Matching IB Margin Rates

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Count of Notre Dame
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Matching IB Margin Rates

Post by Count of Notre Dame »

Has anyone had success getting their broker to match Interactive Broker's low margin rates? I'm looking to start a brokerage account and was wondering if there were any real alternatives. Did you already have substantial assets in brokerage and who was the broker? Was thinking this thread could be viewed similarly to the mortgage refinance one, thank you!
Tanelorn
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Re: Matching IB Margin Rates

Post by Tanelorn »

If you’ve got millions of dollars of margin debt and are a good brokerage customer, you might be able to get similar rates some other brokers especially if you’re willing to move lots more assets to them. But the real question is why don’t you want to use IB?
babystep
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Re: Matching IB Margin Rates

Post by babystep »

I wish Fidelity will match that rate but haven't asked them. I would be curious to know if anyone was able to match or get a decent low rate from Fidelity.
SpaceCowboy
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Re: Matching IB Margin Rates

Post by SpaceCowboy »

babystep wrote: Mon Apr 12, 2021 11:51 pm I wish Fidelity will match that rate but haven't asked them. I would be curious to know if anyone was able to match or get a decent low rate from Fidelity.
Fidelity does negotiate rates, but I haven’t gotten them down to IB levels. Use it occasionally as a short term credit line.
babystep
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Re: Matching IB Margin Rates

Post by babystep »

SpaceCowboy wrote: Mon Apr 12, 2021 11:59 pm
babystep wrote: Mon Apr 12, 2021 11:51 pm I wish Fidelity will match that rate but haven't asked them. I would be curious to know if anyone was able to match or get a decent low rate from Fidelity.
Fidelity does negotiate rates, but I haven’t gotten them down to IB levels. Use it occasionally as a short term credit line.
Thanks SpaceCowboy.
learntoinvest123
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Re: Matching IB Margin Rates

Post by learntoinvest123 »

Count of Notre Dame wrote: Mon Apr 12, 2021 6:56 pm Has anyone had success getting their broker to match Interactive Broker's low margin rates? I'm looking to start a brokerage account and was wondering if there were any real alternatives. Did you already have substantial assets in brokerage and who was the broker? Was thinking this thread could be viewed similarly to the mortgage refinance one, thank you!
Yes, brokers will negotiate margin rates. Much will depend on your negotiating skills and how much money you bring to the table and how much margin you use. The more margin you use, brokers will give you better rates.

You will have to shop around. Not every broker will play ball. I have negotiated margin rates down, but nothing close to IBKR.
kxl19
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Re: Matching IB Margin Rates

Post by kxl19 »

babystep wrote: Mon Apr 12, 2021 11:51 pm I wish Fidelity will match that rate but haven't asked them. I would be curious to know if anyone was able to match or get a decent low rate from Fidelity.
I was able to negotiate a ~3% rate at Fido.
babystep
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Re: Matching IB Margin Rates

Post by babystep »

kxl19 wrote: Tue Apr 13, 2021 9:13 pm
babystep wrote: Mon Apr 12, 2021 11:51 pm I wish Fidelity will match that rate but haven't asked them. I would be curious to know if anyone was able to match or get a decent low rate from Fidelity.
I was able to negotiate a ~3% rate at Fido.
That is pretty good. Their advertised rate is 4% for 1M+.
Topic Author
Count of Notre Dame
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Re: Matching IB Margin Rates

Post by Count of Notre Dame »

Tanelorn wrote: Mon Apr 12, 2021 8:10 pm If you’ve got millions of dollars of margin debt and are a good brokerage customer, you might be able to get similar rates some other brokers especially if you’re willing to move lots more assets to them. But the real question is why don’t you want to use IB?
I don't love the software and would like to move assets to a brokerage to negotiate a mortgage rate AUM discount.
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kilowattcorn
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Re: Matching IB Margin Rates

Post by kilowattcorn »

Personal experience: Fidelity offered 1.5% margin rate (via discount on their published rate, so this is not a fixed rate) + $2500 on a ~1.5-2M taxable portfolio, if I promised to use a significant amount of margin. They seem to be flexible on rates as long as they expect you to be a profitable customer (frequent trader, managed account, Fidelity funds, etc).
econalex
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Re: Matching IB Margin Rates

Post by econalex »

Just do a short box spread on SPX and the market shall provide :twisted:

I experimented earlier today with a very small one and got filled at 0.74% apr, due Dec 2023. Other got better fills. Search in forum.
BFR
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Re: Matching IB Margin Rates

Post by BFR »

I am in the low 1s at both Fidelity and Schwab. With Fidelity, I recently opened the account and made the account opening contingent on getting portfolio margin at the same rate that I had at Schwab. I got Schwab to give me a low rate based on my balances. My debit balances at Schwab are in the mid six figures and my debits at Fidelity are low six figures.
harikaried
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Re: Matching IB Margin Rates

Post by harikaried »

kilowattcorn wrote: Fri Sep 17, 2021 3:31 pmFidelity offered 1.5% margin rate … if I promised to use a significant amount of margin
As in borrowing $500k+? At least the posted rates at Fidelity have a pretty big drop from $250k loan vs $500k. And what if you borrow some but not that full threshold amount within some time frame (1year+?)?
nalor511
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Re: Matching IB Margin Rates

Post by nalor511 »

harikaried wrote: Fri Sep 17, 2021 5:38 pm
kilowattcorn wrote: Fri Sep 17, 2021 3:31 pmFidelity offered 1.5% margin rate … if I promised to use a significant amount of margin
As in borrowing $500k+? At least the posted rates at Fidelity have a pretty big drop from $250k loan vs $500k. And what if you borrow some but not that full threshold amount within some time frame (1year+?)?
Fido offered me 1.5% for 500k but I had to commit to draw that amount, which I'm not willing to do. I don't know what happens if you take less, I guess they can adjust the rate whenever they want.
harikaried
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Re: Matching IB Margin Rates

Post by harikaried »

nalor511 wrote: Fri Sep 17, 2021 5:47 pmFido offered me 1.5% for 500k but I had to commit to draw that amount
Well… One day of interest at that amount is $20. "Oh, we got some other source of funding the next day!" :wink:
bling
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Re: Matching IB Margin Rates

Post by bling »

econalex wrote: Fri Sep 17, 2021 4:43 pm Just do a short box spread on SPX and the market shall provide :twisted:

I experimented earlier today with a very small one and got filled at 0.74% apr, due Dec 2023. Other got better fills. Search in forum.
define "very small". SPX options are based on the actual price of S&P, x100 for options and we're dealing with lots of money here, which isn't really suitable for small margin loans.
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kilowattcorn
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Re: Matching IB Margin Rates

Post by kilowattcorn »

harikaried wrote: Fri Sep 17, 2021 5:38 pm
kilowattcorn wrote: Fri Sep 17, 2021 3:31 pmFidelity offered 1.5% margin rate … if I promised to use a significant amount of margin
As in borrowing $500k+? At least the posted rates at Fidelity have a pretty big drop from $250k loan vs $500k. And what if you borrow some but not that full threshold amount within some time frame (1year+?)?
The agent said the negotiated margin rate was not subject to the tiers and would apply to any margin amount, and that their hope was that new customers who negotiated rates would use significant margin within a year of opening the account. How that translates to their actual policies or margin rate changes is unclear. The agents are probably incentivized to get money in the door and they probably worry less about what happens down the line.

On their end, the rate is expressed as a discount on their base rate and "hard coded" to the account (currently 7.075%, so a 1.5% would be a 5.575% discount).
econalex
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Re: Matching IB Margin Rates

Post by econalex »

bling wrote: Sat Sep 18, 2021 6:53 am
econalex wrote: Fri Sep 17, 2021 4:43 pm Just do a short box spread on SPX and the market shall provide :twisted:

I experimented earlier today with a very small one and got filled at 0.74% apr, due Dec 2023. Other got better fills. Search in forum.
define "very small". SPX options are based on the actual price of S&P, x100 for options and we're dealing with lots of money here, which isn't really suitable for small margin loans.
I got 1 Dec 23 box 4600-4400 at 196.9. So I borrowed $19,690 (before commission) and will repay $20,000 at Dec 2023. I consider this amount very small. You can go smaller by reducing the spread, but from what I understand the effective apr will be higher.

Remember margin rate at IBKR is 1.5% + benchmark for the first $100k.
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