Interactive Brokers: thanks Brexit, screw you!

Hi RIP readers,

This is a quick post about how Brexit is impacting Interactive Brokers account in Europe.

For those who don’t know what I’m talking about: Interactive Brokers (IB) is one of the most popular US discount broker, with very low fees, incredible instruments availability, 40 years of history, and they’re a public company traded on NASDAQ stock exchange.

I wrote few posts about IB during last 4 years, including a long IB 101 guide.

I also joined their affiliate program, and earned ~300 USD from referrals so far. Not a great affiliate program, because I earn money only if you sign up with my link and spend at least 300 USD in fees in one year, which is very unlikely. Perfect! I wouldn’t join unsustainable affiliate programs. Those who offer too much money to the their salesmen are usually selling a crappy overpriced product.

Most important of all, I use IB daily and I’m a very happy customer!

Until yesterday.

Yesterday I found this r/eupersonalfinance thread titled “Interactive Brokers: Brexit account migration = insurance drops from 500k USD to 20k EUR“.

It points to a F.A.Q. about Brexit on IB website.

Essentially, IB (UK) accounts will be moved to Europe. Either Luxemburg, Ireland or “Central Europe” (which seems to be based in Hungary).

Swiss investors have been served by IBUK so far.

The only thing that matters is this:

Essentially, we’re going to lose SIPC protection up to 500k USD (with 250k USD cash sublimit).

This is a serious issue, and I don’t know how to react at the moment.

Except: Fuck Brexit!

At the moment, I hadn’t received any official communication from IB.

What I see on their website is that one can deny the consent to the transfer, but then your account is frozen: you can’t buy, sell, deposit, withdraw… You can only transfer your assets to another broker or… give your consent to the transfer of your account to one of the European IB brokers (Lux, IE, or CE). Holding on the higher protection in the meantime.

Not a long term strategy.

There’s a thread in the MustachianPost Forum to discuss whether Swiss investors will be affected or not. I called the IB customer support and their representative told me that Swiss accounts will be moved to EU anyway. This is not good.

I don’t have a strategy at the moment.

First, I should assess the impact of a lower protection on my assets (just 20k EUR thanks to European regulations). Let’s not forget that in case of a broker going belly up “gracefully”, your assets are indeed preserved. The “protection” I care about is to cover for the case where a broker goes offline “Madoff style”, i.e. maliciously. Which is very unlikely for a brokerage firm which has been in the market for many decades, and heavily regulated.

But still.

I’ll do my research on the topic “what happens if your broker goes broke?” and I’ll write a post about it in the near future. Stay tuned 😉

Have a nice (protected) day!

And fuck Brexit and Brexiters

 

78 comments

  1. I always wonder reading these stories. Why not just move your business to any US broker like TD Ameritrade/ Etrade or dozen others?

      1. Can’t confirm that you need an adress in the US. I opened several Accounts with US Brokers having no US adress. So, still wondering ……

        1. My wife looked into it as she’s an American citizen by birth by never resided in the US since she was 1 and her family moved back to Italy. The short answer is no, you can’t have a US brokerage account while not residing in the US, unless you keep some sort of address there (postal box addresses and similar services don’t count).

          1. That’s definitely not in line with my experience over the last 23 years. Easy to open and maintain accounts with only Swiss Adress & Citizenship etc.

            1. Maybe I got the question wrong. I’m talking about the ability to open an account with a U.S.-based broker on their U.S. branch.

              As far as I’m aware, as a EU resident you can’t open an account with a U.S.-only broker like TD Ameritrade. This might be different for Swiss citizens, though. You may want to double-check that. As a U.K. resident I couldn’t, so I ended up opening my taxable account with the “UK-based-branch” of Interactive Brokers.

              My wife, instead, has double citizenship. She has both Italian and U.S. citizenship. Because of the U.S. global taxation system and their virtually universal control over banks worldwide, my wife is double screwed: she can’t open brokerage accounts or self-invested accounts in the U.K. because virtually all inexpensive financial institutions won’t accept U.S. people’s business; and because she doesn’t have a U.S. address she can’t open an account with a U.S. based broker either. :/

              1. Checking the TD Ameritrade Page to open accounts https://start.tdameritrade.com/ I see no reason why you couldn’t open an account as EU Citizen. It even states for non US Citizens: “Foreign tax ID, passport, or visa number (if you’re not a U.S. citizen or permanent resident)” In the country drop down you can select UK (or any other EU Country).

                Your wife’s situation sounds a bit familiar. While residing in the US I was literally “toxic waste” for any non US Bank/Broker. However after returning to Europe from the US I was still able to keep all my US Bank Accounts (i.e. BofA, FirstTech) andBrokerage Accounts even without having a US Adress. Of course they are keen to have your US SSN but the rest seemed workable. Not sure if this is different because your wife is a US Citizen.

              2. If you fill out the form. I am a german residence. You get the following message “Based on your information, we are not currently able to open an account for you. As a U.S.-registered broker-dealer, TD Ameritrade does not open accounts for residents of certain countries. If you have any questions or would like to speak to a New Client Consultant, call us at 800-454-9272..” It is not possible to open an account from EU

      1. Not a lot of magic involved in having a US Brokerage Account as far as I understand.

        Couple of personal experiences. Always with Swiss Residence, Swiss Passport, Swiss Address, Swiss Name, Swiss Birth Certificate, Swiss Drivers License, Swiss Social Security Number, Swiss……….. 😀 :

        Opened first Brokerage Account in the US around 1998 (yes, before the Dotcom bubble burst) with Datek. Datek has had an interesting story.
        At the same time also had a US Brokerage Account with ETrade as I was working for an US Tech Company and Options / RSU etc.
        Around 2003 or so opened a couple of accounts with ETrade incl. for members of my family
        Convinced my Swiss Banker to open an account with ETrade to save trading fees (he mentioned ETrade being far less expensive than what he was paying as employee)
        Around 2008 or so opened an Account with TDAmeritrade and this is still my main account as of today, also while residing etc. in Switzerland. Moved for a couple of years to the US and then back to Switzerland and no issue with TD to change the residence again back to CH. Anyway…… really nothing mysterious.
        I get phone support and whatever I need from my Swiss Phone Number.

        Administrative stuff:
        – I wire funds in and out of the accounts by international wire mostly. There are a couple of other options but this is the easiest.
        – I need to complete a Form every couple of years. If I remember right it’s W-8BEN or whatever.
        – My Swiss tax guy / or Swiss taxes never had an issue with my US Brokerage Accounts. I just send them the yearly statement.

        If you want a TDAmeritrade Account (I have no connection whatsoever with them 🙂 ) just go to https://start.tdameritrade.com/open and open the account. I suggest to select Switzerland in the drop down as country if you live in Switzerland. 😀

        1. This is very interesting.
          Maybe worth a discussion on the MP Forum.

          I would love to know what I’m not seeing here. Any drawback you would like to mention? Time to wire them the money? In which currency? Fees and Costs compared to IB? How easy and quick to get the money out in whatever currency I want?

          1. Well, I think the investopedia article is a decent summary of TD’s capabilities (I can’t comment on IB). It also tells me I’m a beginner for using TD. So still lots to learn until I’m ready for IB. 😀 Apart from the Wire Transfer costs there are no fees that I’m being charged. I buy/sell the usual stuff: ETF’s/US Shares. Wire took 1-2 business days if I remember right. I wired USD out onto a USD account in CH (because of USD decline) once over the last decade. So total cost was 25$ for a pretty substantial sum. I have a US Bank Account (which is only an option if you have a US SSN mostly) That’s why I could do an ACH Transfer for free to save 25$. However I’m still in a problematic relationship with a major Swiss Bank that charges me tons of fees and I should take action on that before I’m concerned with 25$ wire transfer fee every 10 years. But somehow I feel pity for them…… the dinosaurs.

          1. Well, 25 USD is the standard domestic Wire Fee also for most banks in the US.

            I am very disappointed at this puny 20k protection.

            I suppose this applies to all EU-based brokers as well, such as DeGiro and Trade Republic?
            I have never seen this brought up when people compare brokers. Maybe it is not so critical?

            How many broker rug pulls à la Madoff have we witnessed in Europe in the last ~70 years? Zero, one, twenty?

            1. I don’t know about historical data, but I’m sure new accounts and volumes of 2020 dwarf the previous 69 years combined. let’s think in a Black Swan conscious way

          2. Hello
            Reputable US brokers like Charles Schwab present a currency challenge to foreign investors: they only handle USD and you can’t keep other currencies in your account. You may be able to open an account as a Swiss resident, but when you wire your CHF from your Swiss bank account, automatically they convert the amount into USD at their own exchange rate (which is not the interbank rate…) before money appears in your account. Unless you wire USD, then you pay a “premium” exchange rate (still lower than CH banks’ though). If you are ready to pay that, they are good.

            1. This is a very good point, but one can transfer positions, I assume.
              Anyway, the currency problem is still there for monthly investing, and withdrawing your money in a non-USD currency.

        2. Hi Wonderman

          Thanks for your infos. I have opened a TDAmeritrade Account in the US as a Swiss resident (and EU citizen). I would like to know if you have to pay taxes in the US when you sell US shares…do you know anything about it?

      2. I’ve just tried to open an account with TD Ameritrade. I got the following message after filling out my personal details on the first page of their application form (I’m a resident in Ireland):

        “We can’t open your account at this time.
        Based on your information, we are not currently able to open an account for you. As a U.S.-registered broker-dealer, TD Ameritrade does not open accounts for residents of certain countries. If you have any questions or would like to speak to a New Client Consultant, call us at 800-454-9272.”

        😦

          1. There are also firsttrade, sogotrade (same apex clearing corporaiton behind them) and tradestation that open accounts to most non US residents.

  2. In the FAQ it is written : “In limited instances, an account will be migrated to a jurisdiction where the full scope of product eligibility cannot be offered. Client’s holding restricted products may migrate and maintain or close such positions but won’t be allowed to increase the position.”

    Does this mean Bye Bye to VT ETF? IB main advantages will soon be lost…

  3. Hi Mr RIP, thank you for blog and for alerting us on this point.
    I’m also a happy Interactive Brokers customer (till now? ).
    I will follow this point to better understand how to deal with it.
    Keep us posted on your research.
    Have a good day.
    Mr. OTG

  4. Hi Heisenberg,
    After your comment I also tried to open an account as a swiss resident and I managed to advace to the next pages of the application.

    Just to be sure I then changed my country to Ireland and, in fact, i got the same message as you.

  5. Quoting the small print at the bottom of the page after you click on “Select an account”:

    “This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.”

  6. Hi Mr. RIP,

    Thanks for the blog post.

    I am just wondering, is this really an issue? At the end of the day, we as investors, own the share of the funds.

    So if vanguard or ib will get bankrupt, we still will not lose them no?

    Also if such a large company get bankrupt, I will assume the market collapse according.

    What are your thought? What is the real risk?

    1. Do you know the actual mechanic of owning a share of an asset via a broker?
      Have you ever tried to call Vanguard to verify that they know you?

      1. No, never looked into it in details. Yourself? I assumed so far it was safe enough

        I guess it will be a topic to dig at some points..

      2. I just called Vanguard, and they have no idea who I am.
        They guy kept telling me that at Vanguard they have no idea who owns what, and – after few minutes of begging – I discovered that it’s the Custodian Bank who has the Ledger, who keeps track of who owns what.
        So maybe you should contact the Custody Bank of each of the ETFs you own shares of, but it seems to be a “distributed” thing. The guy at Vanguard told me I should contact my broker or my tax advisor to get more info, but he said that the Custody Bank for a specific ETF should have your name attached to the securities you own for that ETF.
        I don’t know (yet) if a single ETF has a single Custody Bank or not.
        I clearly asked him “so the Custody Bank doesn’t have an entry like ‘InteractiveBrokers:1000000shares’, but many entries like ‘RIP:1000shares’, ‘Ben:550shares’, ‘Michael:35shares’…” and he said “yes”, but I’m not sure he understood my issue (why didn’t he tell this to me earlier?).

        Let’s hunt for Custody Banks!

        Edit: here’s a Vanguard official document that mentions Custodian Bank for VT: https://personal.vanguard.com/pub/Pdf/sai072.pdf

        1. I guess we can keep going down the rabbit hole indefinitely though: in a black swan scenario, what happens to the ledger if the custodian bank goes bust?
          (Actually, that is more likely than Vanguard or IB going bankrupt).

          1. I think that if both your Broker and the Fund emitter (Vanguard) are still alive, your holdings can be determined. In case of a failure of multiple systems… well… weapons, ammos, and canned food 🙂

    2. Hi Loic – risk here isnt Vanguard or even IB going bankrupt but more a fraudulent activity in IB side may result in your funds to disappear and you only have a protection of 20k EUR instead of previous 500k GBP.

  7. Hi, I’ve been lurking your posts for a while now (fellow Italian in switzerland as well), but is the first time I comment. I had a question to help me clarify what’s going on. I looked into the MustachianPost link you sent and I’ve found this (I guess you have already read it):

    “Securities like shares and bonds which are held in custody by a custodian bank are not bank account balances and are neither preferential deposits nor protected deposits. Securities are your property which are simply held by the bank for safekeeping. They remain your property after the bank goes bankrupt and can be transferred to a different custodian bank.”

    So, just to clarify, does this means that this regulation change affects only the cash on IB? Therefore, would you say that we are “safe” with an amount of cash less than 20k?

    Sorry for my confusion, but I tried to look on multiple sources without mucc success.

    1. We’re all trying to understand it. We don’t have many samples in the past of a huge Broker going bankrupt so we need to make some guess.
      It seems that cash is exposed to multiple risks: broker going broke, custodian banks going broke. Cash is insured by SIPC (at the moment) up to 250k. It will move to EU regulation and only insured up to 20k. This looks like a minor issue for buy and hold investors, since you usually don’t keep cash into your brokeragfe account. But for “scared investors” like me, who from time to time raise the cash positions, feeling unprotected is bad.

      What’s not clear is what happens to assets (stocks and bonds) though. Yes, you read it right. In theory if a broker goes belly up without being malicious (not Madoff style), the custodian banks of the funds you own have your name attached to your shares. Not the fund emitters! I called Vanguard, they have no idea who I am. I would like to call the custodian bank for Vanguard funds I own and see if they know me. Because else… ok, on paper shares belong to you but how the hell do you exercise this right if the broker disappears?

      Another funny scenario is: what happens if the custodian bank that has your name goes belly up? If the broker and the fund emitter are still alive, they have records of your holdings, and they can move to another custodian bank (I assume). in case of a joint failure of two entities out of three (broker, custodian bank, fund emitter) you need government coverage. And that’s where the 500k SIPC protection rules, and 20k EU protection sucks.

      Last scenario is: what happens if the broker act maliciously? Like selling your shares on your behalf and running away with the cash? In that case the SIPC protection up to 500k may help – and the EU 20k sucks asses.

      How likely are the above scenarios? Probably not very likely for the triple [interactive Brokers, Vanguard, WhateverCustodianBank]. slightly more riskier for [EToro, GennaroActiveFundManagement, BankOfCanigattì]

  8. Hi RIP, awesome blog, the info you share here is extremely valuable. Huge thanks for your work!

    I’m also researching this topic and I’d like to comment on this part:

    “I would like to call the custodian bank for Vanguard funds I own and see if they know me.”

    You indicated above that the Vanguard people you talked to probably did not understand you – I also think this is the case.

    My understanding is that a custody of an ETF is responsible to store the shares that the ETF owns – but the story ends there – they don’t know the “end user” – in other words the owners of the ETF shares. So there are 2 layers: [physical positions of the ETF (like MSFT, AMZN, etc) ] -> [Custody of the ETF company where physical positions are stored] -> [ETF shares (that’s what we buy) traded on an exchange] -> [Custody of the broker which stores the ETF shares (that’s what we own)].

    E.g. BalckRock (iShares) mainly uses State Street as custodian – Source: https://www.ishares.com/uk/individual/en/products/253743/ishares-sp-500-b-ucits-etf-acc-fund Search for “Custodian” – “State Street Custodial Services (Ireland) Limited”. I’m sure Vanguard also discloses this somewhere on their website (tried to find, gave up after 10mins), for the distributing “Vanguard FTSE All-World UCITS ETF” I only found this site: https://www.etfeurope.net/fund/vanguard-ftse-all-world-ucits-etf-VWRL.S “Custodian Brown Brothers Harriman Trustee Svcs (Ireland) Ltd” (it’s not an official site, but I believe this info) – from what I know this means that all the positions of this given fund are stored by “Brown Brothers Harriman Trustee”. E.g. it stores X piece of shares of MSFT, Y shares of AMZN, etc. etc. and knows that those belong to e.g. “Vanguard FTSE All-World UCITS”.

    Just by logically thinking – these ETFs are huge funds with 100s or 1000s of positions – it’d be impossible to assign each holding to each “end user” (meaning you or myself as the ETF owner) – just think about this… owning let’s say 10 pieces of shares of an ETF would map to lots of fractional physical holdings. Also, owners of ETF shares change daily – so this level of bookkeeping would be insane. So my understanding is that the custody works with the ETF company (iShares, Vanguard, etc.) but they don’t know who owns the ETF shares. So talking to the custody of Vanguard won’t help I believe.

    I’m personally not worried about this part: e.g. in above example iShare pays custody fees for State Street to store the assets (same with Vanguard & Brown Brothers) – I’m sure they make sure assets are properly stored and ETF providers police these companies carefully (not even talking about regulators…). So if the custody goes bankrupt, these assets are not part of the insolvency (that’s by law) and the ETF provider would just move the assets to a new custodian. If the ETF provider goes bankrupt, the assets are still there (typically another ETF provider would just take over – or worst case it’d be liquidated and ETF owners would get their money).

    Now, there is also another custody – which is the custody of your broker (and my broker which happens to be the same). In this case we are talking about the custody of IB which stores the ETF shares that we own. From what I know there are 2 options here: 1) omnibus accounts 2) named accounts. An omnibus account means the custodian only knows “Broker X has Y piece of shares of Vanguard FTSE All-World”, a named account manes “RIP owns Y pieces of shares through Broker X”. I believe you want to talk to this custody. My understanding is that the custody of IB UK is IB LLC – this is how we get the SIPC insurance (Source: look at your IB activity statement, search for “Location of Customer Assets, Positions and Money”, you’ll have a column with “Custodian”). My understanding is that these are omnibus accounts – so IB LLC only knows “IB UK has X pieces of ETF Y”, and only IB UK has the per customer bookkeeping – this is how we can have low fees. So in your case I believe what you want is to talk to IB LLC and ask them if they know you and your holdings.

    I’d also say the big question is: who will be the custody after the move?

    I hope this helps a bit. Also wanna mention that I’m just trying to help and my motivation is to figure this out together. If there is any wrong info in what I say, I’m more than happy to learn new things and admit that something wasn’t correct – so feel free to disagree and correct any mistakes.

  9. I’ve recently been told about https://tastyworks.com/. It’s an US broker which apparently accepts EU customers and offers US-based ETFs. That’s as much as I know about it. I’m not sure it’s a broker to hold assets for the long term. Does anyone has any experience with this broker?

    1. Good to know, but the last thing I need is a broker that I never heard of before, exists since 2011, and never went thru a financial crisis as a destination for a Million Dollars I have invested 🙂

  10. Hi, this is really great information, thanks for that!

    I am wondering about the consequences for US estate tax.
    Is that something you have considered? Switzerland has a 15% withholding tax treaty rate on dividends, that’s about as good as it gets. Switzerland also seems to have an estate tax treaty with the US, but wouldn’t it still be a risk to hold US assets, which I figure you would if you somehow get an account with a US-based broker?

    https://www.bogleheads.org/wiki/Nonresident_alien's_ETF_domicile_decision_table

    I live in Dubai (no US tax treaty), so for me it definitely makes sense to buy Ireland-domiciled ETF’s instead of those domiciled in the US. I would assume that the US branches of any broker would only give you access to the US-domiciled ETF’s?

    Even if it’s not an issue now, what if you decide to move to (for instance) Spain for your retirement? Spain doesn’t have an estate tax treaty with the US, as far as I could see. So if you die as a Spanish tax resident, the US estate tax would apply. Wouldn’t that alone be reason enough to prefer Ireland-domiciled ETF’s? Especially since the Swiss treaty rate is the same as Ireland’s?

    1. Hi Marvin
      I think that even though the funds are domiciled in Ireland they are still subject to US estate tax as the custodian is located in the US.

      P.S.: as to the withholding tax on dividends, 15% is not actually as good as it gets (Romania has 10% 🙂 ). But indeed, there are countries with way bigger tax so 15% is acceptable.

        1. Hi Marvin, in case I expatriate I need to rethink the investment strategy of course.
          The withholding tax is irrelevant, since you can get it back via DA-1 form, and pay income taxes on your dividend as if it was regular income.

  11. I saw that, thanks. But I was referring to your last statement:
    “So if you die as a Spanish tax resident, the US estate tax would apply. Wouldn’t that alone be reason enough to prefer Ireland-domiciled ETF’s? Especially since the Swiss treaty rate is the same as Ireland’s?”
    The estate tax does not apply to your Ireland domiciled ETFs but to your cash from the broker’s account, IF you are a resident in a country without an estate tax treaty with US, as is Spain.
    So, in order to skip the estate tax you should be a resident in one of these countries:
    http://www.bogleheads.org/wiki/Nonresident_alien%27s_ETF_domicile_decision_table

    1. Yes, exactly. I meant ETF’s and the fact that most Swiss people probably don’t care if the ETF’s they’re buying are domiciled in the US or in Ireland. Since it doesn’t really matter, as long as you live (and die) in Switzerland. But we should probably all prefer Ireland-domiciled ETF’s, just in case?

      1. Why? You can always buy IE or LU domiciled funds when/if you move to a country with unfavorable US tax treaty. Why lose money in the meantime?

        1. Would you lose money in the meantime? Isn’t the price the same for the ETF’s, no matter where they are domiciled?
          Say you move from Switzerland to Dubai (no US tax treaty), if you decide to sell the US-domiciled shares to then buy the same shares domiciled in Ireland, wouldn’t you first have to pay tax on the capital gains (ok, maybe Switzerland doesn’t tax capital gains for private investors?) and then pay a lot of fees for selling and buying?

          1. Switzerland doesn’t tax Capital Gain on individual investors.
            IB fees for US domiciled securities are a joke: In July I sold $430k of VT shares and I paid $11.14 fees…

              1. Usually slightly higher TER, higher transaction fees (stamp duties in European Stock Exchanges), potentially tax inefficient (unrecoverable US withholding tax, but I’ve seen few funds who claim they can recover it), lower trading volume (higher bid-ask spread).

  12. Hi Mr. RIP,

    I know I have no right to ask this but… when will you write the follow up post, if you do? 🙂

    I already got a request from IB to transfer my account to Interactive Brokers Ireland Limited (“IBIE”). I don’t know if to sign this already or wait for your update post.

    Daniel

    1. Hi Daniel, a follow-up is not in my schedule at the moment 😐
      On my side IB is keeping my account with IBUK, probably because I meet the criteria to be classified as a “proficient investor” on their side.

  13. Hi MrRip,

    Do you mind to share what are the minimum requirements to get classified as a “proficient investor” ?

    1. Here’s their professional/non-professional investor definition, which I don’t meet of course: https://www.interactivebrokers.com/en/index.php?f=718

      I see that I’ve been classified as Accredited Investor:

      And according to their definition: “As defined in Rule 501 Regulation D of the Securities Act of 1933, an investor who is financially sophisticated and has a reduced need for the protection provided by certain government filings”

      Taking a look at “Rule 501 Regulation D of the Securities Act of 1933” (link), I see several requirements.
      The sufficient criteria I think I meet are:
      (5) Any natural person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, exceeds $1,000,000;
      (6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years

  14. Looks like another option for EU residents is https://www.tradestation.com/ . I just confirmed with a representative that EU residents can open accounts with them. Client assets have SIPC protection (https://www.tradestation.com/accounts/stocks-etfs-safety-of-funds/). Another good thing is the fact that EU residents can trade US ETFs on their platform.

    I’m not sure how good their reputation is, but from a quick search I found out they have been around since 1982 and were a public company until 2011. IB seems to have a partnership with TradeStation and together offer this product https://www.tradestation-international.com/global/, which could be another alternative on its own.

    Anyways, I will do a more detailed research on this. Just curious if anyone here has looked into that?

    1. I never heard of this brokerage platform.
      On their homepage they say “At TradeStation Crypto is Easy”, which is not exactly what I look for in a brokerage account for my stocks.

      1. I have been using them for a few years now and they have a good platform for trading, ok platform for account management and are generally responsive and efficient. Can’t say the same for firsttrade and sogotrade that are a bit rubbish in their customer service and platform.

  15. Hi Mr Rip!
    Looking for your wise last-minute opinion on this 🙂
    Many of us got the proposal to shift to IBIE (Ireland) and we have to decide to agree/decline by the 31st, after which date we won’t be able to fully use the service if we don’t take any decision (or I guess, if we decline too)
    Did you gather additional inputs and have any suggestion on what to do?
    I’ve checked few reddits posts like:
    https://www.reddit.com/r/eupersonalfinance/comments/ixti09/interactive_brokers_brexit_account_migration/
    https://www.reddit.com/r/eupersonalfinance/comments/khpkv9/interactive_brokers_after_brexit/
    but there doesn’t seem to be consensus on what are really the best options for EU investors.
    Thanks and happy new year!

    1. Sadly I don’t have a last minute wise word 🙁
      I’m still with IBUK, probably because I’m an accredited investor (see few comments above).
      I didn’t do further research… sorry

      1. From https://forum.mustachianpost.com/t/interactive-brokers-brexit-account-migration-insurance-drops-from-500k-usd-to-20k-eur/4437/51, it seems like if one is a swiss resident one can stay with IBUK.

        For the sake of completeness, if one was not a swiss resident, or if this does not apply, If I understand correctly, there are 3 choices for migrating IB off the UK:
        – Hungary (100K protection)
        – Luxemburg (20K?)
        – Ireland (20K?)

        Has anyone read this more carefully or looked at other factors? Is Hungary a good answer?

          1. Hungary had 2 outrageous broker scandals, therefore the hun government established an obligatory 100k protection fund for brokers.

  16. Hi Mr.Rip.
    Could you explain a little more about this statement “Let’s not forget that in case of a broker going belly up “gracefully”, your assets are indeed preserved”?
    I’m using Trading212 broker and I have the same issue with the 20k eur protection.
    Thank you

    1. A broker, and in general any company, can go broke in at least two different ways: “fraudulent” or simply “out of business”.
      The latter I assume is more likely. “Sorry guys, we’re no more able to stay in business… we give up!” and then if you’re lucky they give you some time to move/withdraw the assets, or get acquired by another company. If you’re unlucky everything goes black on a Monday morning but the liquidation procedure is clear, your assets are safe, and it just takes time to get them back somehow.

      This is the “out of business” way to go broke.

      The “fraudulent” way is the Madoff style. They can issue orders on your behalf, and before disappearing into the vid they sell your assets, convert them into Bitcoins, and fly to Aruba changing their identity. Biggest financial scam of all time. In this case the 20k vs 100k vs 250k protection becomes useful, since you might never get your money back.

  17. that is what I see in ibkr.info/article/3587

    “You can only make a claim after a firm goes out of business and its assets have been liquidated and distributed to those who are owed money. Please check the details of the schemes for any limits that apply – not all losses will be covered as there are maximum levels of compensation. The Fund will pay you compensation for the amount you have lost up to a maximum of EUR 100,000. The amount paid by the Fund is:”

    “100% up to the limit of the EUR equivalent of one million forints (EUR 2,800 on 12th December 2020),
    above one million forints: 1 million forints and 90% of the part above one million forints to a maximum of EUR 100,000.”

    FWIW as swiss resident (after confirming this information, first login of the year?), I did not get window to switch.

    1. I don’t get it.
      Did they force you to switch as a Swiss resident? Did you sign a lot of paperwork? When you log in what url do you see in our browser?

  18. Hi Mr RIP,

    hope you are doing great. Any recent development on this?
    I was just now evaluating to open an IB account but I thought “wait, let’s see what good RIP recommends” and stumbled upon this. Also, I already know that I will try to move from DE to CH in the short future, so I was wondering if that move would be easy with IB (e.g. simple data change to new residence+tax ID in the account ), or more of a hassle (e.g. close all positions +open new account worst case) which would make opening an account now not a sensible decision.
    Any ideas how would that work? Would you recommend to open now?

    Thanks as always

    1. Hi Matt, sorry for late reply. No, I haven’t dug further, since in CH we’re still IBUK customers.
      If you plan to move to CH shortly, I’d just wait. Unless your wealth is large enough that “you can’t wait” (6 digits at least).

  19. I just discovered your blog, I had the same dilemma with the change announced by IB. I have now moved to Flatex, which offers the guarantees of a German bank (up to 100k EUR)

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