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Why is Interactive Brokers Right for Your Online Trading

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Presentation on theme: "Why is Interactive Brokers Right for Your Online Trading"— Presentation transcript:

1 Why is Interactive Brokers Right for Your Online Trading
Why is Interactive Brokers Right for Your Online Trading? John Seeberg, Interactive Brokers Presented to the US Investor Clubs December 17, 2007 Member SIPC

2 Presentation Outline I will discuss competitive advantages of Interactive Brokers: Highlights Review the trading Platform, TWS (TraderWorkstation), order types, and trading tools Account types, account opening steps, Account Management

3 Interactive Brokers Group Fact Sheet
30th year as a Broker Dealer with equity capital currently around $3 billion Barron’s Review of Online Brokers had Interactive Brokers earned the only 5-star rating for cost out of 27 web- and software-based online brokers Interactive Brokers Group (IBKR) is a newly formed public holding company created through an IPO in May 2007 Timber Hill, affiliate of IBG, is the largest Market Maker of Options in the world. Responsible for more than 20% of total US equity derivatives volume. Direct Membership, and access to 70 market centers in 17 countries IB Smart Route and IB Smart Spreads technology is unique in the industry. Solving best execution for Equities and US Options. IB executes over 700,000 trades a day; a 40% rise since December 2006

4 IB Competitive Advantages
IB Universal Account Global Market Access Low Commissions, competitive financing Choose a product Options, Stocks, Futures, etc Technology and Efficiency as a Philosophy "Create technology to provide liquidity on better terms. Compete on price, speed, size, diversity of global products and advanced trading tools."

5 IB Universal Account® in TWS
The IB Universal Account allows trading of stocks, options, futures, Forex, bonds, and Exchange Traded Funds (ETFs) all from the same Trader Workstation screen. Real Time margining of all positions presented with account balances and current margin. Account can operate with a single currency where margin loans are created when foreign products are traded; or multiple currency balances can be held.

6 IB Global Market Access. Stocks, ETFs, Securities Options,
IB Global Market Access Stocks, ETFs, Securities Options, Single Stock Futures, Futures, Futures options, Forex North America Europe Asia

7 North American Stocks Commission

8 US Securities Options Commission

9 US Futures Commission

10 Interest Earned on Long Cash Balances
Benchmark= Fed Funds Effective1 (Overnight Rate)4.300

11 Interest Earned on Short Balances Benchmark= Fed Funds Effective1 (Overnight Rate)4.300%

12 Margin Interest Expense

13 IB Order Types Trader Workstation supports over 40 order types
limit risk speed execution provide price improvement use discretion time the market simplify the trading process

14 BookTrader: Enter single or multiple orders into the market depth of any market

15 OptionTrader: Option chain display, greek risk factors, option modeler, order entry and management for single contracts, combination orders

16 FXTrader: An advanced Foreign Exchange market order entry tool which offers tight interbank spreads and integration with other asset classes such as forex futures and options

17 ChartTrader: Real-time charts and the ability to enter orders

18 BasketTrader: Trade basket files or create index based baskets
DepthTrader: Level II and NYSE Deep Book PortfolioTracker: Rebalance a portfolio based on percentages VolTrader: Create orders where the limit price is a volatility Market Scanner: Scan the market and filter results Options Intelligence Report: A daily report provides tables and commentary about the market’s expectations of future price movements. Includes seven volatility tables and is updated hourly between noon and the close.

19 IB SmartRoutingsm US Equities and US Equity Options
Sweeps all 6 US Options Exchanges Auto ReRoute SmartSpreads AutoRecoverysm Price Improvement Volatility Orders


21 Organization AccountTypes

22 IRA Account Types Traditional. Tax-deferred retirement account to which an individual taxpayer can contribute. A spouse may also contribute, but must open a separate account. Contributions are tax deductible to certain limitations. Earnings are not taxed until you start withdrawing the money. Withdrawals may not generally be made from an IRA prior to reaching age 59 1/2. If withdrawals are made prior to this time, the amount of the withdrawal is subject to a 10% penalty tax in addition to the normal tax liability. Distributions must begin by April 1 of the year following the year in which the employee turns 70. Failure to withdraw the required amount results in a 50% tax penalty.

23 IRA Account Types RothRetirement account to which taxpayer can contribute. A spouse may also contribute, but must open a separate account. Contributions are not tax deductible. Earnings are tax-free. Withdrawals of original contribution are tax-free. Investors may continue to contribute to their Roth IRA beyond age 70. Simplified Employee Pension (SEP)Plan in which the employee and employer contributes to an IRA. SEPs are used by small employers and self-employed individuals. Each individual employee can set aside a percentage of his or her pre-taxed income into the plan. Contributions are made by the employer (there are no employee contributions). 100% immediate vesting of all plan contributions.

24 IRA Account Types Direct RolloverUsed by investors when they are changing jobs or retiring. Allows the investor to move assets from a 401K or other employee sponsored retirement plan or an existing IRA without paying taxes or penalties. Employees who contribute, transfer, or rollover IRA assets into this account, may not later transfer this account back to a 401K or other employee sponsored retirement plan.

25 IB Account Opening



28 Thank you, USIC, for sharing Interactive Brokers John Seeberg

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