SPY - Dividend Recognition

Unlike the case of a stock, in which a dividend is taxable in the year in which it is paid, the SPDR S&P 500 ETF Trust (Symbol: SPY) represents itself as a Regulated Investment Company and its dividend is deemed taxable in the year in which the record date is determined.  As such, SPY dividends declared in either October, November or December and payable to shareholders of record on a specified date in one of those months will be considered taxable income income in that year despite the fact that such dividend will generally be paid in January of the following year.

 

Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.

Margin Treatment for Foreign Stocks Carried by a U.S. Broker

As a U.S. broker-dealer registered with the Securities & Exchange Commission (SEC) for the purpose of facilitating customer securities transactions, IB LLC is subject to various regulations relating to the extension of credit and margining of those transactions. In the case of foreign equity securities (i.e., non-U.S. issuer), Reg T. allows a U.S. broker to extend margin credit to those which either appear on the Federal Reserve Board's periodically published List of Foreign Margin Stocks, or are deemed to have a have a "ready market" under SEC Rule 15c3-1 or SEC no-action letter.

Prior to November 2012, "ready market" was deemed to include equity securities of a foreign issuer that are listed on what is now known as the FTSE World Index. This definition was based upon a 1993 SEC no-action letter and was premised upon the fact that, while there may not have been a ready market for such securities within the U.S., the securities could be readily resold in the applicable foreign market.  In November of 2012, the SEC issued a follow-up no-action letter (www.sec.gov/divisions/marketreg/mr-noaction/2012/finra-112812.pdf) which expanded the population of foreign equity securities deemed to have a ready market to also include those not listed on the FTSE World Index provided that the following four conditions are met:

 

1. The security is listed on a foreign exchange located within a FTSE World Index recognized country, where the security has been trading on the exchange for at least 90 days;

2. Daily bid, ask and last quotations for the security as provided by the foreign listing exchange are made continuously available to the U.S. broker through an electronic quote system;

3. The median daily trading volume calculated over the preceding 20 business day period of the security on its listing exchange is either at least 100,000 shares or $500,000 (excluding shares purchased by the computing broker);

4. The aggregate unrestricted market capitalization in shares of the security exceed $500 million over each of the preceding 10 business days.

Note: if a security previously meeting the above conditions no longer does so, the broker is provided with a 5 business day window after which time the security will no longer be deemed readily marketable and must be treated as non-marginable.

Foreign equity securities which do not meet the above conditions, will be treated as non-marginable and will therefore have no loan value. Note that for purposes of this no-action letter foreign equity securities do not include options.

Panoramica dei CFD su azioni emessi da IBKR

Il presente articolo mira a fornire un'introduzione generale sui CFD (contratti per differenza) su azioni emessi da IBKR.

Per ulteriori informazioni sui CFD su indici emessi da IBKR, clicchi qui. Per i CFD su forex, clicchi qui.

Gli argomenti trattati sono i seguenti:

I.    Definizione di CFD
II.   Confronto tra CFD e azioni sottostanti
III.  Considerazioni relative ai costi e ai requisiti di margine
IV.  Esempio indicativo
V.   Risorse relative ai CFD
VI.  Domande frequenti

 

Avvertenza sui rischi

I CFD sono strumenti complessi e implicano un alto rischio di perdita rapida di denaro per via della leva finanziaria.

Il 67% dei conti detenuti dagli investitori al dettaglio perde denaro nell'ambito delle attività di trading di CFD svolte tramite IBKR (UK).

È bene considerare se si comprende il funzionamento dei CFD e se ci si può permettere di assumersi l'alto rischio di perdita di denaro.

Norme dell'ESMA relative ai CFD (solamente clienti retail)

L'Autorità europea degli strumenti finanziari e dei mercati (ESMA) ha emanato nuove norme relative ai CFD in vigore a partire dal 1 agosto 2018.

Tali norme comprendono: 1) dei limiti della leva sull'apertura di posizioni su CFD; 2) una norma sulla liquidazione del margine a seconda dello specifico conto; e 3) una tutela del saldo negativo a seconda dello specifico conto.

L'ordinanza dell'ESMA è applicabile solamente ai clienti al dettaglio (retail). I clienti professionali non ne sono soggetti.

Per maggiori dettagli, si prega di fare riferimento all'implementazione delle norme dell'ESMA sui CFD in IBKR.

I.  Definizione di CFD su azioni

I CFD di IBKR sono contratti scambiati sui mercati OTC che generano lo stesso rendimento delle azioni sottostanti, compresi i dividendi e le operazioni societarie (clicchi qui per sapere di più sui CFD e le operazioni societarie).

In altri termini, si tratta di un accordo tra l'acquirente (lei) e IBKR per lo scambio della differenza tra il valore corrente di un'azione e il suo valore in un certo momento futuro. Qualora detenga una posizione lunga e la differenza sia positiva, riceverà una certa somma da IBKR. Qualora la differenza sia negativa, sarà lei a dover corrispondere una somma a IBKR.

I CFD su azioni di IBKR possono essere negoziati tramite i conti a margine, ed è dunque possibile aprire posizioni sia lunghe che corte basate sulla leva finanziaria. Il prezzo del CFD coincide con quello dell'azione sottostante così come quotato in borsa. Di fatto, le quotazioni dei CFD emessi da IBKR sono identiche a quelle delle azioni trasmesse tramite il sistema SmartRouting, che può osservare in Trader Workstation e in relazione alle quali IBKR offre l'accesso diretto al mercato (direct market access). Analogamente alle azioni, i propri ordini non inviabili a mercato (ovvero, ordini limite) presentano la copertura del sottostante rappresentata direttamente sulla profondità del libro ordini delle Borse valori in cui questo è negoziato.  Ciò significa anche che è possibile immettere ordini per l'acquisto del CFD al prezzo denaro del sottostante e venderlo al prezzo lettera.

Per un confronto tra il trasparente modello dei CFD emessi da IBKR e altri disponibili sul mercato, consulti la nostra Panoramica dei modelli di mercato dei CFD.

Attualmente IBKR offre circa 7100 CFD su azioni, che coprono i principali mercati statunitensi, europei e asiatici. I costituenti degli indici elencati in basso sono attualmente disponibili in forma di CFD su azioni emessi da IBKR. In diversi Paesi IBKR offre inoltre la possibilità di negoziare azioni liquide a bassa capitalizzazione. Si tratta di azioni con capitalizzazione di mercato corretta per il flottante libero pari ad almeno 500 milioni di USD e con un valore di negoziazione medio giornaliero di almeno 600.000 USD.  Consulti la pagina Elenco prodotti > CFD per ulteriori dettagli. Saranno presto aggiunti ulteriori Paesi.

Stati Uniti S&P 500, DJA, Nasdaq 100, S&P 400 (Mid Cap), liquide a bassa capitalizzazione
Regno Unito FTSE 350 + liquide a bassa capitalizzazione (incl. IOB)
Germania Dax, MDax, TecDax + liquide a bassa capitalizzazione
Svizzera Porzione svizzera dello STOXX Europe 600 (48 azioni) + liquide a bassa capitalizzazione
Francia CAC Large Cap, CAC Mid Cap + liquide a bassa capitalizzazione
Paesi Bassi AEX, AMS Mid Cap + liquide a bassa capitalizzazione
Belgio BEL 20, BEL Mid Cap + liquide a bassa capitalizzazione
Spagna IBEX 35 + liquide a bassa capitalizzazione
Portogallo PSI 20
Svezia OMX Stockholm 30 + liquide a bassa capitalizzazione
Finlandia OMX Helsinki 25 + liquide a bassa capitalizzazione
Danimarca OMX Copenhagen 30 + liquide a bassa capitalizzazione
Norvegia OBX
Repubblica ceca PX
Giappone Nikkei 225 + liquide a bassa capitalizzazione
Hong Kong HSI + liquide a bassa capitalizzazione
Australia ASX 200 + liquide a bassa capitalizzazione
Singapore* STI + liquide a bassa capitalizzazione
Sudafrica Top 40 + liquide a bassa capitalizzazione

 *non disponibile per i residenti a Singapore

II.   Confronto tra CFD e azioni sottostanti

A seconda dei propri obiettivi e del proprio stile di trading, i CFD offrono una serie di vantaggi, ma anche svantaggi, rispetto alle azioni:
 
VANTAGGI DEI CFD EMESSI DA IBKR VANTAGGI DEI CFD EMESSI DA IBKR
Nessuna imposta di bollo o imposte sulle transazioni (Regno Unito, Francia, Belgio) Nessun diritto di proprietà
In genere, commissioni e tassi di margine inferiori rispetto alle azioni Operazioni societarie complesse non sempre esattamente replicabili
Aliquote d'imposta per i dividendi in accordo con le convenzioni fiscali senza necessità di rivendicazione Tassazione sulle plusvalenze potenzialmente diversa rispetto alle azioni (si prega di consultare il proprio consulente fiscale)
Esenzione dalle normative di day trading  

III.  Considerazioni relative ai costi e al margine

I CFD di IBKR possono costituire una maniera ancora più efficace di negoziare nei mercati azionari europei rispetto alla nostra già concorrenziale offerta di azioni.

Innanzitutto, i CFD di IBKR presentano commissioni inferiori rispetto alle azioni, ma offrono gli stessi differenziali di finanziamento contenuti:

EUROPA   CFD AZIONE
Commissione GBP 0.05% 6.00 GBP + 0.05%*
EUR 0.05% 0.10%
Finanziamento** Benchmark +/- 1.50% 1.50%

*per ordine + 0.05% eccedenti i 50,000 GBP
**finanziamento di CFD sul valore complessivo della posizione, finanziamento azionario sull'importo assunto in prestito

All'aumento dell'importo negoziato corrisponde una diminuzione delle commissioni sui CFD, pari ad appena lo 0.02%. Le posizioni di dimensioni più elevate prevedono tassi di finanziamento ridotti, pari ad appena lo 0.5%.  Per maggiori dettagli, si prega di consultare le sezioni Commissioni > CFD e Tassi di finanziamento > CFD.

In secondo luogo, i CFD prevedono requisiti di margine inferiori rispetto alle azioni. I clienti retail sono soggetti a ulteriori requisiti di margine imposti dall'ESMA, l'ente di regolamentazione europeo. Per i dettagli, si prega di fare riferimento all'implementazione delle norme dell'ESMA sui CFD in IBKRR.

  CFD AZIONE
  Tutte Standard Margine di portafoglio
Requisito di margine di mantenimento*

10%

25% - 50% 15%

*Margine tipico delle Blue Chip. I clienti retail sono soggetti a un margine iniziale minimo del 20%. Margine di mantenimento infra-giornaliero standard del 25% per le azioni, del 50% alla giornata.  Il margine di portafoglio mostrato è il margine di mantenimento (compreso quello alla giornata). Le emissioni particolarmente volatili sono soggette a requisiti più elevati

Per maggiori dettagli, si prega di fare riferimento alla sezione relativa ai requisiti di margine dei CFD.


IV.  Esempio indicativo (clienti professionali)

Si consideri l'esempio seguente. I titoli di Unilever quotati ad Amsterdam hanno generato un rendimento del 3.2% nel mese passato (20 giorni di trading fino al 14 maggio 2012) e si pensa che continueranno a garantire un buon rendimento. Si desidera avere un'esposizione di 200,000 EUR e mantenerla per cinque giorni. Si effettuano 10 transazioni per creare la posizione e 10 per chiuderla. I propri costi diretti sarebbero i seguenti:

AZIONE

  CFD AZIONE
Posizione di 200,000 EUR   Standard Margine di portafoglio
Requisito di margine 20,000 100,000 30,000
Commissione (di ingresso e uscita) 200.00 400.00 400.00
Tasso d'interesse (semplificato) 1.50% 1.50% 1.50%
Importo finanziato 200,000 100,000 170,000
Giorni finanziati  5 5 5
Interesse passivo (tasso semplificato del 1,5%) 41.67 20.83 35.42
Costo diretto complessivo (commissioni + interessi) 241.67 420.83 435.42
Differenza di costo   Maggiore del 74% Maggiore del 80%

Nota: l'interesse passivo sui CFD è calcolato sull'intera posizione del contratto, mentre l'interesse sulle azioni è calcolato sull'importo assunto in prestito. I tassi applicabili per le azioni e i CFD sono gli stessi.

 

Si ipotizzi, invece, che si disponga solamente di 20,000 EUR per finanziare il margine. Se Unilever continuasse a mostrare le stesse performance del mese precedente, il proprio potenziale di profitto si rivelerebbe il seguente:  

COMPENSO A LEVA CFD AZIONE
Margine disponibile 20,000 20,000 20,000
Ammontare complessivo investito 200,000 40,000 133,333
Rendimento lordo (5 giorni) 1,600 320 1,066.66
Commissione 200.00 80.00 266.67
Interesse passivo (tasso semplificato del 1,5%) 41.67 4.17 23.61
Costo diretto complessivo (commissioni + interessi) 241.67 84.17 290.28
Rendimento netto (rendimento lordo meno i costi diretti) 1,358.33 235.83 776.39
Importo della redditività dell'investimento a margine 0.07 0.01 0.04
Differenza   Plusvalenza inferiore del 83% Plusvalenza inferiore del 43%

 

RISCHIO DI LEVA CFD AZIONE
Margine disponibile 20,000 20,000 20,000
Ammontare complessivo investito 200,000 40,000 133,333
Rendimento lordo (5 giorni) -1,600 -320 -1,066.66
Commissione 200.00 80.00 266.67
Interesse passivo (tasso semplificato del 1,5%) 41.67 4.17 23.61
Costo diretto complessivo (commissioni + interessi) 241.67 84.17 290.28
Rendimento netto (rendimento lordo meno i costi diretti) -1,841.67 -404.17 -1,356.94
Differenza   Minusvalenza inferiore del 78% Minusvalenza inferiore del 26%

 

V.   Risorse relative ai CFD

Di seguito potrà trovare alcuni link utili a informazioni più dettagliate in merito ai CFD di IBKR:

Dettagli dei contratti CFD

Elenco dei prodotti > CFD

Commissioni > CFD

Tassi di finanziamento > CFD

Requisiti di margine > CFD

Operazioni societarie > CFD

È anche disponibile il seguente video tutorial:

Come immettere transazioni di CFD in Trader Workstation

 

VI.  Domande frequenti

Quali sono le azioni disponibili come CFD?

Azioni ad alta e media capitalizzazione negli Stati Uniti, nell'Europa occidentale, nei Paesi nordici e in Giappone. Le azioni liquide a bassa capitalizzazione sono disponibili anche in molti mercati. Per maggiori dettagli, si prega di consultare la pagina Elenco dei prodotti > CFD. Presto saranno aggiunti ulteriori Paesi.

 

Sono disponibili CFD su indici azionari e forex?

Sì. Consulti gli articoli CFD su indici di IBKR: informazioni, domande e risposte e CFD su forex: informazioni, domande e risposte.

 

Come sono stabilite le quotazioni di CFD su azioni?

Le quotazioni dei CFD emessi da IBKR sono identiche a quelle delle azioni sottostanti, trasmesse tramite SmartRouting. IB non aumenta il differenziale né detiene posizioni contro i propri clienti. Consulti l'articolo Panoramica dei modelli di mercato dei CFD per sapere di più.

 

È possibile visualizzare i propri ordini limite riflessi sulla Borsa valori?

Sì. IBKR offre accesso diretto al mercato (direct market access), quindi la copertura del sottostante dei propri ordini non inviabili a mercato (ovvero con limite di prezzo) è rappresentata direttamente nel "deep book" delle borse in cui è negoziata. Ciò significa anche che è possibile immettere ordini per l'acquisto del CFD al prezzo denaro del sottostante e venderlo al prezzo lettera. Inoltre, è possibile conseguire un miglioramento del prezzo nel caso in cui l'ordine di un altro cliente incroci il proprio a un prezzo migliore di quello disponibile sui mercati pubblici.

 

Come vengono determinati i margini dei CFD su azioni?

IBKR stabilisce inoltre requisiti relativi ai margini basati sul rischio a seconda della volatilità storica di ciascuna azione sottostante. Il margine minimo è del 10%. Il margine della maggior parte dei CFD di IBKR è calcolato secondo questo tasso; di conseguenza, nella maggior parte dei casi, in termini di margine la negoziazione dei CFD risulta più conveniente rispetto a quella delle azioni sottostanti.  Gli investitori retail sono soggetti a ulteriori requisiti relativi ai margini imposti dall'ESMA, l'ente di regolamentazione

europeo. Consulti l'articolo Panoramica dell'implementazione delle norme ESMA sui CFD in IBKR per saperne di più. Non vi sono scostamenti del portafoglio tra le singole posizioni su CFD o tra CFD ed esposizioni all'azione sottostante. Le posizioni concentrate e quelle particolarmente ampie possono essere soggette a una marginazione aggiuntiva. Consulti l'articolo Requisiti di margine dei CFD per saperne di più.

 

I CFD su azioni short sono soggetti al riacquisto forzato?

Sì. Nell'eventualità in cui il prestito dell'azione sottostante si riveli difficile o impossibile, il titolare della posizione short sul CFD sarà tenuto al riacquisto.

 

Come sono gestiti i dividendi e le operazioni societarie?

In genere, IBKR fa sì che l'impatto delle operazioni societarie sui titolari di CFD siano gli stessi sperimentati dai titolari delle azioni sottostanti. I dividendi sono registrati con un adeguamento della liquidità, mentre le altre operazioni potrebbero essere registrate con una correzione della liquidità, delle posizioni o di entrambe. Per esempio, nel caso in cui l'operazione societaria dovesse comportare una modifica del numero delle azioni (es. frazionamento azionario, frazionamento inverso), il numero di CFD sarebbe corretto di conseguenza. Se il risultato dell'operazione societaria fosse una nuova entità con azioni quotate in Borsa e IBKR decidesse di offrire i relativi CFD, allora verrebbero create nuove posizioni long o short dell'importo corrispondente. Consulti la sezione Operazioni societarie su CFD per saperne di più.

*Si prega di notare che, nell'ambito delle operazioni societarie più complesse (es. alcuni tipi di fusioni), potrebbe non essere possibile adeguare correttamente i CFD. In questi casi IBKR potrebbe chiudere la posizione sul CFD prima della data di stacco cedola.

 

La negoziazione di CFD IBKR è consentita a tutti i clienti?

La negoziazione dei CFD di IBKR è consentita a tutti i clienti, a eccezione di quelli residenti negli Stati Uniti, in Canada e a Hong Kong. Gli utenti residenti a Singapore possono negoziare i CFD di IBKR a eccezione di quelli basati sulle azioni quotate a Singapore. Non vi sono deroghe alle esclusioni determinate dalla residenza sulla base del tipo di investitore.

 

Come posso iniziare a negoziare CFD con IBKR?

È necessario impostare i permessi per il trading di CFD in Gestione conto e accettare le relative informative sul trading. Se si detiene un conto presso IBLLC, IBKR provvederà a configurare un nuovo segmento del conto (identificato tramite il numero di conto già esistente più il suffisso "F"). Una volta confermata la configurazione, sarà possibile iniziare a negoziare. Il nuovo conto "F" non richiede una procedura di finanziamento separata, in quanto i fondi sono automaticamente trasferiti dal proprio conto principale per soddisfare i requisiti di margine dei CFD.  

Sono previsti requisiti per i dati di mercato?

I dati di mercato per i CFD su azioni di coincidono con quelli delle azioni sottostanti. Di conseguenza, è necessario disporre dei permessi per i dati di mercato delle relative Borse valori. Se si è già provveduto a configurare i propri permessi per i dati di mercato sulle rispettive Borse valori, non occorrerà fare null'altro. Se si desidera negoziare CFD su una Borsa valori senza disporre dei relativi permessi per i dati di mercato, è possibile configurare i permessi secondo lo stesso metodo adottato per la negoziazione delle azioni sottostanti.

 

In che modo sono rappresentate le transazioni e le posizioni su CFD all'interno dei propri rendiconti?

Se si detiene un conto presso IBLLC, le proprie posizioni su CFD saranno detenute in un segmento del conto separato e identificato tramite il numero del proprio conto principale più il suffisso "F". È possibile scegliere di visualizzare i rendiconti di attività del segmento "F" separatamente o insieme al proprio conto principale. È possibile effettuare la scelta nella finestra del rendiconto di Gestione conto. Per tutti gli altri conti, i CFD sono mostrati nel proprio rendiconto insieme agli altri prodotti di trading.

 

È possibile trasferire posizioni su CFD da un altro broker?

Al momento IBKR non consente di trasferire le posizioni su CFD.

 

Sono disponibili grafici per i CFD su azioni?

Sì.

 Quali modalità di protezione dei conti sono disponibili nell'ambito della negoziazione di CFD con IBKR?

I CFD sono contratti aventi IB UK come controparte, e non sono negoziati sulle Borse valori regolamentate, né compensati presso una stanza di compensazione centrale. Dato che IB UK è la propria controparte nelle transazioni di CFD, si è esposti ai relativi rischi finanziari e commerciali, compreso il rischio di credito associato alle negoziazioni con IB UK. Si prega di notare, tuttavia, che tutti i fondi dei clienti sono sempre interamente segregati, compresi quelli dei clienti istituzionali. IB UK è un partecipante del Financial Services Compensation Scheme ("FSCS") del Regno Unito. IB UK non fa parte della Securities Investor Protection Corporation (“SIPC”) degli Stati Uniti. Per maggiori dettagli in merito ai rischi associati alla negoziazione di CFD, si prega di fare riferimento all'Informativa sui rischi dei CFD di IB UK.

 

Quali tipi di conti IBKR (es. conti individuali, per consulenti, istituzionali ecc.) consentono di negoziare CFD? 

Tutti i conti a margine sono adatti alla negoziazione di CFD, ma non i conti di liquidità e i conti SIPP.

 

Quali sono le dimensioni massime consentite per le posizioni detenute sugli specifici CFD?

Non vi sono limiti predefiniti. Tuttavia, è bene ricordare che le posizioni estremamente ampie potrebbero essere soggette a requisiti di margine maggiori. Per maggiori dettagli, si prega di fare riferimento alla sezione Requisiti di margine dei CFD.

 

È possibile negoziare i CFD telefonicamente?

No. In casi eccezionali potremmo acconsentire all'elaborazione telefonica degli ordini di chiusura di posizioni, ma non di quelli di apertura.

 

Excess Margin Securities

The term "excess margin securities" refers to margin securities carried for the account of a customer having a market value in excess of 140 percent of the total debit balance in the customer's account. These securities are in excess of the securities held in a customer's margin account that are pledged by the customer as collateral for the margin loan and can be used to support the purchase of additional securities on margin

Example:

A customer whose account equity consists solely of a cash balance of USD 10,000 on Day 1 purchases 400 shares of stock ABC at USD 50 per share on Day 2.

Account Balance Day 1 Day 2
Cash $10,000 ($10,000)
Stock $0 $20,000 
Total $10,000 $10,000 

On Day 2, the customer's excess margin securities total USD 6,000. This is calculated by subtracting 140% of the margin debit or loan balance from the market value of the stock position ($6,000 = $20,000 - {1.4 * $10,000}).

The term is relevant from a regulatory perspective as the SEC requires that U.S. broker dealers segregate and maintain in a good control location (e.g., DTC or bank) all customer securities which are deemed excess margin securities. Such securities cannot be pledged or loaned to finance the activities of the firm or other customers without specific written permission from the customer. The portion of the securities classified as margin securities ($20,000 - $6,000 or $14,000 in this example) are subject to a lien and may be pledged or loaned by the broker to others to assist in financing the loan made to the customer.

Note that securities which were excess margin at the date of acquisition may later be reclassified as margin securities based upon the customer's subsequent trade and/or margin borrowing activity. For example, if the loan value of excess margin securities is subsequently used to acquire additional securities on margin, a portion of securities will then be reclassified as margin securities and subject to a lien. If the customer subsequently deposits cash or sells securities to reduce or eliminate the margin loan, the securities will be reclassified as excess margin or fully paid and are required to be segregated.
See also "fully paid securities".

Fully Paid Securities

The term "fully paid securities" refers to securities held in a customer's margin or cash account that have been completely paid for and are not being pledged as collateral to support the purchase of other securities on margin. The term is relevant from a regulatory perspective as the SEC requires that U.S. broker dealers segregate and maintain in a good control location (e.g., DTC or bank) all customer securities which are fully paid.  Such securities cannot be pledged or loaned to finance the activities of the firm or other customers.

Note that securities which were fully paid at the date of acquisition may later be reclassified as margin or excess margin securities based upon the customer's subsequent trade and/or borrowing activity. For example, if the loan value of fully paid securities is subsequently used to acquire additional securities on credit, a portion of securities will then be classified as margin securities and subject to a lien and potential pledge or hypothecation by the broker.

See also "excess margin securities".

Overview of IBKR issued Share CFDs

The following article is intended to provide a general introduction to share-based Contracts for Differences (CFDs) issued by IBKR.

For Information on IBKR Index CFDs click here. For Forex CFDs click here.

Topics covered are as follows:

I.    CFD Definition
II.   Comparison Between CFDs and Underlying Shares
III.  Cost and Margin Considerations
IV.  Worked Example
V.   CFD Resources
VI.  Frequently Asked Questions

 

Risk Warning

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

69% of retail investor accounts lose money when trading CFDs with IBKR (UK).

You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

ESMA Rules for CFDs (Retail Clients only)

The European Securities and Markets Authority (ESMA) has enacted new CFD rules effective 1st August 2018.

The rules include: 1) leverage limits on the opening of a CFD position; 2) a margin close out rule on a per account basis; and 3) negative balance protection on a per account basis.

The ESMA Decision is only applicable to retail clients. Professional clients are unaffected.

Please refer to ESMA CFD Rules Implementation at IBKR for more detail.

I.  Share  CFD Definition

IBKR CFDs are OTC contracts which deliver the return of the underlying stock, including dividends and corporate actions (read more about CFD corporate actions).

Said differently, it is an agreement between the buyer (you) and IBKR to exchange the difference in the current value of a share, and its value at a future time. If you hold a long position and the difference is positive, IBKR pays you. If it is negative, you pay IBKR.

IBKR Share CFDs are traded through your margin account, and you can therefore enter long as well as short leveraged positions. The price of the CFD is the exchange-quoted price of the underlying share. In fact, IBKR CFD quotes are identical to the Smart-routed quotes for shares that you can observe in the Trader Workstation and IBKR offers Direct Market Access (DMA). Similar to shares, your non-marketable (i.e., limit) orders have the underlying hedge directly represented on the deep book of those exchanges at which it trades.  This also means that you can place orders to buy the CFD at the underlying bid and sell at the offer.

To compare IBKR’s transparent CFD model to others available in the market please see our Overview of CFD Market Models.

IBKR currently offers approximately 7100 Share CFDs covering the principal markets in the US, Europe and Asia. The constituents of the major indexes listed below are currently available as IBKR Share CFDs. In many countries IBKR also offers trading in liquid small cap shares. These are shares with free float adjusted market capitalization of at least USD 500 million and median daily trading value of at least USD 600 thousand.  Please see CFD Product Listings for more detail. More countries will be added in the near future.

United States S&P 500, DJA, Nasdaq 100, S&P 400 (Mid Cap), Liquid Small Cap
United Kingdom FTSE 350 + Liquid Small Cap (incl. IOB)
Germany Dax, MDax, TecDax + Liquid Small Cap
Switzerland Swiss portion of STOXX Europe 600 (48 shares) + Liquid Small Cap
France CAC Large Cap, CAC Mid Cap + Liquid Small Cap
Netherlands AEX, AMS Mid Cap + Liquid Small Cap
Belgium BEL 20, BEL Mid Cap + Liquid Small Cap
Spain IBEX 35 + Liquid Small Cap
Portugal PSI 20
Sweden OMX Stockholm 30 + Liquid Small Cap
Finland OMX Helsinki 25 + Liquid Small Cap
Denmark OMX Copenhagen 30 + Liquid Small Cap
Norway OBX
Czech PX
Japan Nikkei 225 + Liquid Small Cap
Hong Kong HSI + Liquid Small Cap
Australia ASX 200 + Liquid Small Cap
Singapore* STI + Liquid Small Cap
South Africa Top 40 + Liquid Small Cap

 *not available to Singapore residents

II.   Comparison Between CFDs and Underlying Shares

Depending on your trading objectives and trading style, CFDs offer a number of advantages compared to stocks, but also some disadvantages:
 
BENEFITS of IBKR CFDs DRAWBACKS of IBKR CFDs
No stamp duty or financial transaction tax (UK, France, Belgium) No ownership rights
Generally lower commission and margin rates than shares Complex corporate actions may not always be exactly replicable
Tax treaty rates for dividends without need for reclaim Taxation of gains may differ from shares (please consult your tax advisor)
Exemption from day trading rules  

III.  Cost and Margin Considerations

IBKR CFDs can be an even more efficient way to trade the European stock markets than IBKR’s highly competitive stock offering.

Firstly, IBKR CFDs have low commissions compared to stocks, and the same low financing spreads:

EUROPE   CFD STOCK
Commission GBP 0.05% GBP 6.00 + 0.05%*
EUR 0.05% 0.10%
Financing** Benchmark +/- 1.50% 1.50%

*per order + 0.05% of excess over GBP 50,000
**CFD financing on total position value, stock financing on borrowed amount

When you trade more, CFD commissions become even lower, as low as 0.02%. Financing rates are reduced for larger positions, to as low as 0.5%.  Please see CFD Commissions and CFD Financing Rates for more details.

Secondly, CFDs have lower margin requirements than stocks. Retail clients are subject to additional margin requirements mandated by ESMA, the European regulator. Please see ESMA CFD Rules Implementation at IBKR for details.

  CFD STOCK
  All Standard Portfolio Margin
Maintenance Margin Requirement*

10%

25% - 50% 15%

*Typical margin for blue-chips. Retail Clients are subject to a minimum Initial Margin of 20%. Standard 25% intraday maintenance margin for stocks, 50% overnight.  Portfolio Margin shown is maintenance margin (incl. overnight). More volatile issues are subject to higher requirements

Please refer to CFD Margin Requirements and for more detail.


IV.  Worked Example (Professional Client)

Let’s look at an example. Unilever’s Amsterdam listing has returned 3.2% in the past month (20 trading days to May 14th, 2012) and you believe it will continue to perform well. You want to build a EUR 200,000 exposure and hold it for 5 days. You do 10 trades to build up and 10 trades to unwind. Your direct costs would be as follows:

STOCK

  CFD STOCK
EUR 200,000 Position   Standard Portfolio Margin
Margin Requirement 20,000 100,000 30,000
Commission (round trip) 200.00 400.00 400.00
Interest Rate (Simplified) 1.50% 1.50% 1.50%
Amount Financed 200,000 100,000 170,000
Days Financed  5 5 5
Interest Expense (1.5% Simplified Rate) 41.67 20.83 35.42
Total Direct Cost (Commission + Interest) 241.67 420.83 435.42
Cost Difference   74% Higher 80% Higher

Note: Interest expense for CFDs is calculated on the entire contract position, for shares interest is calculated on the borrowed amount. The applicable rates are the same for both shares and CFDs.

 

But let’s assume you only have EUR 20,000 available to fund the margin. If Unilever continues to perform as it has in the past month, your potential profit would compare as follows:  

LEVERAGE REWARD CFD STOCK
Available Margin 20,000 20,000 20,000
Total Invested 200,000 40,000 133,333
Gross Return (5 Days) 1,600 320 1,066.66
Commission 200.00 80.00 266.67
Interest Expense (1.5% Simplified Rate) 41.67 4.17 23.61
Total Direct Cost (Commission + Interest) 241.67 84.17 290.28
Net Return (Gross Return less Direct Cost) 1,358.33 235.83 776.39
Return on Margin Investment Amount 0.07 0.01 0.04
Difference   83% Less Gain 43% Less Gain

 

LEVERAGE RISK CFD STOCK
Available Margin 20,000 20,000 20,000
Total Invested 200,000 40,000 133,333
Gross Return (5 Days) -1,600 -320 -1,066.66
Commission 200.00 80.00 266.67
Interest Expense (1.5% Simplified Rate) 41.67 4.17 23.61
Total Direct Cost (Commission + Interest) 241.67 84.17 290.28
Net Return (Gross Return less Direct Cost) -1,841.67 -404.17 -1,356.94
Difference   78% Less Loss 26% Less Loss

 

V.   CFD Resources

Below are some useful links with more detailed information on IBKR’s CFD offering:

CFD Contract Specifications

CFD Product Listings

CFD Commissions

CFD Financing Rates

CFD Margin Requirements

CFD Corporate Actions

The following video tutorial is also available:

How to Place a CFD Trade on the Trader Workstation

 

VI.  Frequently Asked Questions

What Stocks are available as CFDs?

Large and Mid-Cap stocks in the US, Western Europe, Nordic and Japan. Liquid Small Cap stocks are also available in many markets. Please see CFD Product Listings for more detail. More countries will be added in the near future.

 

Do you have CFDs on Stock Indices and Forex?

Yes. Please see IBKR Index CFDs - Facts and Q&A and Forex CFDs - Facts and Q&A.

 

How do you determine your Share CFD quotes?

IBKR CFD quotes are identical to the Smart routed quotes for the underlying share. IBKR does not widen the spread or hold positions against you. To learn more please go to Overview of CFD Market Models.

 

Can I see my limit orders reflected on the exchange?

Yes. IBKR offers Direct market Access (DMA) whereby your non-marketable (i.e., limit) orders have the underlying hedge directly represented on the deep book of those exchanges at which it trades. This also means that you can place orders to buy the CFD at the underlying bid and sell at the offer. In addition, you may also receive price improvement if another client's order crosses yours at a better price than is available on public markets.

 

How do you determine margins for Share CFDs?

IBKR establishes risk-based margin requirements based on the historical volatility of each underlying share. The minimum margin is 10%. Most IBKR CFDs are margined at this rate, making CFDs more margin-efficient than trading the underlying share in most cases.  Retail investors are subject to additional margin requirements mandated by ESMA, the European

regulator. Please see ESMA CFD Rules Implementation at IBKR for details. There are no portfolio off-sets between individual CFD positions or between CFDs and exposures to the underlying share. Concentrated positions and very large positions may be subject to additional margin. Please refer to CFD Margin Requirements for more detail.

 

Are short Share CFDs subject to forced buy-in?

Yes. In the event the underlying stock becomes difficult or impossible to borrow, the holder of the short CFD position will become subject to buy-in.

 

How do you handle dividends and corporate actions?

IBKR will generally reflect the economic effect of the corporate action for CFD holders as if they had been holding the underlying security. Dividends are reflected as cash adjustments, while other actions may be reflected through either cash or position adjustments, or both. For example, where the corporate action results in a change of the number of shares (e.g. stock-split, reverse stock split), the number of CFDs will be adjusted accordingly. Where the action results in a new entity with listed shares, and IBKR decides to offer these as CFDs, then new long or short positions will be created in the appropriate amount. For an overview please CFD Corporate Actions.

*Please note that in some cases it may not be possible to accurately adjust the CFD for a complex corporate action such as some mergers. In these cases IBKR may terminate the CFD prior to the ex-date.

 

Can anyone trade IBKR CFDs?

All clients can trade IBKR CFDs, except residents of the USA, Canada, and Hong Kong. Singapore residents can trade IBKR CFDs except those based on shares listed in Singapore. There are no exemptions based on investor type to the residency based exclusions.

 

What do I need to do to start trading CFDs with IBKR?

You need to set up trading permission for CFDs in Account Management, and agree to the relevant trading disclosures. If your account is with IBLLC, IBKR will then set up a new account segment (identified with your existing account number plus the suffix “F”). Once the set-up is confirmed you can begin to trade. You do not need to fund the F-account separately, funds will be automatically transferred to meet CFD margin requirements from your main account.  

Are there any market data requirements?

The market data for IBKR Share CFDs is the market data for the underlying shares. It is therefore necessary to have market data permissions for the relevant exchanges. If you already have set up market data permissions for an exchange for trading the shares, you do not need to do anything. If you want to trade CFDs on an exchange for which you do not currently have market data permissions, you can set up the permissions in the same way as you would if you planned to trade the underlying shares.

 

How are my CFD trades and positions reflected in my statements?

If you have an account with IBLLC, your CFD positions are held in a separate account segment identified by your primary account number with the suffix “F”. You can choose to view Activity Statements for the F-segment either separately or consolidated with your main account. You can make the choice in the statement window in Account Management. For other accounts CFDs are shown normally in your account statement alongside other trading products.

 

Can I transfer in CFD positions from another broker?

IBKR does not facilitate the transfer of CFD positions at this time.

 

Are charts available for Share CFDs?

Yes.

 What account protections apply when trading CFDs with IBKR?

CFDs are contracts with IB UK as your counterparty, and are not traded on a regulated exchange and are not cleared on a central clearinghouse. Since IB UK is the counterparty to your CFD trades, you are exposed to the financial and business risks, including credit risk, associated with dealing with IB UK. Please note however that all client funds are always fully segregated, including for institutional clients. IB UK is a participant in the UK Financial Services Compensation Scheme ("FSCS"). IB UK is not a member of the U.S. Securities Investor Protection Corporation (“SIPC”).Please refer to the IB UK CFD Risk Disclosure for further detail on risks associated with trading CFDs.

 

In what type of IBKR accounts can I trade CFDs e.g., Individual, Friends and Family, Institutional, etc.? 

All margin accounts are eligible for CFD trading. Cash or SIPP accounts are not.

 

What are the maximum a positions I can have in a specific CFD?

There is no pre-set limit. Bear in mind however that very large positions may be subject to increased margin requirements. Please refer to CFD Margin Requirements for more detail.

 

Can I trade CFDs over the phone?

No. In exceptional cases we may agree to process closing orders over the phone, but never opening orders.

 

 

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

62% of retail investor accounts lose money when trading CFDs with IBKR (UK).

You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

ESMA Ruling

The European Securities and Markets Authority (ESMA) issued temporary product intervention measures effective from 1st August 2018 (ESMA Decision).

The restrictions imposed by the ESMA Decision consist of: 1) leverage limits on the opening of a CFD position; 2) a margin close out rule on a per account basis; 3) negative balance protection on a per account basis; 4) a restriction on the incentives offered to trade CFDs; and 5) a standardized risk warning.

The ESMA Decision is only applicable to retail clients. Professional clients are unaffected.


 

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

62% of retail investor accounts lose money when trading CFDs with IBKR (UK).

You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
 

IBKR Stock Yield Enhancement Program

PROGRAM OVERVIEW

The Stock Yield Enhancement Program (SYEP) offers clients the opportunity to earn additional income on their full-paid shares by lending those shares to IBKR for on-lending to short sellers that are willing to pay to borrow them. 

Upon enrollment, Program activities are managed in their entirety by IBKR and require no actions on the part of participants.  These activities include the following:

- Identifying the shares in client accounts which borrowers are attempting to borrow;

- Establishing loans and returns;

- Paying interest (expressed as an interest accrual for activity statement reporting purposes) on cash collateral posted to a client’s account; and

- Reporting of loan activity, cash collateral transfers and income on the activity statements;

In contrast to the securities lending programs offered by others, IBKR provides complete transparency to the market rates, gross income earned from each transaction by IB and interest paid by to the client and IBKR. 

 

HOW IT WORKS

- Clients may enroll in the Program in Account Management (full details below). Activation generally takes place overnight. Eligible accounts include any IB LLC, IB Hong Kong, IB Canada, and IB-UK margin accounts, IB LLC, IB Canada, IB-UK or IB Hong Kong cash accounts with equity in excess of USD 50,000 are also eligible.

- Once activated, IBKR will review the inventory of eligible shares on a daily basis held by the client and use eligible shares to satisfy internal and external borrow demand. If the supply of eligible shares exceeds borrow demand, clients will be allocated loans on a pro rata basis (e.g. if aggregate supply is 20,000 shares and aggregate demand 10,000, each client will be eligible to have 50% of their shares loaned).

- At the end of each day that any loan is in place, IBKR will pay the client interest (presented as an interest accrual) on the cash collateral posted to the client’s account for the loan. IBKR will retain any amounts it earns from the loan in excess of the interest paid to the client. The details regarding the transaction, including the quantity of shares loaned, collateral amount, gross income earned by IBKR and interest accruing to the client are reflected on the daily activity statement. 

- Clients maintain full control of loaned shares with no impairment as to:

          * Market exposure ( i.e., will continue to recognize profit or loss consistent with stock price move);

          * The ability to sell at any time without prior notice;

          * Hedges (e.g., covered calls, protective puts);

          * The representation of holdings in statements and the trading platform; and

          * Cost basis 

 

SPECIAL CONSIDERATIONS

- Loaned shares may not be protected by SIPC, however, the cash collateral received for the loaned securities is segregated within the 15c3-3 Reserve Account and therefore subject to the same investment restrictions;

- The interest rate that IBKR pays for any given loan is subject to supply and demand considerations that are outside the control of IBKR and which are susceptible to change from one day to another without advance notice or limit as to the magnitude of change. The interest paid to participants will reflect such changes;

- Proxy voting rights on loaned shares are forfeited (rights go to borrower);

- Loaned shares are typically used to facilitate short sales and such transactions may affect the value of shares.

 

HOW TO ENROLL IN THE STOCK YIELD ENHANCEMENT PROGRAM

For enrollment in the latest Client Portal, please click on the below buttons in the order specified.

 

For enrollment via Classic Account Management, please click on the below buttons in the order specified.

 

For additional FAQs relating to the Yield Enhancement Program, click here.

 

Stock Yield Enhancement Program FAQs

What is the purpose of the Stock Yield Enhancement Program?
The Stock Yield Enhancement program provides customers with the opportunity to earn additional income on securities positions which would otherwise be segregated (i.e., fully-paid and excess margin securities) by permitting IBKR to lend out those securities to third parties. Customers who participate in the program will receive cash collateral to secure the return of the stock loan at its termination as well as interest on the cash collateral provided by the borrower for any day the loan exists.

 

What are fully-paid and excess margin securities?
Fully-paid securities are securities in a customer’s account that have been completely paid for. Excess margin securities are securities that have not been completely paid for, but whose market value exceeds 140% of the customer’s margin debit balance.

 

How is the income received by a customer on any given Stock Yield Enhancement Program loan transaction determined?
The income which a customer receives in exchange for shares lent depend upon loan rates established in the over-the-counter securities lending market. These rates can vary significantly not only by the particular security loaned but also by the loan date. In general, IBKR pays interest to participants on their cash collateral at a rate that approximates 50% of the amounts earned by IBKR for lending the shares. . For example, assume IBKR earns 15% annualized income from lending shares with a value of $10,000 and it posts $10,000 cash collateral to a participant’s account. The normal daily interest rate IB would pay to a participant on the cash collateral would be $2.08

 

How is the amount of cash collateral for a given loan determined?
The cash collateral underlying the security loan and used for determining interest payments is determined using standard industry convention whereby the closing price of the stock is multiplied by 102% and then rounded up to the nearest whole dollar. For example, a loan of 100 shares of a stock which closes at $59.24 would be equal to $6,100 ($59.24 * 1.02 = $60.4248; round to $61, multiply by 100).

 

How do long sales, transfers of securities lent via the IBKR Stock Yield Enhancement Program or un-enrollment affect interest?

Interest ceases to accrue on the next business day after the trade date (T+1). Interest also ceases to accrue on the next business day after the transfer input or un-enrollment date.

 

What are the eligibility requirements for participation in the IBKR Stock Yield Enhancement Program?
All IB LLC, IB UK, IB HK, and IB Canada margin accounts or IB LLC, IB UK (excluding SIPP accounts), IB HK and IB Canada cash accounts with equity over $50,000 at the time of application are eligible. IB Japan, IB Australia and IB India customers are not eligible. Japanese and Indian clients maintaining accounts with IB LLC are eligible.


In addition, Financial Advisor client accounts, fully disclosed IBroker clients and Omnibus Brokers who meet the above requirements can participate. In the case of Financial Advisors and fully disclosed IBrokers, the clients themselves must sign the agreements. For Omnibus Brokers, the broker signs the agreement.

 

Are IRA accounts eligible to participate in the Stock Yield Enhancement Program?
Yes.

 

Are partitions of IRA accounts managed by Interactive Brokers Asset Management eligible to participate in the Stock Yield Enhancement Program?
No.

 

Are UK SIPP accounts eligible to participate in the Stock Yield Enhancement Program?
No.

 

How do I enroll in the IBKR Stock Yield Enhancement Program?
Clients who are eligible and who wish to enroll in the Stock Yield Enhancement Program may do so by selecting Settings followed by Account Settings. Click the gear icon next to the words Trading Permissions. Check the box at the top of the page under Trading Programs that says Stock Yield Enhancement. Click CONTINUE and fill out any required agreements/disclosures.

 

What happens if equity in a participating cash account falls below the $50,000 qualifying threshold?
The cash account must meet this minimum equity requirement solely at the point of signing up for the program. If the equity falls below that level thereafter there is no impact upon existing loans or the ability to initiate new loans.

 

How does one terminate Stock Yield Enhancement Program participation?

Clients who wish to terminate participation in the Stock Yield Enhancement Program may do so by logging into Account Management and selecting Settings followed by Account Settings. Click the gear icon next to the words Trading Permissions. Remove the check from the box in the Trading Programs section titled Stock Yield Enhancement Program". Click CONTINUE and fill out any required agreements/disclosures. Requests to terminate are typically processed at the end of the day.

 

If an account signs up and un-enrolls at a later time, when can it be re-enrolled into the program?
After un-enrollment, the account may not re-enroll for 90 calendar days.

 

What types of securities positions are eligible to be lent?
Eligible securities include U.S. common stocks (exchange listed, PINK and OTCBB) and Canadian common stocks (exchange listed), ETFs, preferred stocks and corporate bonds. Municipal bonds, non-U.S. and non-Canadian securities are not eligible.

 

Is there any restriction on lending stocks which are trading in the secondary market following an IPO?
No, as long as IBKR is not part of the selling group.

 

How does IBKR determine the amount of shares which are eligible to be loaned?
The first step is to determine the value of securities, if any, which IBKR maintains a margin lien upon and can lend without client participation in the Stock Yield Enhancement Program. A broker who finances client purchases of securities via margin loan is allowed by regulation to loan or pledge as collateral that client’s securities in an amount up to 140% of the cash debit balance. For example, if a client maintaining a cash balance of $50,000 buys securities having a market value of $100,000, the debit or loan balance will be $50,000 and the broker holds a lien on 140% of that balance or $70,000 of securities. Any securities held by the client in excess of that amount are referred to as excess margin securities ($30,000 in this example) and are required to be segregated unless the client provides IB the authorization to lend through the Stock Yield Enhancement Program.

The debit balance is determined by first converting all non-USD denominated cash balances to USD and then backing out any short stock sale proceeds (converted to USD as necessary). If the result is negative then we free up 140% of that negative number. In addition, cash balances maintained in the commodities segment or for spot metals and CFDs are not considered.

EXAMPLE 1: Customer is long EUR 100,000 in a USD Base Currency account with a EUR.USD rate of 1.40. Customer purchases USD denominated stock valued at $112,000 (EUR 80,000 equivalent). All securities are deemed fully-paid as cash balance as converted to USD is a credit.

Component EUR USD Base (USD)
Cash 100,000 (112,000) $28,000
Long Stock   $112,000 $112,000
NLV     $140,000

EXAMPLE 2: Customer holds long USD of 80,000, long USD denominated stock of $100,000 and short USD denominated stock of $100,000. Long securities totaling $28,000 are deemed margin securities and the remainder of $72,000 excess margin securities. This is determined by subtracting the short stock proceeds from the cash balance ($80,000 - $100,000) and multiplying the resultant debit by 140% ($20,000 * 1.4 = $28,000)

Component Base (USD)
Cash $80,000
Long Stock $100,000
Short Stock ($100,000)
NLV $80,000

 

Will IBKR lend out all eligible shares?
There is no guarantee that all eligible shares in a given account will be loaned through the Stock Yield Enhancement Program as there may not be a market at an advantageous rate for certain securities, IBKR may not have access to a market with willing borrowers or IBKR may not want to loan your shares.

 

Are Stock Yield Enhancement Program loans made only in increments of 100?
No. Loans can be made in any whole share amount although externally we only lend in multiples of 100 shares. Thus the possibility exists that we would lend 75 shares from one client and 25 from another should there be external demand to borrow 100 shares.

 

How are loans allocated among clients when the supply of shares available to lend exceeds the borrow demand?
In the event that the demand for borrowing a given security is less than the supply of shares available to lend from participants in our Yield Enhancement Program, loans will be allocated on a pro rata basis (e.g. if aggregate supply is 20,000 and demand is 10,000, each client will be eligible to have 50% of his/her shares lent)

 

Are shares loaned only to other IBKR clients or to other third parties?
Shares may be loaned to any counterparty and is not limited solely to other IBKR clients.

 

Can the Stock Yield Enhancement Program participant determine which shares IBKR can lend?
No. The program is entirely managed by IBKR who, after determining those securities, if any, which IBKR is authorized to lend by virtue of a margin loan lien, has the discretion to determine whether any of the fully-paid or excess margin securities can be loaned out and to initiate the loans.

 

Are there any restrictions placed upon the sale of securities which have been lent through the Stock Yield Enhancement Program?
Loaned shares may be sold at any time, without restriction. The shares do not need to be returned in time to settle your sale of the share and proceeds from the sale are credited to the client’s account on the normal settlement date. In addition, the loan will be terminated on the open of the business day following the security sale date.

 

Can a client write covered calls against stock which has been loaned out through the Stock Yield Enhancement Program and receive the covered call margin treatment?
Yes. A loan of stock has no impact upon its margin requirement on an uncovered or hedged basis since the lender retains exposure to any gains or losses associated with the loaned position.

 

What happens to stock which is the subject of a loan and which is subsequently delivered against a call assignment or put exercise?
The loan will be terminated on T+1 of the action (trade, assignment, exercise) which closed or decreased the position.

 

What happens to stock which is the subject of a loan and which is subsequently halted from trading?
A halt has no direct impact upon the ability to lend the stock and as long as IBKR can continue to loan the stock, such loan will remain in place regardless of whether the stock is halted.

 

Can the cash collateral from a loan be swept to the commodities segment to cover margin and/or variation?
No. The cash collateral securing the loan never impacts margin or financing.

 

What happens if a program participant initiates a margin loan or increases an existing loan balance?
If a client maintains fully-paid securities which have been loaned through the Stock Yield Enhancement Program and subsequently initiates a margin loan, the loan will be terminated to the extent that the securities do not qualify as excess margin securities. Similarly, if a client maintaining excess margin securities which have been loaned through the program increases the existing margin loan, the loan may again be terminated to the extent that the securities no longer qualify as excess margin securities.

 

Under what circumstances will a given stock loan be terminated?
In the event of any of the following, a stock loan will be automatically terminated:

- If the client elects to terminate program participation
- Transfer of shares
- Borrowing of a certain amount against the shares
- Sale of shares
- Call assignment/put exercise
- Account closure

 

Do participants in the Stock Yield Enhancement Program receive dividends on shares loaned?
Yes. Stock Yield Enhancement Program shares that are lent out are segregated and IBKR will pay the dividend and not payment in lieu (PIL).

 

Do participants in the Stock Yield Enhancement Program retain voting rights for shares loaned?

No. The borrower of the securities has the right to vote or provide any consent with respect to the securities if the Record Date or deadline for voting, providing consent or taking other action falls within the loan term.

 

Do participants in the Stock Yield Enhancement Program receive rights, warrants and spin-off shares on shares loaned?

Yes. The lender of the securities will receive any rights, warrants, spin-off shares and distributions made on loaned securities.

 

How are loans reflected on the activity statement?

Loan collateral, shares outstanding, activity and income is reflected in the following 6 statement sections:


1. Cash Detail – details starting cash collateral balance, net change resulting from loan activity (positive if new loans initiated; negative if net returns) and ending cash collateral balance.

 

2. Net Stock Position Summary – for each stock details total Shares at IBKR, the number of Shares Borrowed, the number of Shares Lent and the Net Shares (=Shares at IBKR + Shares Borrowed - Shares Lent). 

 

3. IB Managed Securities Lent – lists for each stock loaned through the Stock Yield Enhancement Program the Quantity of shares loaned, the Interest Rate (%). 

 

4. IB Managed Securities Lent Activity – details the loan activity for each security including Loan Return Allocations (i.e., terminated loans); New Loan Allocations (i.e., initiated loans); the share Quantity; the Net Interest Rate (%); Interest Rate on Customer Collateral (%) and the Collateral Amount. 

 

5. IB Managed Securities Lent Activity Interest Details – details on an individual loan basis including the Interest Rate Earned by IBKR (%); the Income Earned by IBKR (represents the total income IBKR earns from the loan which is equal to {Collateral Amount * Interest Rate}/360); the Interest Rate on Customer Collateral (represents about half of the income IB earns on the loan) and Interest Paid to Customer (represents the interest income earned on a client’s collateral)

Note: This section will only be displayed if the interest accrual earned by the client exceeds USD 1 for the statement period.   

 

6. Interest Accruals – the interest income is accounted for here as an interest accrual and is treated as any other interest accrual (aggregated but only displayed as an accrual when exceeding $1 and posted to cash monthly). For year-end reporting purposes, this interest income will be reported on Form 1099 issued to U.S. taxpayers.

 

Considerations for Optimizing Order Efficiency

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.

 

Overview of SEC Fees

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 2016 the fee was assessed at a rate of $0.0000218 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.

Transaction

Subject to Fee?

Example

Calculation

Stock Purchase

No

N/A

N/A

Stock Sale (cost plus commission option)

Yes

Sell 1,000 shares MSFT@ $25.87

$0.0000218 * $25.87 * 1,000 = $0.563966

Call Purchase

No

N/A

N/A

Put Purchase

No

N/A

N/A

Call Sale

Yes

Sell 10 MSFT June ’11 $25 calls @ $1.17

$0.0000218 * $1.17 * 100 * 10 = $0.025506

Put Sale

Yes

Sell 10 MSFT June ’11 $25 puts @ $0.41

$0.0000218 * $0.41 * 100 * 10 = $0.008938

Call Exercise

No

N/A

N/A

Put Exercise

Yes

Exercise of 10 MSFT June ’11 $25 puts

$0.0000218 * $25.00 * 100 * 10 = $0.545

Call Assignment

Yes

Assignment of 10 MSFT June ’11 $25 calls

$0.0000218 * $25.00 * 100 * 10 = $0.545

Put Assignment

No

N/A

N/A

 

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

 

 

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