Market Data Non-Professional Questionnaire

Overview: 

Insight into completing the new Non-Professional Questionnaire.

Background: 

The NYSE and most US exchanges require vendors to positively confirm the market data status of each customer before allowing them to receive market data. Going forward, the Non-Professional Questionnaire will be used to identify and positively confirm the market data status of all customer subscribers. As per exchange requirements, without positively identifying customers as non-professional, the default market data status will be professional. The process will protect and maintain the correct market data status for all new subscribers. For a short guide on non-professional definitions, please see ibkb.interactivebrokers.com/article/2369.

Each question on the questionnaire must be answered in order to have a non-professional designation. As exchanges require positive confirmations of proof for non-professional designations, an incomplete or unclear Non-Professional Questionnaire will result in a Professional designation until the status can be confirmed. 

If the status should change, please contact the helpdesk.

Explanation of questions:

1)    Commercial & Business purposes

a)    Do you receive financial information (including news or price data concerning securities, commodities and other financial instruments) for your business or any other commercial entity?

Explanation: Are you receiving and using the market data for use on behalf of a company or other organization aside from using the data on this account for personal use?

b)    Are you conducting trading of any securities, commodities or forex for the benefit of a corporation, partnership, professional trust, professional investment club or other entity?

Explanation: Are you trading for yourself only or are you trading on behalf of an organization (Ltd, LLC, GmbH, Co., LLP, Corp.)?

c)    Have you entered into any agreement to (a) share the profit of your trading activities or (b) receive compensation for your trading activities?

Explanation: Are you being compensated to trade or are you sharing profits from your trading activities with a third party entity or individual?

d)    Are you receiving office space, and equipment or other benefits in exchange for your trading or work as a financial consultant to any person, firm or business entity?

Explanation: Are you being compensated in any way for your trading activity by a third party, not necessarily by being paid in currency.

2)    Act in a capacity

a)    Are you currently acting in any capacity as an investment adviser or broker dealer?

Explanation: Are you being compensated to manage third party assets or compensated to advise others on how to manage their assets?

b)    Are you engaged as an asset manager for securities, commodities or forex?         
 

Explanation: Are you being compensated to manage securities, commodities, or forex?

c)     Are you currently using this financial information in a business capacity or for managing your employer’s or company’s assets?

Explanation: Are you using data at all for a commercial purposes specifically to manage your employer and/or company assets?

d)    Are you using the capital of any other individual or entity in the conduct of your trading?

Explanation: Are there assets of any other entity in your account other than your own?

3)    Distribute, republish or provide data to any other party

a)    Are you distributing, redistributing, publishing, making available or otherwise providing any financial information from the service to any third party in any manner?

Explanation: Are you sending any data you receive from us to another party in any way, shape, or form?

4)    Qualified professional securities / futures trader

a)    Are you currently registered or qualified as a professional securities trader with any security agency, or with any commodities or futures contract market or investment adviser with any national or state exchange, regulatory authority, professional association or recognized professional body? i, ii
YES☐             NO☐

i) Examples of Regulatory bodies include, but are not limited to,

  • US Securities and Exchange Commission (SEC)
  • US Commodities Futures Trading Commission (CFTC)
  • UK Financial Service Authority (FSA)
  • Japanese Financial Service Agency (JFSA)

ii) Examples of Self-Regulatory Organization (SROs) include, but are not limited to:

  • US NYSE
  • US FINRA
  • Swiss VQF 

CFTC Ownership and Control Reporting

The Commodities Futures Trading Commission (CFTC) has historically maintained rules which require FCMs to report information relating to clients holding positions equal to or exceeding defined thresholds (e.g., Large Trader Reporting).  In November 2013, the CFTC adopted a new rule which expands the prior reporting rules and which requires the collection and reporting of more comprehensive information on owners and controllers of accounts trading U.S. commodity futures products.  This new rule is referred to as Ownership and Control Reporting (OCR) and outlined below are a series of FAQs relating to this rule. 

1. Who must provide CFTC OCR information?
In order to comply with the requirement that any account meeting the position or volume thresholds be reported to the CFTC by 09:00 ET on the day following the day in which the account becomes reportable, IB requires that all accounts trading U.S. commodity futures products provide the requested information.
 
2. What information must be provided?
The following information is required of all Owners and Controllers of an account:
• Name
• Street Address
• Email Address
• Direct Phone Number, Including Country Code
 
The following details are also required for owners and controllers that are legal entities:
• Legal Entity Identifier (LEI), If Applicable
• Contact Person Details:
o Name
o Job Title
o Relationship to Legal Entity
o Direct Phone Number, Including Country Code
 
The following details are also required for all individuals who are “Account Controllers”:
• Individual’s Relationship to Account Owner
• Individual’s Job Title
• Name of Individual’s Employer
• Employer’s Legal Entity Identifier (LEI), If Applicable
 
3. Who is an "Account Owner" for the purposes of OCR?
An "Account Owner" includes any individual or legal entity who holds a direct ownership interest in the trading account.

4. Who is an "Account Controller" for the purposes of OCR?
The CFTC defines an “Account Controller” as “a natural person who by power of attorney or otherwise actually directs the trading of an account. A trading account may have more than one controller.”
This definition can be found at 17 C.F.R. § 15.00(bb).
 
5. What is the "Head of Desk" option?
As noted above, you must provide full OCR information for all Owners and Controllers of your account. Unless you indicate otherwise, IB presumes that every active TWS user on your account is an Account Controller for CFTC OCR purposes.
 
Your institution may have a "Head of Desk" who directs the trading of your institution's trading account, with the other traders simply acting under this individual's direction.  If this is the case, you can identify the "head of desk" using the Account Management OCR interface, in which case "Account Controller" information will only be required for that individual.
 
6. What is a Legal Entity Identifier (LEI)?
An LEI is a unique 20 -digit alphanumeric code associated with a single organization and which is intended to be recognized universally across regulatory agencies and jurisdictions.
-If any of the Account Owners or Controllers of your account have LEIs, you must provide the LEIs;
-If an Account Owner or Controller of your account does not have an LEI, you can select "non applicable".
 
DTC, in collaboration with SWIFT, operate as the local (U.S.) source provider of LEIs and maintains a website (www.gmeiutility.org) for the assignment of new and search of existing LEIs.
 
7. What is a National Futures Association (NFA) ID?
A number which the National Futures Organization assigns to each registrant (e.g., firms and individuals such as Commodity Trading Advisors and Commodity Pool Operators). The NFA maintains an Online Registration System (ORS) through which registration and assignment of the ID is provided. See www.nfa.futures.org
 
8. How do I know if my employer has an LEI or NFA ID?
You may ask your employer to provide you with this information or search one of the following websies:
 
LEI searches may be performed via the following DTC website: www.gmeiutility.org. Searches may be conducted by the entity's registered legal name or address.
 
NFA ID searches may be performed via the following NFA webpage: www.nfa.futures.org/basicnet/welcome.aspx . Searches may be conducted by entering a firm name, individual name or pool name.
 
9. Why must I provide this information?
U.S. federal regulations require all FCMs, including IB, to obtain this information from its clients. The requirement is universal and applies to any individual or entity regardless of their broker.
 
10. Does OCR apply to non-U.S. persons?
Yes, if you wish to trade U.S. commodity futures products, we must collect this information from you.
 
11. How will Interactive Brokers treat this information?
This data will be kept confidential in accordance with the Interactive Brokers Group Privacy Statement. See link for details: https://individuals.interactivebrokers.com/en/index.php?f=ibgStrength&p=priv
 
12. Can I enter the OCR information in multiple sessions?
Unfortunately, all data must be entered within a single session and partial entry and a save option is not available. If you do not enter all required OCR information in a single session, you will need to start all over and reenter it in your next session.
 
13. Are foreign brokers subject to OCR?
Yes. As a foreign broker you must either:
a) Ensure that IB has OCR information for all of your customers that trade U.S. commodity futures products; or
b) Perform your own OCR submissions on their behalf.
 
14. Where can I learn more?
The full text of this rule change is available on the CFTC website

 

Hong Kong - China Stock Connect

Hong Kong – China Stock Connect (“China Connect”) is a mutual market access program through which Hong Kong and international investors can trade shares listed on the Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) via the Stock Exchange of Hong Kong (SEHK) and their existing clearinghouse. As a member of SEHK, IBKR provides you with direct access to trade with eligible listed products on the Shanghai and Shenzhen Stock Exchange. IBKR clients with China Connect trading permissions will be eligible to trade SSE/SZSE securities through Shanghai and Shenzhen - Stock Connect.

Among the different types of SSE/SZSE-listed securities, only A shares (shares in mainland China-based companies that trade on Chinese stock exchange) are included in the Shanghai and Shenzhen Stock Connect.

Shanghai Connect includes all the constituent stocks of the SSE 180 Index, SSE 380 Index and all the SSE-listed A shares that have corresponding H shares listed on the SEHK.

Product List and Stock Codes for SSE

Shenzhen Connect includes all the constituent stocks of the SZSE Component Index, the SZSE Small/Mid Cap Innovation Index that have a market capitalization of not less than RMB 6 billion and all the SZSE-listed A shares that have corresponding H shares listed on SEHK.

Product List and Stock Codes for SZSE

IBKR Commission for Trading SSE/SZSE Securities

Same as trading Hong Kong stocks, IBKR charges only 0.08% of trade value as a commission with a minimum CNH 15 per order. Detailed fee rates can be found in the Hong Kong – China Stock Connect Northbound fee table.

Daily Quota

Trading under Shanghai Connect and Shenzhen Connect is subject to a Daily Quota. The Daily Quota is applied on a “net buy” basis. The Daily Quota limits the maximum net buy value of cross-boundary trades under Shanghai Connect and Shenzhen Connect each day.

If the Northbound Daily Quota Balance drops to zero or the Daily Quota is exceeded during the opening call auction session, new buy orders will be rejected. Or if it happens during a continuous auction session or closing call auction session, no further buy orders will be accepted for the remainder of the day. SEHK will resume the Northbound buying service on the following trading day.

SEHK will also publish the remaining balance of the Aggregate Quota and Daily Quota.

For details, please refer to HKEX Stock Connect FAQ or HKEX Stock Connect Rule 1407

Trading Information of Shanghai and Shenzhen Connect

Trading currency

RMB

Order Type

IBKR offers various order types but will stimulate the order into limit order for execution. More information can be referred to our website.

 

Tick Size / Spread

Uniform at RMB 0.01

Board Lot

100 shares (applicable for buyers only)

Odd Lot

Sell orders only (odd lot should be made in one single order)

Max Order Size

1 million shares

Price Limit

±10% on previous closing price (±5% for stocks under special treatment under risk alert, i.e. ST and *ST stocks)

Day (Turnaround) Trading

Not allowed

Block Trade

Not available

Manual Trade

Not available

Order Modification

IBKR will cancel and replace the order for any order

modification

Settlement cycle

Securities: Settlement on T day

Cash from China Connect trades: Settlement on T+1 day

Forex*: Settlement on T+2 day

*Due to the unsynchronized settlement cycle, clients who exchange CNH themselves should execute the Forex trade one day prior to the stock trade (T-1) to avoid the extra day’s interest payment (considering normal settlement without involving holidays).

Trading Hours

SSE/SZSE Trading Sessions

SSE/SZSE Trading Hours

Opening Call Auction

09:15 - 09:25

Continuous Auction (Morning)

09:30 – 11:30

Continuous Auction (Afternoon)

13:00 – 14:57

Closing Call Auction

14:57 – 15:00

Note: SSE and SZSE will not accept order cancellations from 09:20 to 09:25 and 14:57 p.m. to 15:00.

Half-day Trading

If a Northbound trading day is a half-trading day in the Hong Kong market, it will continue until respective Connect Market is closed. Refer to the exchange website for holiday trading arrangements and additional information.

Disclosure Obligation

If client holds or controls up to 5% of the issued shares of China Connect, the client is required to report in writing to the China Securities Regulatory Commission (“CSRC”) and the relevant exchange, and inform the Mainland listed company within three working days of reaching 5%.

The client is not allowed to continue purchasing or selling shares in that Mainland listed company during the three days notification period. Visit the IBKR Knowledge Base for more information.

Shareholding Restriction

A single foreign investor’s shareholding in a Mainland listed company is not allowed to exceed 10% of the company’s total issued shares, while all foreign investors’ shareholding in the A shares of the listed company is not allowed to exceed 30% of its total issued shares. Visit the IBKR Knowledge Base for more information.

Forced-sale Arrangement

Each IBKR client is not allowed to hold more than a specific percentage of the China Connect listing company's total issued shares. HKEX requires the client to follow the forced-sell requirements if the shares exceed the limit:

Situation

Shareholding (in a listed company)

A single foreign investor

> = 10% of the company’s total issued shares

All foreign investors

> = 30% of the company’s total issued shares

Margin Financing

Margin trading in China Connect securities will subject to restrictions and only certain A shares will be eligible for margin trading. Eligible Securities, as determined by SSE and SZSE from time to time, are listed on the HKEX website

According to the relevant rules of SSE and SZSE, either market may suspend margin trading activities in specific A shares when the volume of margin trading activities for a specific A share exceeds the prescribed threshold. The market will resume margin trading activities in the affected A share when its volume drops below a prescribed threshold.

Holidays

Clients will only be allowed to trade China Connect on days where Hong Kong and Mainland markets are both open for trading and banking services are available in both Hong Kong and Mainland markets on the corresponding settlement days. This arrangement is essential in ensuring that investors and brokers will have the necessary banking support on the relevant settlement days when they will be required to make payments.

The following table illustrates the holiday arrangement of Northbound trading of SSE/SZSE Securities:

 

Mainland

Hong Kong

Open for Northbound Trading

Day 1

Business Day

Business Day

Yes

Day 2

Business Day

Business Day

No, HK market closes on money settlement day

Day 3

Business Day

Public Holiday

No, HK market closes on trading day

Day 4

Public Holiday

Business Day

No, Mainland market closes

Severe Weather Conditions

Information on the trading arrangement available under severe weather conditions can found on the HKEx website

Where to Learn More?

Please refer to the following exchange website links for additional information regarding Hong Kong China Stock Connect:

If you have any questions regarding Hong Kong-China Stock Connect, please contact IBKR Client Services for further information.
 

Foreign Acount Tax Compliance Act (FATCA)

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) represents the United States efforts to combat tax evasion and abuse by US persons holding investments outside of the United States.  The Act establishes a new set of tax information reporting and withholding procedures.  While not expressly aimed at non-US persons, the regulations do impose withholding taxes on certain non-US entities that decline to disclose their US investors or account holders.

Under FATCA, US persons must report to the US tax authority, Internal Revenue Service (IRS), their assets held in offshore accounts.  In addition, the regulations seek to require non-US financial institutions to report to the US tax authority certain information about financial accounts of US or US-owned investors and account holders.

 

How does this impact US Brokers, including Interactive Brokers?

As a broker based in the United States, Interactive Brokers is required to report information and make payment of withholding taxes to the IRS, for all of our customers.  FATCA simply creates additional practices and withholdings to the current requirements for all US brokers.

Interactive Brokers will comply with the new rules.  This may require additional disclosures by investors during the account application process, as well as expanded tax reporting.  For all US institutions, FATCA becomes effective January 1, 2013.  Any FATCA tax withholding requirements begin on January 1, 2014.

Additional aspects of the regulations will be phased-in over the next few years, including an expansion of US brokers reporting on US source income to non-US accounts through Form 1042-S.

 

What action is required for US persons?

No additional action is required for US persons holding Interactive Brokers accounts.   US persons, who include US citizens, Green Card holders and other legal residents,  need only to complete Form W-9 during the account application process to certify their tax status. 

 

Does FATCA affect non-US accounts?  

Yes.  FATCA requires foreign financial institutions (FFIs) to furnish certain data directly to the IRS about any of their US taxpayer accounts or foreign entity accounts in which US taxpayers hold a certain level of ownership.  FFI compliance with the new regulations becomes effective July 1, 2013 with the submission of electronic FFI applications to the IRS.  The application forms are scheduled to be available through the IRS in January 2013.

All non-US persons and entities applying for and maintaining Interactive Broker accounts will continue to be  required to fully disclose and indentify the identity of their account's beneficial owner(s).  Through the IRS Form W-8, our account holders certify the beneficial owner's country of tax residence.  If you fail to provide a Form W-8, or do not resubmit a new W-8 when prompted upon the three-year expiration, additional withholding will apply.

Some entities not ordinarily considered to be financial institutions may be categorized under FATCA as an FFI.  Therefore, it is important to review the details outlined by the IRS.

 

Is there a summary of FFI requirements? 

While the regulations and compliance are far more complex than a brief FAQ can describe, the following offers a short summary of actions required by those defined foreign financial institutions.

  • Identify US taxpayers.  If US taxpayers refuse to waive your non-US country's privacy or secrecy rules, then the US taxpayer account must be closed.
  • Report to the IRS on the related US taxpayer activity within defined financial accounts.
  • Withhold 30% US tax on US source income against any US taxpayer or foreign entity failing to disclose information or comply with the FATCA regulations.

 

Additional Information & Resources

The IRS remains the most comprehensive and up-to-date resource about FATCA compliance, implementation, and document filing.  The IRS continues to issue news releases and forms.  Please feel free to visit the IRS FATCA Website for details. 

 

IRS 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.

IRA: Retirement Account Resource Center

IMPORTANT NOTE: This article has been customized for use by self-directed Individual Retirement Account (IRA) owners for information purposes only.  Persons are encouraged to consult a qualified tax professional with the investments and elections within the IRA.   IB does not provide tax advice.  For detailed information regarding IRAs, you may consult the IRS Publication 590-A about IRA contributions and the IRS Publication 590-B about IRA distributions.

This resource center provides a central reference point for information concerning the various IRA account types offered by IB. 

Important Notice - Select IRA Tax Reporting for key information with transaction and tax reporting in your IRA.

 

Account Management IRA Reference

Account Management IRA Tab

Beneficiary Options

Charitable Distributions

Conversions to a Roth IRA

Direct Rollovers - How & When

Frequently Asked Questions

Recharacterizations from a Roth IRA

Required Minimum Distributions

Rollover Rules & Conditions

Understanding Tax Forms

 

 

 IRS 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.

How to send documents to IB using your smartphone

Overview: 

Interactive Brokers allows you to send us a copy of a document even if you do not currently have access to a scanner. You can take a picture of the requested document with your smartphone.

Below you will find the instructions on how to take a picture and send it to IB per email with the fllowing smartphone operating systems:

iOS (iPhone)

Android (i.e. Samsung Galaxy, HTC One X, Sony Xperia, Motorola Droid)

Windows Phone (i.e. Nokia Lumia, HTC Titan, Samsung Focus)

 If you already know how to do so, please consult the instructions about the information you will need to send us aside from the document picture. Click HERE - Where to send the email to and what to include in the subject.

iOS
1. Press the power button to turn your iPhone screen on. Tap, hold and slide upwards the
Camera icon on the bottom right of your screen then drag it upwards to access the Camera.

slide up from the lock screen to take a picture

- If you do not have the Camera icon, you may access the Camera app from the home screen
of your iPhone.
2. Place your iPhone above the document and take the desired portion or page of the document
and tap on the Camera button (designated with 1 on the below illustration - Fig. 3) to take a
photo. Then you need to access the picture - tap the image in the lower left-hand corner (number 2 in the
illustration)

Tap here to take a picture

3. Exit to the home screen by pressing the round Home button on the face of the iPhone.
4. Open the Photos app
5. Next, tap the album ‘Camera Roll’. Make sure that the picture is clear and the document
is well legible, if it isn’t, please repeat the previous two steps.
6. Touch once the picture to make the menus appear and tap the share icon
designated with 1 in the illustration below.

Share button iOS

5. Select the first option - Email Photo. Please consult the following instructions for the next step - what address you should send the picture to and what else to include aside from the document, HERE.
Note: to send emails your phone has to be configured for that. Please contact your email
provider if you are not familiar with this procedure.


Android
1. Open your applications list and start the camera app. Depending on your phone model, make or setup it might be called differently.
2. Place your phone over the document and take the desired portion or page of the document and
tap the icon for the camera. (The generic button will look like the one shown below.)

Tap to take a picture
3. Press the Home key to go back to the idle screen. Go back to the apps list and start the Gallery
application. On some phones it may be called Pictures or Photos.
4. Open the album called Camera or All pictures. The last image in either of those should be the
document you just took a picture of. Tap the screen once to bring up the buttons and tap the share
icon, which generically should look as shown below.

Share on Android
5. In the sharing menu that will be displayed now tap on Email. Please consult the following instructions for the next step - what address you should send the picture to and what else to include aside from the document, HERE.
Note: to send emails your phone has to be configured for that. Please contact your email
provider if you are not familiar with this procedure.

Send per email

 

Windows Phone
1. Press the camera button in the Desktop menu of Windows phone. (If you do
not see the camera in the desktop menu, please scroll to the right and choose
camera in the listed applications)
2. Take a picture by pressing the trigger button on the side of the phone.
3. Open the picture by scrolling to the left and press the ‘...’ menu item
at the bottom task bar to see the available options.
4. Please choose send and the configured Email account you would like to use.
5. In the upcoming email, please add the destination email address, the
subject and the text you would like to send and press the ‘Send email’ button in
the bottom menu. Please consult the following instructions for the next step - what address you should send the picture to and what else to include aside from the document, HERE.
Note: to send emails your phone has to be configured for that. Please contact your email
provider if you are not familiar with this procedure.


WHERE TO SEND THE EMAIL AND WHAT TO INCLUDE IN THE SUBJECT
The email has to be created observing the below instructions:
1. In the ‘To:’ field type...
a. newaccounts@interactivebrokers.com if your you are a resident of a non-European country
b. newaccounts.uk@interactivebrokers.co.uk if you are a European resident
2. The subject field must contain all of the below:
a. Your account number (it usually has the format Uxxxxxxx, where x are numbers) or your
username
b. The purpose of sending the document. Please use the below convention:
i. PoRes for a proof of residential address
ii. PID for a proof of identity

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 industry convention whereby the closing price of the stock is multiplied by a certain percentage (generally 102-105%) and then rounded up to the nearest dollar/cent/pence/etc. There are different industry conventions per currency. For example, a loan of 100 shares of a USD stock which closes at $59.24 would be equal to $6,100 ($59.24 * 1.02 = $60.4248; round to $61, multiply by 100). Below is a chart of the various industry conventions per currency:

USD 102%; rounded up to the nearest dollar
CAD 102%; rounded up to the nearest dollar
EUR 105%; rounded up to the nearest cent
CHF 105%; rounded up to the nearest rappen
GBP 105%; rounded up to the nearest pence
HKD 105%; rounded up to the nearest cent

For more information, please see KB1146.

 

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?

ELIGIBLE ENTITIES
IB LLC
IB UK (excluding SIPP accounts)
IB HK
IB Canada (exluding RRSP/TFSA accounts)

 

ELIGIBLE ACCOUNT TYPES
Cash (minimum equity over $50,000 on enrollment date)
Margin
Financial Advisor Client Accounts*
Introducing Broker Clients Accounts: Fully Disclosed and Non-Disclosed*
Introducing Broker Omnibus Accounts
Separate Trading Limit (STL)

*Enrolled account must meet requirements in regards to margin account or cash account minimum equity.

IB Japan, IB Europe SARL, IBKR 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?

US Market EU Market HK Market CAD Market
Common Stock (exchange listed, PINK and OTCBB) Common Stock (exchange listed) Common Stock (exchange listed) Common Stock (exchange listed)
ETF ETF ETF ETF
Preferred Stock Preferred Stock Preferred Stock Preferred Stock
Corporate bonds*      

*Municipal bonds 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?
Stock Yield Enhancement Program shares that are lent out are generally recalled from the borrower before ex-date in order to capture the dividend and avoid payments in lieu (PIL) of dividends.

 

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.

 

Change Your Billable Account

If you have additional linked, duplicate or consolidated accounts, the Billable Account section appears on the Market Data Subscriptions screen. Use the Billable Accounts panel to change the account that is currently being billed for market data.

To change your billable account

1. Click Settings > User Settings
2. In the Trading Platform panel, click the Configure (gear) icon for Market Data Subscriptions.

The Market Data Subscription screen opens.

3. Click the Configure (gear) icon in the Billable Account panel.
4. Select the account you want to be billed for market data, then click Save.

Beginning with the next billing cycle, your market data subscriptions will be billed to the account you selected.

 

 

Cost Basis Reporting

 

1099 Reporting

Year End Reports

Account Transfers

 

1099 Reporting 

Statement and Year End Reporting for US persons and entities comprises the following:

1.  Cost Basis:  While the required reporting schedule was staggered, the primary cost basis that will be reported to the IRS includes equities bought and sold after December 31, 2010.  This includes the adjusted cost basis resulting from wash sales and corporate actions.

The future phase-in period for broker reporting includes the assets sold on or after the following dates:

--- Mutual Funds and  ETFS - 1/1/2012

--- Simple debt instruments (i.e. treasuries, fixed-rate bonds & municipal bonds) and options,  - 1/1/2014

--- Other debt instruments - 1/1/2016

2.  Tax Basis Method:  Brokers are required to use the method first in, first out (FIFO), unless given other instructions by an investor.  Changes to your tax basis method may be submitted through the Tax Optimizer.  The Tax Optimizer is launched from within Account Management and is available for stock, option, bond, warrant and single-stock future trades.  

IB offers multiple  tax basis methods, including three basic options:

●        First In, First Out (FIFO) - This is the default option.  FIFO assumes that the oldest security in inventory is matched to the most recently sold security.

●         Last In, First Out (LIFO) - LIFO assumes that the newest security acquired is sold first.

●         Specific Lot - Lets you see all of your tax lots and closing trades, then manually match lots to trades. Specific Lot is not available as the Account Default Match Method.

Tax Optimizer also lets you select the following additional derivatives of the specific identification method.

●        Highest Cost (HC), Maximize Long-Term Gain (MLTG), Maximize Long-Term Loss (MLTG), Maximize Short-Term Gain (MSTG), and Maximize Short-Term Loss(MSTL).


For complete instructions on using the Tax Optimizer and details on the lot-matching algorithms for each method, see the Tax Optimizer Users Guide.

Note:  Changing your tax basis is effective immediately.  The basis selected will be applied to all subsequent trades on the account statements and tax reports.  Updates will not affect previously closed trades nor the TWS profit and loss data displayed.


3.  Gain & Loss Categories:  An additional requirement to the cost basis reporting is the capital gain or loss category.  The gain or loss category of equities is determined by the length of time in which the security was held, known as the "holding period." 

●         Short-Term - Holding periods of one year or less are categorized as "short-term."

●         Long-Term  - Holding periods over one year are categorized as "long-term."

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Year End Reports

The following statements and reports display cost basis information that will be reported on Form 1099-B for eligible accounts.

  • Monthly Account Statements
  • Annual Account Statements 
  • Worksheet for Form 8949

For a complete review of the tax information and year end reporting available, click here.

Note:  Unlike the Account Statements, the Gain & Loss Worksheet for Form 8949 may consolidate sell trades.  The cost basis will be adjusted, as required for 1099-B reporting.

 

Asset Transfers

U.S. legislation from 2008 included new guidelines for tax reporting by U.S. financial institutions.  Effective January 2011, U.S.  Brokers are required to report cost basis on sold assets, whether or not a gain/loss is short-term (held one year or less) or long-term (held more than one year).   U.S. brokerage firms, Interactive Brokers LLC (IB) included, implemented changes to comply with the legislation.

For more information on cost basis with asset transfers, see Cost Basis & Asset Transfers.

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Disclaimer:  IB does not provide tax advice. 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 international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a qualified tax adviser or refer to the U.S. Internal Revenue Service.

ACATS Transfer Guide (US brokerage account transfers)

ACATS Transfer Guide

Introduction

ACATS Transfer Benefits

Navigating The Process

Incoming Or Outgoing

Initiating Your Transfer

What To Expect

Who To Contact For Help

 

Introduction

Understanding the basic facts about transferring accounts between US brokerage firms can be help to avoid delays.  Through this article and other Knowledge Database resources, Interactive Brokers seeks to assist with your incoming and outgoing ACATS requests.

US brokerage firms utilize a standardized system to transfer customer accounts from one firm to another.  Known as the Automated Customer Account Transfer Service or ACATS, the process allows assets to move seamlessly between  brokerage firms in a unified time frame.   ACATS transfers are facilitated by a third party, the National Securities Clearing Corporation (NSCC), to assist participating members with timely asset transfers.

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ACATS Transfer Benefits

The majority of assets may be transferred between US brokerage firms and some banks through ACATS.  This standardized system includes stocks, US corporate bonds, listed options, unit investment trusts, mutual funds, and cash.  Information on assets eligible for transfer is provided at "Assets Eligible..."  Though impacted by multiple factors and time constraints, the accepted or rejected transfers finalize within 10 business days in most cases.

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Navigating The Process

4 simple steps of the ACATS process will help you understand the flow and minimize delays.  Familiarizing yourself with the transfer process helps to ensure a successful transition.

1.  Incoming or Outgoing

2.  Initiating Your Transfer

3.  What to Expect

4.  Who to Contact For Help 

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 1. Incoming or Outgoing

 

Incoming ACATS Transfers

The financial institution that is receiving your assets and account transfer is known as the "receiving firm."  Investors always work with and through the "receiving firm" to move full or partial account assets into a new broker. 

Contact the "receiving firm" (Interactive Brokers) to review the firm's trading policies and requirements.  You should verify that your assets are eligible for trading at the "receiving firm" before initiating the transfer request.   Not all ACATS transferable assets are acceptable for trading at every brokerage firm.

Outgoing ACATS Transfers

All outgoing ACATS transfers, full or partial, must be approved by the "delivering firm."  Investors, however, should work with and through the "receiving firm" in order to begin the the transfer process or to status the progress of the request.      

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2. Initiating Your Transfer

Investors must always begin the ACATS transfer with the "receiving firm."  An ACATS transfer form or Transfer Initiation Form (TIF) must be submitted.  The "receiving firm" takes your reqeust and communicates with the "delivering firm" via ACATS.  The process begins with this request for transfer of the account. 

For your Interactive Brokers Account, the transfer is usually submitted online.  Video instruction on submitting the transfer is provided at "How to deposit funds via a full ACATS/ATON Transfer."  or through Step-by-step instructions.

Note: Outgoing account transfers from your IB account should be directed to the other broker.  Your request will be submitted to IB from the other broker through the ACATS electronically.

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3. What to Expect

Your Account

Brokers ensure the safety and security of transfer requests by only authorizing requests between open accounts that meet the following criteria:

  • Same Account Title
  • Same Tax ID Number
  • Same Account Type

Transfer Approval

Ultimately responsible for validating the transfer,  the "delivering firm" may accept  information from the "receiving firm" correcting data originally entered.  Approved or validated requests result in the delivery of positions to the "receiving firm" for their acceptance.   Assets may not be accepted by the "receiving firm" for the following:

  • Non-marginable or Margin (credit) violation
  • Not Tradable
  • DTC Chill

Note: The most common reasons for ACATS rejections are outlined by clicking here.

Processing Time-frame

The processing time for each transfer request is fixed.  In general, approved transfers complete within 4 to 8 business days.  Almost all transfers complete within 10 business days.  Each firm is required to perform certain steps at specific intervals in the process.  Feel free to review the Full ACATS transfer process flow.

 

Fees

While Interactive Brokers does not charge a fee to transfer your account via ACATS, some brokers do apply a fee for full and partial transfers. Prior to initiating your transfer, you should contact the "delivering firm" to verify any charge.

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4.  Who To Contact For Help

Interactive Brokers Customer Service stands poised to assist with your incoming ACATS transfer reqeust.  Click here for Customer Service contact resources.

Note:  Outgoing or ACATS transfers sending accounts to another broker should be directed to the "receiving firm."  Their Account Transfer Group will work with Interactive Brokers directly to complete your outgoing request.

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