an account by clicking on the account number to popup the Account Selector
- Click the Configure (gear) icon next to Trading Experience & Permissions
- Click on "Stocks" and check the box next to "Hong Kong/China Stock Connect"
- Click CONTINUE and follow the prompts on screen.
After the trading permission has been requested clients will be prompted with the Northbound Trader Disclosure. Once consent has been given, IBKR will assign a BCAN and send the client file to the HKEX before the deadline at 2:45pm HKT. If the request has been approved, clients will be able to trade on the next day.
Utilization in the Securities Lending Market
Utilization Metrics
Utilization is defined as loaned shares divided by available shares in the securities lending market, expressed as a percentage. The Utilization metric on TWS is not specific to IB. It is based on industrywide data provided by a securities finance data vendor. The metric is not conclusive however, as not every lender reports their Utilization to the vendor. In addition, although the source is believed to be reliable, IBKR does not warrant its accuracy.
Generally, Utilization is the ratio of demand to supply. For example, Apple Inc. (AAPL) may have utilization of less than 1% because the stock has vast availability relative to the demand to borrow shares for shorting. Roku Inc. (ROKU) may have utilization above 90% because of higher demand to short shares as compared to the number of available shares.
For accounts enrolled in the Stock Yield Enhancement Program, a high stock-specific Utilization percentage may increase the likelihood that IB may be able to lend your shares. Conversely, stocks with a low Utilization percentage are generally in lesser demand in the securities finance market, generally reducing IB’s ability to lend your shares.
Utilization can be added as a column in TWS.
Using Mosaic Market Scanner to Determine an Indication of Stock Utilization
TWS users can find stock utilization indications by using Mosaic Market Scanner filters. After opening the scanner, Select Custom Scanner and input parameters. Some useful filters include Price, Market Cap, Fee Rate and Utilization.
Please also see Important Considerations and Risks of Participating in Interactive Brokers Fully-Paid Securities Lending Programs here.
