2011 Articles

The ABCs of Re-hypothecation in Gold and Securities Markets: What You Need to Know

Kevin Brekke of Casey Research, LLC, discusses hypothecation and the recent rise in airtime it has been given by various media outlets following the bankruptcy of MF Global. Brekke’s article, The ABCs of Re-hypothecation in Gold and Securities Markets: What Your Need to Know, clearly defines hypothecation and its role in the brokerage industry. The report also singles out an article carried by Reuters that claimed a number of prime brokers, including Interactive Brokers (IB), engaged in hyper-hypothecation. Brekke points out that IB’s publicly available first-half 2011 financial reports quote figures that “appear to refute the […] accusation, suggesting that [the author] did not do sufficient due diligence when researching the article.” In contrasting the stark differences between MF Global and IB near the conclusion of the report, Brekke states that IB “is a well-established company with a long history of growth, headed by a respected leader in the brokerage and market making industry for 34 years, [with] no liquidity, oversight, or compliance issues.”

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Top 50 Brokers of 2011: This One Is On Us

Interactive Brokers jumped three spots to number 17 in Futures Magazine’s annual list of the top 50 brokers. In the article accompanying this year’s rankings, Top 50 Brokers of 2011: This One Is On Us, author Dan Collins of Futures Magazine describes “a strange year for the futures industry,” highlighting the good, the bad and the ugly events that shaped the futures industry in 2011. Thomas Peterffy, chairman and CEO of Interactive Brokers, spoke with Futures Magazine to discuss the state of the industry in a year marked by regulatory uncertainty and market volatility. A leader in the futures industry, Peterffy highlights the need for transparency in the market, recommending that trades should take place on exchange platforms and be reported to clearinghouses.

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Options for Growth

According to new research sponsored by the Options Industry Council (OIC), financial advisors who use options tend to have larger books of business and are more experienced than those who do not use options. Interactive Brokers makes it easy for wealth managers to harness the unique benefits of options with its new product offering. Using IB's wealth managers' portal, FAs can review options managers they do not currently employ before selecting and allocating funds to each options manager as desired. The whole process is streamlined; a single login allows financial advisors to tap options managers and allocate funds to them in real time. IB's product offering is tailored to suit the needs of the growing community of advisors interested in adding options to their repertoire.

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Interactive Brokers Debuts Low-Cost Terminal

Max Bowie, the editor of Inside Market Data, a weekly newsletter that provides breaking news on how buy-side and sell-side firms are using data services, highlighted the launch of Interactive Brokers Information System, or IBIS, a “data display terminal for equities traders and other consumers of US equities data that provides prices, charts, news and research, as well as portfolio and risk analytics at a lower price point that premium vendor terminals.” The introduction of IBIS as a stand-alone product for non-brokerage customers follows years of feedback from financial services industry participants frustrated by the monthly bill associated with their market data services. IBIS is an attractive alternative to more costly data services, particularly for small or new firms seeking to access market data sourced directly from exchanges, plus a range of real-time news, calendars of upcoming earnings reports and economic events, all wrapped into one easy-to-use platform.

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'Cap Intro' Enters the Electronic Age

Interactive Brokers' new Hedge Fund Capital Introduction Program is a boon for hedge funds seeking a cost-effective way to meet potential investors. IB's automated capital-introduction service connects hedge funds with wealthy investors through a secure website, and is offered free-of-charge to qualified fund operators. Investors review information provided by participating funds and may choose to subscribe to one or more of those available. IB handles the transfer of funds from the investor's account to the manager's account. Hedge funds may bypass costly conferences and time-consuming meet-and-greets traditionally held to woo wealthy investors, and cut right to the chase using IB's new electronic cap intro program.

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Trader Workstation for the iPad

In taking full advantage of the available real-estate of Apple's revolutionary iPad, Interactive Brokers has made available to its customers the iTWS mobile version of its Trader Workstation platform (TWS). The mobile platform might suit the security-conscious client as either only the iPad or only the desktop version can be accessed at any time, while a 10-minute period of inactivity will also log customers offline. The mobile application contains many of the technological capabilities that its customers might use in their desktop version including Market Scanners covering major overseas markets. Users face dozens of order-types for investing while the device also delivers executed orders possibly originated from desktop or other mobile devices. The iPad also provides users with access to IB's 'paper-trading' account in which they can test order-types, strategies or enter markets they have never traded before without losing an arm-and-a-leg. Regular users will also recognize usual features including streaming quotes, charts and account monitoring capabilities.

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Interactive Brokers Sees Active Trader Base Powering Volumes

Rapid account growth at Interactive Brokers means that its active customer-base which includes hedge funds and semi-professional traders have boosted a commonly-watched industry measure of activity close to those of its bigger rivals. Interactive Brokers reported record account openings during March lifting its number of clients to 168,000, adding that its customers performed 426,000 daily average revenue trades (DARTs). Its larger rivals with as many as 10 million accounts see DARTs of 478,000 according to latest company data. CEO and founder Thomas Peterffy says that traders flock to his low-commission house on account of the quality of execution for client orders that always go to an exchange. The secret to better execution according to Mr. Peterffy is solid order-routing capabilities that seek out the lowest overall cost for the customer's order.

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Le trading ultrasophistiqué

Switzerland's L'Agefi' financial newspaper peers inside Interactive Brokers Trader Workstation to find not only a wealth of cutting-edge technology, but an array of satisfied clients and partners in the domestic market. One long-time customer noted, "Interactive Brokers is the only major U.S. broker not to be supported in the crisis. I'm more confident about them than about the large banks." Local asset and investment managers have been attracted by the wide range of asset classes made available for trading through Interactive Brokers including its proprietary forex platform.

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Barron's Annual Online Broker Survey 2011

Interactive Brokers retained its crown as best venue for International Traders according to Barron's 2011 Annual Online Broker Survey. Overall the online broker was awarded four-and-a-half stars and was also awarded four-and-a-half stars for its low-cost for the seventh consecutive year and commended for its range of offerings, trading technology and low costs. Not content with its already low fees, during 2010 the company lowered stock commissions in several international markets and made a serious dent in its futures commissions. Barron's found the cost of trading with Interactive Brokers to be less than half the average across this year's 24 entrants saying also that, "Margin costs are the lowest of the entire group." Barron's notes that independent auditing firm Transaction Auditing Group (TAG) found IB's execution delivers quite a bit of price improvement on their trades. During the year Interactive Brokers provided customers with the ability to buy and sell U.S. corporate bonds while boosting its analytical offering with its PortfolioAnalyst tool to help customers analyze performance against a variety of global indices.

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Going for the Gold

Through its affiliate in the United Kingdom Interactive Brokers recently offered two new products. Investors can now access London's bullion market through IB Spot Gold while they can now better use margin and possibly benefit from prevailing tax laws to trade contracts for difference, commonly known as CFDs offered through IBUK. Contracts for difference are available on shares in commonly traded companies and allow investors to take a bull or bear position to possibly benefit from differences between current and future prices.

U.S. and Canadian residents must visit account management and turn in a survey to find out if they qualify for trading either spot gold or CFDs.

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