IBKR - Interactive Brokers

[Mungerish]

Thanks for that link. I had not paid any attention because the costs are so minimal to us usually buying 500-1000 shares per individual trade.

My point is that, even as a low vol trader, I would have to be doing trades of over 1400 shares at a time to be better off with Fidelity or Schwab. They could be charging me .0045 per share and I would not blink.

[iambagman]

Yes, your broker determines commission to you, but that is influenced by how much the broker pays to custodian, assuming they are not integrated.  See IB's comments on introducing broker pricing and bundling.

My point is that the custodian matters greatly to institutional investors, esp post-Lehman. As discussed at length above, while IB is not the household name of JP or GS, IB is most likely a safer custodian for your client capital.   

That all said, and to KCLarkin's point, I would venture that the perception of IB's sub-par reporting functionality and customer service are a bigger hurdle for most HF/RIA clients than the balance sheet needing to be safer.

This notion of bad customer service for IB is often repeated.  If you have a large enough account (and it does not have to be that large) there is a "prime" desk at IB that picks up on the first ring every time.  The service is excellent. So perception maybe a problem as you say - but actual service to even a small hedge fund is excellent if they are on the "prime" desk and not calling the 800 number.  The reporting is powerful as well. Again there is a disconnect between perception and reality.

The fact is that GS and JP are kicking out small and mid sized funds because they are capital constrained and have better alternatives.  I know of a $25M fund that GS started charging $10K a month just to be there.  Staying was not an option.  IB is a very viable and attractive alternative for sub $50M funds and given their level of automation - they can be very very profitable customers. It is a win/win situation

[Spekulatius]

1400 shares isn't really that much, if you manage OP's money, is it?
I can live with IB's reporting, but the lack of support for something as widely used as TurboTax is unexcusable. Every other broker that I know of, supports Turbotax, IB does not.

[writser]

Thanks for that link. I had not paid any attention because the costs are so minimal to us usually buying 500-1000 shares per individual trade.

My point is that, even as a low vol trader, I would have to be doing trades of over 1400 shares at a time to be better off with Fidelity or Schwab. They could be charging me .0045 per share and I would not blink.

Sure, IB could jack up commissions 200% and most clients wouldn't leave. But (I think) Peterffy believes IB is still in the growth stage. He is keeping commissions low to grab market share. He's not aiming for short-term profitability.

[kab60]

I think it's quiet formidable how they grow when you take into account the different stuff people think needs improvement. That provides optionality. People complain about TWS, but check out a Bloomberg terminal. When you learn the stuff you sorta feel special and get to like it and might now wanna switch. Peterffy could jack up prices and it would be cheaper valuation wise in a flash but might hurt long term growth as well as loyalty/stickiness. Also, being so much cheaper than alternatives they probably discourage new competitors/keeps potential entrants on the sideline and forcing other brokers to compete on other things than price.

[AccentricInv]

Anyone else annoyed they raised the price of real-time data to $122/mo for professional users?  Used to be free / waived as of last month.  Are people paying for this, or are you finding a way around it?  (I'm very cheap...)

That said, I still wouldn't think of leaving IB and guess that attests to their customer stickiness.  I also agree that their prime desk is very good, and I've never had an issue with it.  Longest I've been on hold is for a few minutes.  Also their reporting and compliance tools are much much better that even some of the paid options out there, which you get for free. 

Their automation is fantastic, and not given enough credit.  Was just talking to someone who primes at one of the larger IB's the other day (he multi-primes at IB too), and he said has to pick up the phone for routine tasks that IB provides automatically.  Described it like going from Google to back to Netscape...

[Mungerish]

1400 shares isn't really that much, if you manage OP's money, is it?
I can live with IB's reporting, but the lack of support for something as widely used as TurboTax is unexcusable. Every other broker that I know of, supports Turbotax, IB does not.

The 1400 shares question is all about what your buying, the bid and ask size, etc. I wasn't talking about the total position , just the one specific order.

[Mungerish]

Anyone else annoyed they raised the price of real-time data to $122/mo for professional users?  Used to be free / waived as of last month.  Are people paying for this, or are you finding a way around it?  (I'm very cheap...)

That said, I still wouldn't think of leaving IB and guess that attests to their customer stickiness.  I also agree that their prime desk is very good, and I've never had an issue with it.  Longest I've been on hold is for a few minutes.  Also their reporting and compliance tools are much much better that even some of the paid options out there, which you get for free. 

Their automation is fantastic, and not given enough credit.  Was just talking to someone who primes at one of the larger IB's the other day (he multi-primes at IB too), and he said has to pick up the phone for routine tasks that IB provides automatically.  Described it like going from Google to back to Netscape...

You can avoid the data fees by opening a retail account at FIDO or Schwab with enough capital to get Street Smart Edge or Active Trader for free. You need two screens obviously.
That may not be a solution if you are a very active trader who needs to constantly be pulling the trigger on things....in which case $122 per month should be a low cost approach to doing that kind of business I would think.

Although I'm a fan of IB, I would never have the majority of my assets in one place, especially in margin accounts.

[glorysk87]

Does anyone mind helping out an unenlightened peon with IBKR?

The company has maintained a position on my watchlist for quite some time, but I have thus far shied away from diving in deep. I reconsidered today and began researching in earnest.

However, I have a high level question:

Why has the massive growth in # of accounts and total client equity not translated into improved financial performance? Accounts have doubled since 2013 and client equity has almost tripled, yet revenue has only increased by ~30%.  Revenue per average account has been declining YoY for well over a year now.

Curious what the driver here is.

[valueyoda]

Could be that the use of ETFs and passive management has lead to lower activity per account. Still believe that IBKR has a huge moat relative to the other brokers though.