Interactive Brokers is so cheap, where is the catch?

[andrefre]

Hi, has any fellow value buddies used IB or are using them now?

They seem so cheap compared to what I'm paying.

Interactive Brokers:
Commission: 0.08%
Margin interest charge: ~1.3% (Borrowing money to trade. Up to 2X what you have.)
Source: https://www.interactivebrokers.com/en/in...=schedule2

POEMS:
Commission: 0.18%
Margin: 6%

OCBC:
Commission: 0.18%
Margin: 5%

Am I missing something here?

Thank you very much!

---

On further research, it seems that one catch is that Singaporeans cannot trade on SGX

Source: http://forums.hardwarezone.com.sg/money-...471-4.html

[CityFarmer]

It is margin account, instead of the normal brokerage account. In POEMS, it is called "Phillip Cash Prepaid Account".

It is cheap for good reason(s).

[andrefre]

I'm not sure I understand. Margin accounts are usually more expensive.

E.g. my vickers margin is 0.2%, my DBS cash upfront is 0.18%.

If anything this is a benefit?

It is margin account, instead of the normal brokerage account. In POEMS, it is called "Phillip Cash Prepaid Account".

It is cheap for good reason(s).

[CityFarmer]

Refer to brokerage fee of brokers

POEMS: SGX share, minimum rate is 0.28% (above minimum sum), the corresponding rate for prepaid cash account is 0.18% (above minimum sum)

DBS Vickers: SGX share, minimum rate is 0.28% (above minimum sum), margin rate is 0.2% (base on your numbers).

So the margin rate is lower, right? It is logical, since we need to deposit cash before using it.

I'm not sure I understand. Margin accounts are usually more expensive.

E.g. my vickers margin is 0.2%, my DBS cash upfront is 0.18%.

If anything this is a benefit?

It is margin account, instead of the normal brokerage account. In POEMS, it is called "Phillip Cash Prepaid Account".

It is cheap for good reason(s).

[andrefre]

Thanks for the reply CityFarmer, I think we might be using slightly different terms here.

Margin: Borrowing money to trade.
http://www.poems.com.sg/testing/Financia...value=sfin
e.g. borrowing up to 2.5X to trade.

Cash upfront: what you've described as "margin"
http://www.dbs.com.sg/personal/investmen...fault.page


When I mean by margin is borrowing money to trade...

Refer to brokerage fee of brokers

POEMS: SGX share, minimum rate is 0.28% (above minimum sum), the corresponding rate for prepaid cash account is 0.18% (above minimum sum)

DBS Vickers: SGX share, minimum rate is 0.28% (above minimum sum), margin rate is 0.2% (base on your numbers).

So the margin rate is lower, right? It is logical, since we need to deposit cash before using it.

I'm not sure I understand. Margin accounts are usually more expensive.

E.g. my vickers margin is 0.2%, my DBS cash upfront is 0.18%.

If anything this is a benefit?

It is margin account, instead of the normal brokerage account. In POEMS, it is called "Phillip Cash Prepaid Account".

It is cheap for good reason(s).

[Vseeker]

call it "prepaid a/cs" or "cash upfront a/cs"... or whatever other names.. every house have their version (kayH call it Utrade Edge - .18%~.20% & minicomm at s$18)

opening such a/cs usually involved placing certain minimum cash sum upfront into the a/c , some also allow share deposits
thereafter: all your buy/sells thru this A/C: the CASHs or Shares get credited/debited from this nominee a/cs ==> not your bank or CDP a/c

for such A/C, House give you lower comm rate, and even lower minimum commission amount
in return House gets,
o lower credit risks (coz your cashs + shares are collaterals with them)
o lock in biz.. coz you can only buy/sell thru them now (at least for these shares+cashs parked inside this nominee a/c)

NB: its useful to also findout what their charges are, eg. for various corporate actions - are there excessive charges eg. for handling right issues, divs/script divs

those A/Cs that allow you to trade more than 1.0x of your cash (or share values deposited) => these are effectively "Margin A/c"
need to understand how margin calls get triggered, Cost of borrowings if margins are utilised
impt to understand how your own raw emotions react under both mkt extremes
for Margin A/C: suggest unless pretty "seasoned" and know what you're doing => better dun get involved... no offence intended, cheers

[quantcall]

Hi, has any fellow value buddies used IB or are using them now?

They seem so cheap compared to what I'm paying.

Interactive Brokers:
Commission: 0.08%
Margin interest charge: ~1.3% (Borrowing money to trade. Up to 2X what you have.)
Source: https://www.interactivebrokers.com/en/in...=schedule2

POEMS:
Commission: 0.18%
Margin: 6%

OCBC:
Commission: 0.18%
Margin: 5%

Am I missing something here?

Thank you very much!

---

On further research, it seems that one catch is that Singaporeans cannot trade on SGX

Source: http://forums.hardwarezone.com.sg/money-...471-4.html

they are cheap, but don't have office here in sg

[Temperament]

Hi, has any fellow value buddies used IB or are using them now?

They seem so cheap compared to what I'm paying.

Interactive Brokers:
Commission: 0.08%
Margin interest charge: ~1.3% (Borrowing money to trade. Up to 2X what you have.)
Source: https://www.interactivebrokers.com/en/in...=schedule2

POEMS:
Commission: 0.18%
Margin: 6%

OCBC:
Commission: 0.18%
Margin: 5%

Am I missing something here?

Thank you very much!

---

On further research, it seems that one catch is that Singaporeans cannot trade on SGX

Source: http://forums.hardwarezone.com.sg/money-...471-4.html

they are cheap, but don't have office here in sg

How about E-TRADE? Does it has an office in Singapore?

[CityFarmer]

I moved the thread to a more appropriate location. It is more of a general discussion, than a value investing topic.

Thanks.

[felixleong]

yes e-trade does have an office in singapore