Can advisors trade Mutual Funds?

Overview: 

Mutual Funds

Advisors have the ability to trade mutual funds on behalf of their clients by using either an allocation order or by direct allocating.

Can I be long and short the same underlying contract simultaneously?

Overview: 

IB does not offer this particular account structure.  While IB does offer stock and option trading in the same account as futures/commodities trading, there is no account structure here where traders can be short and long the same underlying contract simultaneously.

Background: 

This could occur if an account holder had more than one account.  For example, this account holder could short an XYZ June 2009 45 call in account UXXXXX1, and go long the same XYZ June 2009 45 call in account UXXXXX2.  However, if the account is short 1 XYZ June 2009 45 call in account UXXXXX1, and buys one June 2009 45 call in account UXXXXX1, this would close the short position. 

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.

Is there a way in TWS that I can prevent myself from making trades that cause my cash balance to go negative?

Overview: 

There isn’t a function in TWS that prevents account holders with margin accounts from making trades that cause their cash balance to become negative, which would then incur interest charges for a margin loan.  Traders would want to ensure that their cash balance always remained positive or open a cash account.  Negative cash balances are disallowed in cash accounts and orders that would cause the cash balance to go negative should be rejected by the system.

How do I convert my advisor client account to an Individual IB account?

Overview: 

Due to varying reasons, some clients of advisors no longer want their account to be managed by a Financial Advisor, but they wish to maintain an individual account at IB.

Information:

To transfer an FA Managed account to an Individual IB account, you must create a new Individual account where all aspects of the new account match those of the existing account (titles, tax ID's, trading permissions). Once the new account is approved, log into the old account's Account Management, select Funds Management -> Internal Transfers.

 

Note

  • Only Cash can be internally transferred from an FA managed account to an Individual IB account.  IB does not currently provide a facility for performing an internal account transfer when moving from an FA managed account to an individual account.

Can an advisor client account trade for himself/herself?

Overview: 

By default, client accounts do not have Trading Access and cannot sign into TWS or WebTrader. They are limited to Advisor Portal where they can view Statements and Trade Confirmations, as well as perform account administration tasks. However, there are occasionally requests by advisors that a client be given the ability to trade their own account.

Information:

There is a feature that allows the Advisor to give Trading Access to his Clients. This can be enabled by the Advisor in Advisor Portal in the Manage Clients section followed by Trading and Configuration. The Client would then need to subscribe to market data if they desire and would be able to trade only his/her own account.

Working orders would be accessible by either the client or the advisor.

How do I change the fees which I charge my clients?

Overview: 

Advisor accounts have the ability to configure the fees which they assess to their clients.

Information:

The procedure for changing fees for a client account is as follows. You must log in to Advisor Portal and select Manage Clients -> Fees -> Configure. You will need to change the fees in this section online, but you still must have the client sign the fee change form and submit to us for processing.

Please see the Advisor Client Fees page for additional information, such as the available billing methods and the fee caps currently in place.

Can I upgrade my individual account to an advisor account?

Overview: 

Clients often request that their individual accounts be converted to advisor accounts so they can take advantage of the advisor account structure.

Information:

Unfortunately, we cannot upgrade an Individual account to an Advisor Account. You must complete a new application, which can be accessed from our home page, by selecting Accounts -> New Accounts -> Advisor.
 
During the Advisor Account application, you will be given the opportunity to open a Trading Sub Account for yourself. If you do, and if you make sure that all aspects of this new Sub account (titles, tax IDs, trading permissions,e,mail addresses) match those of your existing individual account, you will be able to request a Positions and Funds move to your new account.
 
Please bear in mind:
- The Advisor Master account is only a shell account that is used to place trades on behalf of Advisor Client accounts.

- The Advisor Master account cannot hold positions.

- In order to trade, you must allocate trades to an Advisor Client account.

How do I move my current IBKR account underneath an advisor account?

Overview: 

There are two possible methods which can be used to move an existing IBKR account underneath an advisor structure, dependent upon the situation of the account being linked.

Link Account to Advisor/Broker:

Interactive Brokers allows existing accounts to request their full account be 'linked' to a Friends and Family Advisor account, a Professional Financial Advisor or a Fully Disclosed Introducing Broker.  These linkages include all cash and positions and are available to accounts which are not currently Advisor or Broker clients.  There are a number of checks which are performed which may prevent the linking of an account, such as, but not limited to, trading permission incompatibilities between the Advisor or Broker Master and the client account, commission schedule1 differences, etc.

To use this functionality, the user on the account requesting to be linked will need to log in to Client Portal and choose the Settings menu option followed by Account Settings. In the Configuration section click the gear icon next to the words "Create, Move, Link or Partition an Account". You will be presented with a variety of options, one of which is "Move my entire account to an account managed by an Advisor/Broker". Check this option and click Continue.

You will be prompted to enter the account ID and the title of the Advisor or Broker which you are attempting to link to.  After submitting this information, users will be presented with any applicable agreements and will need to confirm the request.

Once confirmed, the advisor or broker will receive an email notifying them of the requested link.  They will need to log into Advisor Portal / Account Management to either accept or reject the request.  IBKR will process accepted requests at approximately 3:00 p.m. every Friday.

 

1 Please note, accounts which are configured with an unbundled commission schedule will not be allowed to link to an Advisor or Broker account, unless the commission schedule is changed to bundled.  In the Advisor and Broker account structures, commission schedules cannot be defined for client accounts.  If not properly configured at the master level, changing your commission schedule to bundled may result in higher commission charges.

 

Transfer of Assets to Another IBKR Advisor Managed Account

For those clients which have an attached or additional account, in order to move under an Advisor, you must first open a new account directly under the Advisor, which duplicates the existing account.  It is important to ensure that all aspects of the new account (account titles, tax IDs, trading permissions, etc.) match the existing account exactly.  Client accounts can be created by the Advisor through Advisor Portal (click here for detail). Once the new account has been approved, clients will be able to log into Client Portal and select the Internal Transfer option as the Transfer Method in the Transfer Positions section of Transfer & Pay.  Please keep in mind the following:

  • The Advisor Master account is only a shell account that is used to place trades on behalf of Advisor Client accounts.
  • The Advisor Master account cannot hold positions.
  • In order to trade, you must allocate trades to an Advisor Client account.

 

Notes

  • Transfers are processed on a daily basis, with the exception of US option expiration Friday.
  • The new account should be allowed to close positions on the first day of transfer but will not be allowed to open positions as the new account will not have a previous day Equity With Loan value.
  • The Cost Basis cannot be manipulated for Internal transfers, only for ACATs from outside sources.

 

Can I convert a long cash balance to a non-base currency or trade a position denominated in a non-base currency in my cash account?

Overview: 

Yes, albeit, with certain limitations.  IBKR provides cash accounts the ability to trade products denominated in a currency other than the designated base currency of the account as long as the account is classified as a multi-currency cash account (i.e., maintains Forex trading permissions).  To trade a security denominated in a non-base currency, the account holder must either first deposit the appropriate currency into their account or perform a currency conversion via the IdealPro venue.  Regardless of the method selected, one needs to ensure that a sufficient balance of the appropriate currency exists in order to cover the purchase price of the applicable security including commissions prior to submitting the order or it will be rejected. This implies that IdealPro currency conversions must settle prior to the converted funds being available for a subsequent transaction (e.g., if you are converting USD into EUR for the purpose of purchasing a EUR denominated stock, you would not be able to enter the stock order until the conversion trade had settled two business days later).

Individuals trading futures in a cash account should note that futures variation is settled in cash and any variation which serves to generate a cash deficit in any given currency type (i.e. variation exceeds available cash margin) will result in a forced position liquidation in an amount sufficient to eliminate the cash deficit.

Finally, note that cash accounts are restricted from holding a short balance in any non-base currency as this would constitute a margin loan.  In addition, clients of IB India are not allowed to maintain a multi-currency cash account and may only maintain assets which are denominated in INR.

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