Interactive Brokers restrictions for Australian residents?

I recently took out an account with this firm for options trading purposes.
Their fees are reasonable,Their platform is a bit of a headache for starters,but
ok after some practice.It has some useful addon features
Their response to questions on their Chat Site is excellent and instantaneous.
But, alas, there it ends for options trading:

Margin accounts are not allowed for Australians.
Vertical credit spreads are only allowed on European cash settled options.
You cant leg in on the short side first,to take advantage of a moving market.
They wont accept an asx stock option with an xx.01 value as being European.
Calendar spreads of any type are not allowed.


I am asking myself what use is IB for any kind of real serious trading,if any kind of credit trading is out?(naked or defined risk spread).None of this is mentioned on their website.
I would be interested to know others experience of Options trading with IB
and whether there is something a little more unrestrictive out there at similar rates?
I also trade with Commsec,but the problem with them is that there is no spread trading
platform,and legging into spreads is bad news in the wrong type of market.
They also are ruthless in demanding double the defined risk with no allowance for
any credit,which to me if a credit spread is far OTM is outrageous theft of ones liquidity.

nardir4 said:

I would be interested to know others experience of Options trading with IB

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i believe that only applies to individuals and it's a directive from ASIC, not IB's decision. my IB account is a company trust account and i don't experience any such restrictions when options trading. of course i have no idea whether a company trust structure is suitable for you, but it might be something worth looking into if you really want to trade thru IB using margin.

nardir4 said:

Vertical credit spreads are only allowed on European cash settled options.
You cant leg in on the short side first,to take advantage of a moving market.
They wont accept an asx stock option with an xx.01 value as being European.
Calendar spreads of any type are not allowed.

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Hey,

Just a few corrections,

Vertical credit spreads are allowed on both American and Euro styles.

You can leg the short side first, you just need enough spare margin.

You can trade ASX xx.01 Euro style options.

Calendars are allowed.

nardir4 said:

I also trade with Commsec,but the problem with them is that there is no spread trading
platform,and legging into spreads is bad news in the wrong type of market.
They also are ruthless in demanding double the defined risk with no allowance for
any credit,which to me if a credit spread is far OTM is outrageous theft of ones liquidity.

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Combinations are available through Comsec, ring them through, brokerage is massive, especially on big value orders, they use percentage of trade value above 10k.

Generally far OTM credit spreads aren't the problem, its the WTF in the money on the low volume series that can cause headaches.

Cutz,I don't know how you are managing to trade spreads with IB.I guess the answer possibly lies in Sharkmans reply.
My experience is firstly trying to do it,and secondly long discussions with them as why I could not.I cannot even do it in my paper trading account.They won't accept xx.01 spread trades on the asx,because although they acknowledge them as European options they are not cash settled.The only thing they will allow me to trade is long option positions and limited spreads on European cash settled indices.So if there is anyone else out there contemplating signing up with IB as an individual trader,be forwarned.What annoys me is that I had a discussion with their Australian rep before signing up,and none of this was mentioned,even though I made clear my trading intentions.

Cutz,I am well aware that you can phone commsec for a spread trade and pay a much higher brokerage.A number of times I have waited on the end of the line("sorry for the delay,we will..blah blah....') only to watch a trade move against me.
Trying to leg into the short the short side of a spread with Commsec when it is advantageous is a hit and miss thing,I have found.
Even though the amount in my account covers it many times over,they don't always allow it.When queried about it they usually just play dumb.
Last year they promised a spread trading platform early in this new year.It's never happened.Maybe all the good Australian programmers left to work on the "Think or Swim" platform and never returned.

OptionsXepress seem to offer trading on the US markets to Australian Individuals at good rates.
Capital 19 Offers trading on both US and ASX to individuals at higher rates.
I have no experience of either of these,and would be interested to hear from anyone using them to trade options.

I am aware that this discussion possibly belongs in "Brokers Forum".but I put it here because it concerns solely Options spread trading.

Nadir, I would suggest that Cutz must be trading thru a company, Individual accounts cannot trade spreads or sell naked. Unfortunately my entire trading strategy has been based on trading Commodity futures options selling calls and puts also ETF index options selling Vertical spreads and diagonal spreads. IB were allowing me to do that until the restrictions. However due either to there lack of diligence in doing the correct licensing paper work or ASIC,s changing the rules mid game. Either way I find my SMSF is now locked out of what was excellent returns for what I really enjoyed doing i.e. trading options.

My question is the same as yours but also combined with the fact it is a SMSF trust account. Is there a broker out there allowing trading US options ie selling naked and spreads? I am upset as this was making me good money for the future and now its all gone to ..... Anyone help?

rocketroado said:

Nadir, I would suggest that Cutz must be trading thru a company, Individual accounts cannot trade spreads or sell naked. Unfortunately my entire trading strategy has been based on trading Commodity futures options selling calls and puts also ETF index options selling Vertical spreads and diagonal spreads. IB were allowing me to do that until the restrictions. However due either to there lack of diligence in doing the correct licensing paper work or ASIC,s changing the rules mid game. Either way I find my SMSF is now locked out of what was excellent returns for what I really enjoyed doing i.e. trading options.

My question is the same as yours but also combined with the fact it is a SMSF trust account. Is there a broker out there allowing trading US options ie selling naked and spreads? I am upset as this was making me good money for the future and now its all gone to ..... Anyone help?

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IG Markets will permit you to sell naked and on commodities. The margin method is not SPAN. I am trading as an individual with domestic domicile:

DeepState said:

IG Markets will permit you to sell naked and on commodities. The margin method is not SPAN. I am trading as an individual with domestic domicile:

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Are you referring to Exchange Traded spreads or IG's own Spreads? two diff things one is ETO other is an OTC product (conflict of interest with provider etc)

I find today, with my Corp Trustee SMSF account, on IB, I CANNOT EVEN SHORT STOCK !

Wow

they say must be a "margin account" to Short. Not a 'Cash Account"
I offered to pay the interest charges etc from Cash. No need to connect Shorting with Margin lending.

Surely they could arrange their rules to allow it.
eg, you have to have 25% of portfolio as cash, to cover unfortunate incidents, or 50% of the value of your trade must be excess cash, You can only short from the 'approved list'. or whatever etc etc.

NO DEAL.
Suddenly i am interested in all those inverse ETFs !