Interactive Brokers expands direct market access platform

Source: Interactive Brokers

Interactive Brokers Group (IBG), a global leader in electronic market-making and brokerage services, recently expanded its IB Universal Account by adding CME floor-traded products, CBOT floor-traded products, Swedish stocks and Japanese stocks.

"Financial experts are often quoted saying a multi-asset worldwide direct access platform is something we will see in the future," said Steve Sanders, IB's managing director of development. "However, the fact is that for four years we have been leading the industry with an innovative platform that allows direct access to stocks, options, futures, Forex, bonds, and Exchange Traded Funds (ETFs) worldwide from a single account all from the same Trader Workstation screen."

These new products represent the latest addition to IB's advanced trading tool, which transforms trading from a complicated effort to a straightforward cost-effective process for anyone wanting to trade multiple product types across the globe.

"The Universal Account, which is unique to IB, is a true time and money saver," Sanders said.

Rather than having to maintain separate accounts and individual minimum balances, IB's Universal Account allows trading of multiple products worldwide from a single account. In addition, tracking investments becomes far more manageable since all positions and risk are displayed in real-time within a single screen.

The multi-product platform allows customers to use a single base currency to trade products in other currencies. Transactions are executed by either securing a loan against the base currency or actually converting the currency. The choice between a loan or conversion is entirely up to the customer, based on a personal appetite for currency risk. In either case, the customer's trading costs are decreased through professional financing or currency conversion rates.

"Most brokers would not want to offer our Universal Account structure because it would mean the end of high markups on non-transparent currency conversions and finance rates, which is where brokers make the bulk of their profits," said Sanders. IB offers access to five interbank currency dealers and will route a forex order to the dealer with the best bid or offer available at any given moment. In addition, complete straight-through processing, large volumes, and self-clearing allow IB to offer execution and clearing services at deep discount commissions.

Up until a few years ago, traders and investors were forced to involve a middleman when investing in overseas or alternative assets. Today, customers have the choice of going direct. Rather than paying a middleman to buy energy company stock, customers can directly buy a future. Instead of buying an ADR and paying high management fees, the customer can directly buy the stock from an overseas exchange. "Personally, I'd prefer not to keep the investment managers and custodians of the world in the luxury they are accustomed to from earning extensive markups. With the advent of the internet, most customers can do the research themselves and keep the markup," said Sanders.

Exchange consolidation has been in the news of late with the promise of added convenience for traders and investors. "Interactive Brokers Group already offers this convenience and does not have any incentive or disincentive to fill a particular order on a given exchange. The goal is to provide the best price execution to our customers. In addition, when entering a combination order (i.e. stock-options, futures-ETFs, stock-stock orders), IB will always seek the best price for each leg amongst multiple exchanges and guarantee against partial fills," Sanders said.

"We are constantly expanding our worldwide product offerings for this best kept secret in the trading industry," Sanders said.

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