Interactive Brokers is so cheap, where is the catch?

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#1
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
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#2
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).
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#3
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?

(11-09-2013, 11:03 AM)CityFarmer Wrote: 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).
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#4
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.

(11-09-2013, 11:08 AM)andrefre Wrote: 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?

(11-09-2013, 11:03 AM)CityFarmer Wrote: 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).
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#5
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...




(11-09-2013, 11:36 AM)CityFarmer Wrote: 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.

(11-09-2013, 11:08 AM)andrefre Wrote: 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?

(11-09-2013, 11:03 AM)CityFarmer Wrote: 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).
Reply
#6
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
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#7
(11-09-2013, 10:28 AM)andrefre Wrote: 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
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#8
(11-09-2013, 01:21 PM)quantcall Wrote:
(11-09-2013, 10:28 AM)andrefre Wrote: 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?
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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#9
I moved the thread to a more appropriate location. It is more of a general discussion, than a value investing topic.

Thanks.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#10
yes e-trade does have an office in singapore
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