Sometime in July 2021, Interactive Brokers have sneaked in a small update on their website, gently removing the famously known inactivity fees which used to charge your account with a monthly fee of $10 unless your account meets either one of the two conditions:
After some digging, turns out that they've effectively eliminated the fees for good (at least for now...) as a measure to remove impediments for potential clients to maintain accounts with IBKR.
Removal of these conditions have sent some shock waves across various forums, blogs, or even in Reddit itself - not just Malaysia, Singapore, but also the European part of the world.
Frankly speaking, I was very sceptical when the news first broke out, as it seemed too good to be true but after digging around for a bit, it REALLY IS TRUE! I guess Christmas came early this year...
When I first decided to diversify from investing locally within Malaysia, into investing abroad across various international markets - one thing that frustrated me was that I couldn't find a PERFECT brokerage that suits my investing style.
I like to buy and forget, barely making any transactions on a quarterly basis, wants exposure beyond just the US with strong international bank account presences, and dislikes managing multiple brokerage account
That's how I first ended up with TradeStation Global - as the only reason was that dreaded inactivity fee from IBKR. With my current net worth and investment style, I simply cannot generate at least $10 in commissions on a monthly basis; nor I have a $100K USD worth of Portfolio to be eligible to waive the fees.
AND I WAS NOT ALONE! There's plenty of us on the FI journey who have opted for alternative brokerage house just for this reason alone.
The simple act of removing monthly fees with zero minimum balance has literally sent the shockwave to all of us - who was on the fence, with a strong urge to jump into IBKR's lap immediately.
While TradeStation Global worked very well as a painkiller, doing almost everything that IBKR does without the monthly fees; but indirectly we have to pay a slight premium for every trade that we make - i.e. minimum commissions of $1.5 for TSG vs $0.35 for IBKR.
Let's not also forget - the vanilla IBKR PRO allows their customer to activate for free the "Fractional US Shares" feature on their account, whereas the TSG users are not eligible to. Frankly, these are the only two potential key differentiating factors when comparing the two, since TSG holders have already long-enjoyed all the other perks that come with Interactive Brokers.
Just as a quick recap, any investors through Interactive Brokers (whether directly or indirectly via TSG) are already enjoying these features:
I believe most of us have already, to a certain extent, already have the thought process to immediately jump-ship from TradeStation Global into the Interactive Brokers. As mentioned in previous chapter, the differences between the two are so minimal and really boils down to the following:
As with all decisions, it's always personal and up to you. What's most important is that the decision works for you - and here are some thoughts process that may help you to navigate through it:
IBKR's rate at $0.0035/shares with minimum of $0.35 per trade vs. TSG's $0.0070/shares with minimum of $1.50 per trade
Since the Fractional Shares trading feature only covers selected US shares, those of us whom are heavier into index funds domiciled in Ireland (or Hong Kong, in my case) will be out of luck
Competition is always good - as it pushes business into doing more things to acquire or retain customers. Perhaps, on the hindsight, IBKR would not even make this drastic decision if not for the likes of TSG (and all the new zero-commissions brokerage out there)
TSG's response have been subtle so far (by eliminating minimum funding requirement) - we'll never know what they may offer as part of their desperate retention strategy
I was still hesitating when I was preparing for this article - and writing definitely has helped me to better organise and crystalise my thoughts process allowing me to think deeper before jumping the gun.
On one hand, I want to switch immediately, as I have always wanted to apply with IBKR but wanted to save on the $10 monthly fees. On the other hand, I'm also curious as to what TSG will come out with, in desperation, to escape this unscathed. Especially since their secondary Unique Selling Point (or might even be primary), has always been the zero-inactivity fee with low-minimum funding but still having the near-full IBKR experience.
Of course, they still have their fancy desktop app, but that might appeal more to sophisticated traders and not retail investors like us. No matter how much I think about it - it seems to be an extremely sticky situation for TSG to be in as their current business model is to generate profits from the markup commissions.
If they are forced to commission-match with IBKR, that means their income source has to come from elsewhere - and I just cannot think what else they can offer at this stage except to tap into their proprietary software and also dedicated advisory support.
Looking back at the Brexit incident not too long ago where TSG had to handle a similar crisis - TSG was forced to introduce a monthly $15 Subscription Fee for their software after matching IBKR's default commission model. Even in that situation, it seemed to make more sense to stick with standard IBKR's $10 monthly fee (at that point in time, prior to the removal today) - unless you really want the software.
Given the outlook, I'm leaning more towards going ahead with the de-link since I don't see much maneuvers/cards that TSG can play from business model perspective.
Thanks to the power of the internet, and various contributors ranging from my friend, Lowyat Forum, Reddit, most importantly IBKR FAQ - I managed to compile the below steps even before I completed the delinking process myself.
Below is a rough summary of what I have went through so to manage the expectations, for someone who were quite unlucky (compared to few others that I see in LYN forum)
One key takeaway throughout this exercise is this: EVERYONE'S DE-LINKING EXPERIENCE IS DIFFERENT. Very odd for an institution which should have some sort of standardized processes to a certain extent.... But hopefully the below steps would still be useful as a reference to kickoff your de-linking journey, should you proceed!
When you first send an email to TradeStation Global to request to de-link your account, they will share the below authorization form to fill up. To speed up the process, you can get a copy of this PDF here.
You must physically print it, sign it, and scan it back to them, together with your ID copy attached. Electronic signatures are NOT ACCEPTED!
I don't know if it's required, but I just kept keep [email protected] in copy when I sent the email.
Once you have emailed TSG on the authorization to de-link, you may proceed to notify IBKR through their ticketing system to perform a full manual transfer review so that you can complete the transfer from Master Account into Individual Account
As for the details, FAQ mentioned to provide old/new account number - I can't seem to find any different account numbers generated for TSG so I omitted that - will update back when I hear from IBKR team.
As I did both Step 1 & 2 pretty late on Friday night, I have probably missed Friday's train on the transfer verification processing. Thankfully the wait wasn't too long and I have gotten the verification request email on the subsequent working day during Monday evening (UK time).
All the email does is to ask you to call them to perform a verbal verification.
You will need the following details with you (at least in my case):
I have briefly summarized the processes that I went through.
I selected their Hong Kong ones (+852-2156-7907) as it's cheaper for me to dial Hong Kong than US via my company phone. In any case, it doesn't really matter as I called them midnight Malaysia time hence the Hong Kong agents was already out, and the call was automatically routed to US/Europe agents as they utilize Follow the Sun support model with 24 hours coverage.
There's a few greeting IVR's to go through and all-in-all I waited for approximately ~13 minutes (with good soft music choice). Below was the IVR menu that I went through, but may differ depending on timing/the number you called.
PRESS 1 FOR ENGLISH
PRESS 1 FOR EXISTING ACCOUNT
ENTER 7 DIGIT ACC NUMBER
PRESS 2 FOR TRANSFER-RELATED INQUIRIES
PRESS 0 FOR MENU
PRESS 3 FOR OTHER POSITION TRANSFERS - REMAIN ON THE LINE FOR LIVE AGENT.
From what I have gathered so far, it might be better off to just install Skype and and dial their US TOLL FREE number @ +18666942757. As a matter of fact, it might even be worthwhile to just install Skype app on your phone, save the number to the contacts, so that in case of emergency you'll be able to connect with IBKR, free of charge.
Inform them of your intent to perform verbal verification, and provide them with the case reference number (in the email)
Before they proceed further, they will first verify your identity via mobile app notification. They will send a notification to your IBKR Mobile App and requests you to click on the notification to get verified using my phone's biometrics.
Following that, it's exam time! Just answer the questions listed in the earlier section.
I almost panicked when I forgot the answer to my 3rd question as I don't remember what was the answer I set. Gosh, why did I even set myself up with a security question that has multiple-choice answers!?!?!?
The problem for me was I had to take the call in an impromptu manner since I don't remember the security questions I have set during registration. There was also no way to warm up as the security questions set was not visible in IBKR Portal.
Thankfully I got it right after 3 attempts and the verification is then completed - I think the Agent was being nice to me since I answered everything else pretty much immediately, except the last security question.
The call was done in less than 5 minutes. At this juncture, all I was told is wait - no timeline, no commitment, nada. According to the agent, it really depends on the backlog/queue and it is hard to say now as he does not have visibility. In case of any updates, they will reach out again via IBKR Messages or Email so I was told to keep an eye on it.
From what I read online in various Reddit posts - this entire process will take at least 3 days (if you're lucky) or up to 3 weeks (which happened during the Brexit peak).
Looking at the current situation, I'd assume that we'll be closer to the peak period than the non-peak - since it's basically a crisis for TSG. Fortunately for me, the entire process took only approx. 8 days - which is also a mixture of late-submission hence missing the boat and/or being unlucky to go through verbal verification.
There are few ways to check the progress, with the easiest being the Home screen no longer censoring IBKR's logo and an additional "Refer a friend" tab appearing.
If you visit your account settings, you will also see a few options added where you can now sign up for fractional shares, select IBKR pricing plan, or visit your Refer a Friend page.
The last method that you can check on the progress is to run any report and check if the Account is still assigned to TSG as the Master Title. I'm still waiting for 19th July's Daily report which would probably only come by end of day US time...
On the 19th July evening - I finally received a message from IBKR indicating that my account de-linking process have been successfully processed.
Verified it in the reports section and it is indeed not showing Master Account Title under TradeStation International Ltd anymore.
Just as a quick recap, below are what I went through but remember that everyone's experience may differ slightly depending on your luck (and the person handling your case) - so don't worry even if you went through a slightly different process than what I did. Most importantly is the outcome. Do share in the comments below your experience so that others can also benefit from it!
For now (or at least until I create a dedicated article for standalone IBKR), you may refer to this step-by-step guide on Investing in International Stocks via TradeStation Global
The steps are exactly the same - but SKIP COMPLETELY the Step 1 and go straight into Interactive Brokers website and click on "Open An Account". Once you have created your username and password, continue the guide from step 2 onwards (up until account funding) - as the steps are EXACTLY THE SAME (just ignore any mentions of TSG)
Why? Because TradeStation Global has always been using IBKR's backbone, and their role has always been an introducer with differentiation from product commissions/pricing perspective, as well as their in-house developed app.
I hope this guide has provided you with a deeper insight on the whole saga from Interactive Brokers' decision to remove monthly inactivity fees from their product offerings, which opened up a whole new opportunity for some of us (especially buy-and-hold investors).
On the flip side, I personally feel bad for introducer brokers like TradeStation Global as they have been able to provide this service for years, by charging a slightly higher commission premium as their business model - and this decision definitely will impact them. I'm also wondering how much information was shared by IBKR to their business partners (introducer brokers) when these decisions were made...
In any case, it is a capitalist world and the fittest and agile ones may survive. Let me know what would be your decision - whether if you would stick with the existing TSG to see their counter offers, or to jump ship already to IBKR?