Quote:
Originally Posted by bizaro86
I'm not sure what your friend used, but Interactive Brokers is a large public company. Many/most small to medium hedge funds use it, because they have great execution, low commissions, and a powerful trading engine. They aren't a beginner type operation though, the software is very powerful but it's harder to use than a bank brokerage, just because it has so many more choices.
They have unbelievably good margin rates, and way lower commissions than anyone else available in Canada. They also have direct access to international markets (UK, EU, Asia, Australia) that no other broker in Canada offers.
They have transparent availability of borrow for shorting, and disclose the cost of borrow in advance. They also have an automated process for handling corporate actions (tenders, exchange offers, mergers, etc) which is way better than anything else. That combination makes them an easy choice for anyone doing merger arb type stuff. A few times on the phone spending 20 minutes explaining what I needed to the questrade employee (no, tender to the odd lot option...) when I could do it with 3 clicks at IB got me to switch everything.
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Well I think that you're doing things that a lot of "average" investors shouldn't be doing. I realise I'm at the risk of sounding condescending and this might not be well received, but truthfully, trading options and using margin is probably something best left to people who know what they're doing and not just someone looking for "casual" investing. That doesn't mean that IB is bad or anything like that, it's just I don't know that they need those kinds of capabilities.
I did want to comment about the free trades though, as that's becoming more and more prevalent on some platforms. First, these free products are a loss-leader for sure. The ETF launched by Fidelity a couple weeks ago in the US is available on one platform I think and the plan there is clearly to bring people in and then sell them the higher cost products. The Wealthsimple free trades are in a similar vein, and as I understand will be purely for non-registered accounts (this is what I've heard, but that could be wrong). If so though, people need to bear in mind the tax consequences of these trades!
The other thing, and this might be seen as condescending as well, is that free trades just encourage bad investor behaviour. It encourages people to trade more because it's frictionless, and frankly, more trading will likely mean poorer results. You get the poorer results and suddenly those fund portfolios they offer the easy switch into don't look so bad, and voila....you have the investors paying the higher fee from what began as a free trading account.