How can my employer get set up in order to receive duplicate copies of my trade confirmations and statements?

In order for an employer to be set up so as to received this information, you will need to have them prepare and email to newaccounts@interactivebrokers.com a Rule 407 letter which confirms your employment and which serves as their request to receive duplicate statements and trade confirms. Assuming that your employer is a financial institution which, for in-house compliance purposes and/or as a result of regulatory mandate monitors the trading activities of their employees, they should be familiar with the preparation and contents of this letter. 

You may also want to first verify with your employer whether they are a participant in the IBEmployeeTrackSM program which automatically identifies new IB accounts opened by employees and organizes into a single daily transmission the reports required for all.

 

Note that once established, this reporting cannot be terminated without confirmation from the employer that the delivery of statements and confirms is no longer required.

 

NOTE:

If this request is being driven by a change in the account holder's employment, the account holder should update their employment information within Account Management. In addition, if the account holder selects the Applicant Information and then Regulatory Information menu options within Account Management they will be presented with the following question:

Is the account holder or any immediate family member who resides in the same household, registered as a broker-dealer or an employee, director or owner of a securities or commodities brokerage firm?

Answering 'Yes' to that question will prompt a series of questions and generate a sample Rule 407 letter.

What is the meaning of Mark-to-Market and First In, First Out?

Overview: 

Mark-to-Market (MTM) refers to the method of calculating values for positions based on daily movements of the position calculated against the closing or settlement price of the product for that day.  At the end of each business day, the open positions carried in an account are credited or debited funds based on the settlement price of the open positions that day. 

First In, First Out (FIFO) is the practice of using the first initiated position in a security as the trade that is paired off against the most recent closing trade in that same security.  This method is often used for tax accounting purposes.  In other words, it is the method of valuing securities which uses the oldest items in inventory first.

What does the Interest Accrual Reversal line item on the Activity Statement represent?

Overview: 

Each day, IBKR calculates and reports in the Interest Accruals section of the Activity Statement a forecast or accrual of interest earned or to be paid for the statement period. Around the first week of each month the interest which has been accrued during the prior month is "backed-out" or reversed and actual interest for the month is posted in the Cash Report section. These reversals, which occur once a month, should be close to the actual interest, although they may not always be exactly equal since accruals are a forecast of actual interest. 

Account holders should also note that accrued interest is only posted for any given reporting period when the amount exceeds $1, either positive or negative. Balances below $1 are retained and posted once, when aggregated with future accruals, the amount exceeds $1.

What does the Cash FX Translation Gain/Loss line on my Daily Activity Statement represent and how is it calculated?

Overview: 

In order to provide a comprehensive snapshot of your account equity for statement generation purposes, any long or short cash balance in your account which is denominated in a currency other than that which you have designated as your Base Currency must be converted at the then prevailing exchange rate. As exchange rates tend to vary from one period to another, this conversion process is likely to result in a Cash FX Translation balance that is either positive (i.e., a gain) or negative (i.e., a loss).  It should be noted that these gains or losses represent a mark to market calculation (i.e., as if all non-Base Currency balances had been closed out at the end of day exchange rate) and the actual gain or loss, if any, cannot be determined until such time the non-Base Currency balance has been closed. 

The Cash FX Translation Gain/Loss for any given non-Base Currency is determined by first calculating the difference between the Base Currency exchange rates as of the current and prior daily statement periods (exchange rateC – exchange rateP , where rates are made available in the Base Currency Exchange Rate section of each statement;). This difference, positive or negative, is then multiplied by the Starting Cash balance for the current statement period to determine the Cash FX Translation gain (if positive) or loss (if negative).  As all other non-Base Currency details (e.g., net trade sales and purchases, commissions, interest, etc.) are booked as of the end of day for currency translation purposes, they have, by definition, no translation gain or loss.

Glossary terms: 

What is the Mark-to-Market calculation method and how does it work?

Overview: 

Mark-to-market (MTM) is a method of valuing positions and determining profit and loss which is used by IBKR for TWS and statement reporting purposes. Under MTM, positions are valued in the Market Value section of the TWS Account Window based upon the price which they would currently realize in the open market.  Positions are also valued using the MTM method for statement purposes and it is one of the methods by which profit or loss is computed.  Other methods available include First In, First Out (FIFO), Last In, First Out (LIFO), and Maximum Loss. 

MTM P&L shows how much profit or loss was made over the statement period, regardless of whether positions are open or closed and with no requirement that closing transactions be matched to an opening transaction. The MTM methodology rather assumes that all open positions and transactions are settled at the end of each day and new positions are opened the next day. For purposes of simplification, MTM calculations are split into two calculations: 1) calculations for transactions which took place during the statement period, referred to as Transaction MTM on the statement; and 2) calculations for positions which were open prior to the start of the period, referred to as Prior Period MTM on the statement.

Background: 

For example, assume 100 shares of hypothetical stock XYZ are purchased at $50.00 on Day 1; another 200 shares are purchased on Day 2 at $52.00; 200 shares are sold on Day 3 at $53.00 and another 100 on Day 4 at $53.50.  Also assume that the closing prices for XYZ on Days 1, 2, 3 and 4 are $50.50, $51.50, $54.00 and $54.00, respectively. The MTM statement calculations for each day are as follows:
 

Day 1

Transaction MTM  - $50.00  ((50.50 – 50.00) * 100 )

Prior Period MTM  -   $0.00

 Total MTM  -           $50.00

 

Day 2

Transaction MTM  - ($100.00)  ((51.50 – 52.00) * 200 )

Prior Period MTM  -  $100.00   ((51.50 – 50.50) * 100 )

 Total MTM  -                $0.00

 

Day 3

Transaction MTM  - ($200.00)  ((54.00 – 53.00) * -200 )

Prior Period MTM  -  $750.00   ((54.00 – 51.50) * 300 )

 Total MTM  -            $550.00

 

Day 4

Transaction MTM  -  ($50.00)  ((53.50 – 54.00) * 100 )

Prior Period MTM  -     $0.00   ((54.00 – 54.00) * 100 )

 Total MTM  -            ($50.00)

 

Total - $550.00

 

IMPORTANT NOTICE

Account holders should note that profit and loss calculations are calculated for statement reporting purposes solely and should consult with their tax advisor regarding their obligations with respect to reporting gains and losses for tax reporting purposes.

Why am I not informed of the assignment on my US securities option position until the following day?

Overview: 

The processing of exercise notices for American style options on days other than the expiration date is not performed on a real-time basis, but rather as part of a nightly batch process by the Options Clearing Corporation (OCC).   The processing sequence, which by definition results in a notification lag of at least one day to the assigned client, is as follows: 

  • OCC generally allows its clearing members to submit exercise notices on behalf of the clients holding a long position electronically throughout the day, but generally no later than the start of their critical processing in the evening (Day E). 
  • As part of its evening position processing sequence, OCC randomly assigns the exercise notices it has received to the open interest of its clearing members.  That information is then made available by OCC to its clearing members early in the morning on the following day (Day E+1). 
  • At the point in which that information has been made available, clearing firms such as IBKR have already completed their processing of that day’s trade activity in order to provide timely statements, margin and settlement information to their clients.  Also, since OCC carries the client positions of its clearing members in an omnibus manner (i.e., they do not know the identity of the clients, only the clearing firm), the clearing member must, in turn, execute a random process to assign those exercise notices to clients holding a short position in that particular option series. 
  • Once IBKR receives notice of the assignment from OCC and completes its random assignment process, the assignments will be readily posted to the Trader Workstation of the impacted accounts and reflected on the Daily Activity Statement as of that day’s close (E+1). 

In addition, due to this processing sequence and the fact that a long option may have remaining time value, IBKR cannot automatically provide an exercise notice to OCC for any long option spread against the assigned short option as a means of offsetting the ensuing delivery obligation. 

Account holders should refer to the Characteristics and Risks of Standardized Options disclosure document which is provided by IBKR to every option eligible client at the point of application and which clearly spells out the risks of assignment.  This document is also available online at OCC's web site.

What are the key dates relating to stock Dividends?

Overview: 

Key dates relating to stock dividends are as follows:

1. Declaration Date - date at which company's board of directors approves dividend payment and designates the Payment Date and Record Date.

2. Record Date - the date which determines which stockholders are entitled to receive the dividend payment. You need to own the shares as of the close of the Record Date in order to receive the dividend.

3. Ex-Dividend Date - the date on or after which the stock will be traded without the right to receive the dividend. Because most stock trades in the US settle regular way; that is, two business days after the trade, an individual must purchase the stock two business days before the Record Date to qualify for the dividend. The Ex-Dividend Date is therefore one business day before the Record Date.

4. Payment Date - the date on which the declared dividend is paid to all stockholders owning shares on the record date.

 

* Please note these key dates may be different for special dividends. Please reference KB 3043 for information regarding special dividends.

Are non-US residents subject to withholding for tax purposes?

Overview: 

 

Information relating to tax obligations is reported as required to the tax authorities within your country of residence as well as other countries if trading products subject to any local withholding requirements.  Unless specifically directed by a taxing authority, IBKR does not withhold taxes on proceeds from security sales. We are required by US tax law, for example, to withhold US taxes on dividends paid by US corporations to foreign persons at a rate of 30%. This rate may be lower if the US has entered into a tax treaty with your country. In addition, investment interest income is not subject to US withholding. All withholdings for non-US persons and most entities will be reported on Form 1042-S at the close of each year. For further information refer to IRS publication 901 and/or your tax advisor.

Why does the Cash Report section of my statement reflect a reduction in cash despite no trade activity or withdrawals?

Overview: 

 

The Cash Report section details how each period's cash balance changes from beginning to end. If your account holds a long or short balance in a non-base currency, such balances will be translated (but not converted) into your base currency for statement reporting and account equity aggregation purposes. The rates at which these non-base balances have been converted are detailed in the Exchange Rates section located towards the bottom of your Daily Activity Statement. All other things being equal, any change in an exchange rate from one statement period to another will result in either an increase or decrease in your ending cash balance with the net change across all non-Base currencies being reflected in the Cash FX Translation Gain/Loss line. This does not reflect a realized gain or loss on these open currency positions but rather a mark-to-market calculation across statement periods.

Glossary terms: 

What timeframe of activity statements is made available online and how can archived statements be obtained?

Overview: 

Daily activity statements for the past 4 years are available online through Client Portal. Monthly activity statements for the past 60 months and annual statements for the past 5 years are also available. Statements are available for an additional 2 years beyond this and are available in electronic format only (delivered via email) at the following cost:

  • Statements 6 to 7 years old the cost will be USD 25.00 for the first statement + USD 5.00 for each additional statement

Note: IBKR does not typically provide daily statements in lieu of monthly or annual statements.

Payment may be made in the form of check, or in the case of active accounts a debit to the account cash balance.  Requests for archived statements may be made via web ticket and checks are to be mailed to Interactive Brokers, Attn: Funds & Banking, 209 S La Salle St. Suite 1000, Chicago, IL 60604 USA

Background: 

IMPORTANT NOTE

Cashier’s Checks, Official Checks, Teller’s Checks and Banker’s checks issued by banks are the recommended forms of payment.  Personal checks and checks issued by a credit union or bill payment service are subject to a seven business day hold period, after which the requested statements will be issued.

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