Due to a June 2018 ruling by the Israeli financial court, Interactive Brokers is no longer permitted to offer spot forex trading to Israeli retail clients. While IBKR's forex offering is a deliverable "spot" transaction, the ruling interpreted a 2014 amendment to Israeli Securities Law 5728-1968 to cover spot/cash transactions in addition to derivative/contract style transactions.

• Forex transactions that would create a negative balance or would increase a pre-existing negative balance in either component currency will not be allowed to Israeli retail clients.
• The negative cash balance test applies only to the component currencies and for the cash movements created directly by the forex trade. There is no restriction regarding the creation of negative balances by other means such as cashiering activity or trading activities in securities (stocks, bonds, options, etc).

Example: Having USD 1,000 and converting to ILD, value of ILS 3,600 (1 USD = 3.6 ILS) 

Procedure

In order to be consider a "Qualified Investor" IB requires client to meet the following criteria and procedural requirements.

Qualified Investor qualification need to be recertified every 3 years.

For Individuals

Individuals, which comply with at least one of the following alternatives:

1. Total value of Liquid Assets greater than NIS 8 million; or
2. Annual income in each preceding two years is greater than NIS 1.2 million or the income of the Household to which he belongs is greater than NIS 1.8 million.; or
3. Total value of Liquid Assets greater than NIS 5 million and the annual income in each proceeding two years is greater than NIS 600,000 or such annual income of the Household to which he belongs is greater than NIS 900,000.

"Liquid Assets" means cash, deposits, securities, equities and funds.

"Household" means an individual and the persons living with him or who are dependent on him for their living.

The client must:

• compete the Qualified Investor Representation form and
• provide a written signed confirmation from a registered attorney or accountant certifying their qualification. This certification should be no older than 3 months.

For Corporates

The following entities can be exempted:

1. Authorized mutual funds or fund managers
2. Provident funds or fund managers
3. Insurers
4. Banking corporations
5. Portfolio managers
6. Investment advisors, who acquire for themselves
7. Stock Exchange members
8. Underwrites, who buy for themselves
9. Venture capital funds
10. Corporations (including funds, partnerships) other than corporations which were incorporated for the purpose of purchasing securities in a specific offer, with equity exceeding 50 million NIS
11. Corporations, wholly owned by one of the aforementioned investors

Entities qualifying under exemptions 1-9 must provide confirmation of their status from a governmental register.
Entities that wish to be considered under exemptions 10 and 11 must:

• complete the Qualified Investor Representation form and
• provide a written signed confirmation from a registered attorney or accountant certifying their qualification. This certification should be no older than 3 months.
   

• IB FXCFD取引はすべての投資家のお客様に適したものではなく、お客様の知識や取引経験などをご考慮のうえ、ご自身が高いリスクを許容しうる投資経験や損失に耐えうる財産状況にない場合には、取引を取りやめるなど、ご自身の判断と責任において投資判断をされるようお願いいたします。
• 外国為替レートおよび金利レートのボラティリティーにより短時間で多額な損失が生じる可能性があります。FXCFDにはお客様の投資に係わるボラティリティーをさらに拡大させるレバレッジがかかっているため、投資額以上の損失が生じる可能性があります。IB FXCFDのロールオーバー金利はまた、金利レートの変動により受け取りから支払いに転じることがあります。
• 必要なＩB維持証拠金を十分に補う資産が、いつでも口座に入っている必要があります。猶予期間はなく、当社はマージンコールの請求を行いません。資産はリアルタイムで計算され、これが不足した場合、当社では速やか、かつ自動的にポジションの強制決済を行って口座の証拠金不足を解消します。リアルタイムの強制決済は口座内の資産がマイナスになるリスクの最小化を目的としていますが、このリスクを取り除くことはできません。資産がマイナスになった場合には、不足分を補うために資金の追加が必要になります。
• 当社が提示するIB FXCFD取引の取引価格は現行の通貨市場に基づくものですが、この価格によって取引が約定されることを保証するものではありません。大きな数量の取引の場合、為替レートが素早く変動する市場において、また取引量が多い時間帯においてはスリッページが発生する可能性があります。
• またはお取引がタイミング良く行われるとの保障もありません。主要国の休日や取引が活発でない時間帯においては、取引レートの提示が困難になる場合があります。当社が表示する取引価格は、システムの不具合や故障など、あるいは当社が他の市場参加者などより受け取る価格情報の誤りなどの様々な理由により、市場価格から乖離する可能性があります（オフマーケット・プライス）。当社はオフマーケット・プライスにてお客様の取引が約定された場合、その内容を訂正する、あるいは取り消すことがあります。
• IB FXCFDは、お客様と当社との相対取引です。金融商品取引所で取引されるものではなく、また決済機関による決済もありません。従ってお客様は、当社の財務状況の変化などにより損失を被る可能性があります。

この概要の記載事項に関しご質問などございましたら、当社クライアント・サービスまでご連絡ください。またお取引にあたってはリスク開示書を良くお読みください。リスク開示書は当社のウェブサイト上、およびIB FXCFDの取引許可をリクエストしていただきますと、アカウント・マネジメントからもご確認いただけるようになります。

• Trading of IB FXCFDs is not suitable for all investors, and you should not trade them unless you are an experienced investor with a high risk tolerance and the capability to sustain losses if they occur
• The volatility of foreign exchange rates and interest rates may quickly cause significant losses. Forex CFDs employ leverage that further amplifies the volatility relative to your investment and you may lose more than you have invested. In addition, IB FXCFD roll over interest may turn from a credit to a debit due to changes in interest rates
• You are required to maintain sufficient equity in your account at all times to cover IBSJs maintenance margin requirement. There are no grace-periods and IBSJ does not issue margin calls. Your equity is calculated in real time and should it become insufficient, IBSJ will immediately and automatically liquidate positions to bring your account into margin compliance. Real time liquidations aim to minimize the risk that your account equity becomes negative, but they cannot eliminate that risk. Should your equity become negative you are required to deposit additional funds to cover the deficit
• The price IBSJ displays to you for IB FXCFDs is based on the prevailing foreign exchange market. However there is no guarantee for executions at that price. Slippage may occur for large trades or in fast moving markets and during heavily traded hours
• Moreover, your ability to establish or close positions on a timely basis is not guaranteed. It may become difficult to display quotes during major holidays or during hours when foreign exchange trading is not active. IBSJ may display prices that deviate from a fair market due to system-malfunctions or failures, or erroneous quotes that IBSJ may receive from market participants or for other reasons (off-market prices). IBSJ will adjust or cancel trades executed with off-market prices
• IB FXCFDs are over-the-counter trades between you and IBSJ. They are not traded on any exchange or cleared by any central counterparty. You are therefore exposed to counterparty risk and should IBSJ become insolvent you may not be able to fully recoup your investment, or at all

Please contact IBSJs Client Service Department should you have questions about the content of this summary and read the full risk disclosure carefully before commencing trading. The risk disclosure is available in Account Management when you request IB FXCFD trading permissions, and on IBSJs web site.

Title:

How are executions allocated when an order receives a partial fill because an insufficient quantity is available to complete the allocation of shares/contracts to sub-accounts?

Overview:

From time-to-time, one may experience an allocation order which is partially executed and is canceled prior to being completed (i.e. market closes, contract expires, halts due to news, prices move in an unfavorable direction, etc.). In such cases, IB determines which customers (who were originally included in the order group and/or profile) will receive the executed shares/contracts. The methodology used by IB to impartially determine who receives the shares/contacts in the event of a partial fill is described in this article.

Background:

Before placing an order CTAs and FAs are given the ability to predetermine the method by which an execution is to be allocated amongst client accounts. They can do so by first creating a group (i.e. ratio/percentage) or profile (i.e. specific amount) wherein a distinct number of shares/contracts are specified per client account (i.e. pre-trade allocation). These amounts can be prearranged based on certain account values including the clients’ Net Liquidation Total, Available Equity, etc., or indicated prior to the order execution using Ratios, Percentages, etc. Each group and/or profile is generally created with the assumption that the order will be executed in full. However, as we will see, this is not always the case. Therefore, we are providing examples that describe and demonstrate the process used to allocate partial executions with pre-defined groups and/or profiles and how the allocations are determined.

Here is the list of allocation methods with brief descriptions about how they work.

·         AvailableEquity
Use sub account’ available equality value as ratio. 

·         NetLiq
Use subaccount’ net liquidation value as ratio

·         EqualQuantity
Same ratio for each account

·         PctChange¹:Portion of the allocation logic is in Trader Workstation (the initial calculation of the desired quantities per account).

·         Profile

The ratio is prescribed by the user

Basic Examples:

Details:

CTA/FA has 3-clients with a predefined profile titled “XYZ commodities” for orders of 50 contracts which (upon execution) are allocated as follows:

Account (A) = 25 contracts

Account (B) = 15 contracts

Account (C) = 10 contracts

Example #1:

CTA/FA creates a DAY order to buy 50 Sept 2016 XYZ future contracts and specifies “XYZ commodities” as the predefined allocation profile. Upon transmission at 10 am (ET) the order begins to execute²but in very small portions and over a very long period of time. At 2 pm (ET) the order is canceled prior to being executed in full. As a result, only a portion of the order is filled (i.e., 7 of the 50 contracts are filled or 14%). For each account the system initially allocates by rounding fractional amounts down to whole numbers:

Account (A) = 14% of 25 = 3.5 rounded down to 3

Account (B) = 14% of 15 = 2.1 rounded down to 2

Account (C) = 14% of 10 = 1.4 rounded down to 1

To Summarize:

A: initially receives 3 contracts, which is 3/25 of desired (fill ratio = 0.12)

B: initially receives 2 contracts, which is 2/15 of desired (fill ratio = 0.134)

C: initially receives 1 contract, which is 1/10 of desired (fill ratio = 0.10)

The system then allocates the next (and final) contract to an account with the smallest ratio (i.e. Account C which currently has a ratio of 0.10).

A: final allocation of 3 contracts, which is 3/25 of desired (fill ratio = 0.12)

B: final allocation of 2 contracts, which is 2/15 of desired (fill ratio = 0.134)

C: final allocation of 2 contract, which is 2/10 of desired (fill ratio = 0.20)

The execution(s) received have now been allocated in full.

Example #2:

CTA/FA creates a DAY order to buy 50 Sept 2016 XYZ future contracts and specifies “XYZ commodities” as the predefined allocation profile. Upon transmission at 11 am (ET) the order begins to be filled³ but in very small portions and over a very long period of time. At 1 pm (ET) the order is canceled prior being executed in full. As a result, only a portion of the order is executed (i.e., 5 of the 50 contracts are filled or 10%).For each account, the system initially allocates by rounding fractional amounts down to whole numbers:

Account (A) = 10% of 25 = 2.5 rounded down to 2

Account (B) = 10% of 15 = 1.5 rounded down to 1

Account (C) = 10% of 10 = 1 (no rounding necessary)

To Summarize:

A: initially receives 2 contracts, which is 2/25 of desired (fill ratio = 0.08)

B: initially receives 1 contract, which is 1/15 of desired (fill ratio = 0.067)

C: initially receives 1 contract, which is 1/10 of desired (fill ratio = 0.10)

The system then allocates the next (and final) contract to an account with the smallest ratio (i.e. to Account B which currently has a ratio of 0.067).

A: final allocation of 2 contracts, which is 2/25 of desired (fill ratio = 0.08)

B: final allocation of 2 contracts, which is 2/15 of desired (fill ratio = 0.134)

C: final allocation of 1 contract, which is 1/10 of desired (fill ratio = 0.10)

The execution(s) received have now been allocated in full.

Example #3:

CTA/FA creates a DAY order to buy 50 Sept 2016 XYZ future contracts and specifies “XYZ commodities” as the predefined allocation profile. Upon transmission at 11 am (ET) the order begins to be executed²  but in very small portions and over a very long period of time. At 12 pm (ET) the order is canceled prior to being executed in full. As a result, only a portion of the order is filled (i.e., 3 of the 50 contracts are filled or 6%). Normally the system initially allocates by rounding fractional amounts down to whole numbers, however for a fill size of less than 4 shares/contracts, IB first allocates based on the following random allocation methodology.

In this case, since the fill size is 3, we skip the rounding fractional amounts down.

For the first share/contract, all A, B and C have the same initial fill ratio and fill quantity, so we randomly pick an account and allocate this share/contract. The system randomly chose account A for allocation of the first share/contract.

To Summarize³:

A: initially receives 1 contract, which is 1/25 of desired (fill ratio = 0.04)

B: initially receives 0 contracts, which is 0/15 of desired (fill ratio = 0.00)

C: initially receives 0 contracts, which is 0/10 of desired (fill ratio = 0.00)

Next, the system will perform a random allocation amongst the remaining accounts (in this case accounts B & C, each with an equal probability) to determine who will receive the next share/contract.

The system randomly chose account B for allocation of the second share/contract.

A: 1 contract, which is 1/25 of desired (fill ratio = 0.04)

B: 1 contract, which is 1/15 of desired (fill ratio = 0.067)

C: 0 contracts, which is 0/10 of desired (fill ratio = 0.00)

The system then allocates the final [3] share/contract to an account(s) with the smallest ratio (i.e. Account C which currently has a ratio of 0.00).

A: final allocation of 1 contract, which is 1/25 of desired (fill ratio = 0.04)

B: final allocation of 1 contract, which is 1/15 of desired (fill ratio = 0.067)

C: final allocation of 1 contract, which is 1/10 of desired (fill ratio = 0.10)

The execution(s) received have now been allocated in full.

Available allocation Flags

Besides the allocation methods above, user can choose the following flags, which also influence the allocation:

·         Strict per-account allocation.
For the initially submitted order if one or more subaccounts are rejected by the credit checking, we reject the whole order.

·         “Close positions first”¹.This is the default handling mode for all orders which close a position (whether or not they are also opening position on the other side or not). The calculation are slightly different and ensure that we do not start opening position for one account if another account still has a position to close, except in few more complex cases.

Other factor affects allocations:

1)      Mutual Fund: the allocation has two steps. The first execution report is received before market open. We allocate based onMonetaryValue for buy order and MonetaryValueShares for sell order. Later, when second execution report which has the NetAssetValue comes, we do the final allocation based on first allocation report.

2)      Allocate in Lot Size: if a user chooses (thru account config) to prefer whole-lot allocations for stocks, the calculations are more complex and will be described in the next version of this document.

3)      Combo allocation¹: we allocate combo trades as a unit, resulting in slightly different calculations.

4)      Long/short split¹: applied to orders for stocks, warrants or structured products. When allocating long sell orders, we only allocate to accounts which have long position: resulting in calculations being more complex.

5)      For non-guaranteed smart combo: we do allocation by each leg instead of combo.

6)      In case of trade bust or correction¹: the allocations are adjusted using more complex logic.

7)      Account exclusion¹: Some subaccounts could be excluded from allocation for the following reasons, no trading permission, employee restriction, broker restriction, RejectIfOpening, prop account restrictions, dynamic size violation, MoneyMarketRules restriction for mutual fund. We do not allocate to excluded accountsand we cancel the order after other accounts are filled. In case of partial restriction (e.g. account is permitted to close but not to open, or account has enough excess liquidity only for a portion of the desired position).

Footnotes:

1.        Details of these calculations will be included in the next revision of this document.

2.        To continue observing margin in each account on a real-time basis, IB allocates each trade immediately (behind the scenes) however from the CTA and/or FA (or client’s) point of view, the final distribution of the execution at an average price typically occurs when the trade is executed in full, is canceled or at the end of day (whichever happens first).

3.       If no account has a ratio greater than 1.0 or multiple accounts are tied in the final step (i.e. ratio = 0.00), the first step is skipped and allocation of the first share/contract is decided via step two (i.e. random allocation).