Discussion:

This FAQs is split into three parts.

• Part A sets outs key information in relation to the Proposed Transfer (as described below).
• Part B covers key legal and regulatory topics that arise as a result of the Proposed Transfer (as described below).
• Part C aims to answer any other questions that you may have and provides some further and more practical information in relation to what will and will not be changing following the Proposed Transfer (as described below).

PART A – THE PROPOSED TRANSFER

1. What is the situation currently and why do things have to change?

As you will be aware, at present, your relationship with Interactive Brokers is led by our entity based in the United Kingdom, specifically Interactive Brokers (U.K.) Limited (“IBUK”) and the services provided to you are provided by IBUK and, depending on the products you do business in, our US affiliate Interactive Brokers LLC (“IBLLC”). At present IBUK utilises what is known as a financial services passport to be able to perform its part of the service provision across continental Europe. Our working assumption is that following the end of the Brexit transitional period later this year, IBUK will lose its financial services passport and that from 1 January 2021 Interactive Brokers will need to make some changes in relation to which legal entity does business with you.

2. What are the “changes” envisaged above?

We have established a new Interactive Brokers legal entity in Ireland, namely, Interactive Brokers Ireland Limited (“IBIE”). We propose to transfer the business that you currently conduct with IBUK and IBLLC to IBIE. In other words, it is our intention that all of your accounts, investments and services currently provided to you by IBUK and IBLLC will instead be singularly provided by IBIE (for convenience we will refer to this as the “Proposed Transfer”).

3. When will the Proposed Transfer occur?

We will write to you again ahead of the Proposed Transfer.

4. Who is IBIE? What sort of a firm is it?

Effective 22 December 2020, IBIE became authorised as an investment firm by the Central Bank of Ireland. Its regulatory status and profile will be very similar to IBUK’s. This is because both IBIE and IBUK will be authorised pursuant to the second Markets in Financial Instruments Directive (Directive 2014/65/EU). This is an EU-wide piece of legislation the purpose of which is to, as much as possible, harmonise how investment firms are regulated across the EU

This does not mean there are not some differences between the legislation that applies to your relationship with IBUK and IBLLC at present and that which will apply once your account is transferred to IBIE. We explain this in more detail in Part B of this FAQs.

5. What are IBIE’s legal details?

Interactive Brokers Ireland Limited is registered as a private company limited by shares (registration number 657406) and is listed in the Register of Companies maintained by the Irish Companies Registration Office. Its registered address is 10 Earlsfort Terrace, Dublin 2, D02 T380, Ireland. We are still finalising IBIE’s day-to-day contact details and we will be in touch with these details in due course.

6. Who will regulate IBIE and what are their contact details?

The Central Bank of Ireland will be the competent regulator for IBIE (in the same way that the Financial Conduct Authority is the competent regulator for IBUK). The Central Bank of Ireland’s contact details are set out below:

Location

The Central Bank of Ireland

New Wapping Street

North Wall Quay

Dublin 1

D01 F7X3

Contact Numbers

Phone: +353 (0)1 224 6000

Fax: +353 (0)1 224 5550

Postal Address

Central Bank of Ireland

P.O. Box 559

Dublin 1

Public Helpline

E-mail: enquiries@centralbank.ie

Lo-Call: 1890 777 777

Phone: +353 (0)1 224 5800

 

7. Where does IBIE fit with respect to the broader Interactive Brokers group?

IBIE is a wholly-owned subsidiary that sits within the broader Interactive Brokers Group.

8. What does the Proposed Transfer mean for me? Will there be any material impacts?

We do not anticipate any material impacts for you as a result of the Proposed Transfer. Nonetheless, it is very important that you read this FAQs carefully and in full and make sure that you understand what the changes are for you.

9. What do I have to do if I want to continue doing business with Interactive Brokers?

If you would like to continue to do business with Interactive Brokers, we require your cooperation and action.

Specifically, we need you to consent and agree to the Customer Agreement and other Documents available under the Important Information section of the Proposed Transfer process and to the regulatory matters outlined in the Covering Letter, the Important Information and Consent sections of the Proposed Transfer process. You can do this by following the instructions in the Covering Letter.

To be clear, you do not have to consent to the Proposed Transfer if you feel that you may be adversely affected by it. However, you should be aware that if you decide to decline, IBUK may not be able to keep servicing your account at the end of the Brexit transition period. If that happens, your account will be restricted from opening new transactions or transferring new assets. You always have the ability to transfer your account to another broker. If you wish to decline, please follow the instructions in the Covering Letter.

In either case, we ask that you read the entirety of this FAQs and the Covering Letter before deciding to consent to or decline the Proposed Transfer.

10. What happens next?

If you consent to the transfer, please complete all actions detailed in the Covering Letter and we will prepare your account for the Proposed Transfer. Following the Proposed Transfer, IBIE will write to you with further information about your new relationship with them.

 

PART B – LEGAL AND REGULATORY CHANGES THAT YOU SHOULD BE AWARE OF

1. What terms and conditions will govern my relationship with IBIE following the Proposed Transfer? Are these different to the ones that currently apply?

Trades that you conduct after the Proposed Transfer will be governed by the new Customer Agreement between you and IBIE. A copy of the new Customer Agreement is available in the Important Information section of the Proposed Transfer process. Please see the response to Question A3 above in relation to the timing for the Proposed Transfer.

2. What conduct of business rules (including best execution) will apply to my relationship with IBIE? Are there any material differences that will apply to my relationship with IBIE compared to those that apply to my existing relationship with IBUK?

There are some changes to be aware of, which we explain below.

If you do business with IBUK on a “carried” basis (in other words, you trade index options, futures and futures options and IBUK carries your account and custodies your assets) then the Financial Conduct Authority’s conduct of business rules currently apply to you. These rules are based heavily on the recast Markets in Financial Instruments Directive, the Markets in Financial Regulation and various delegated directives and regulations (collectively, “MiFID”). In relation to best execution, where it applies, IBUK must take all sufficient steps to achieve the best possible result for you when we execute your order.

If you currently do business with IBUK on an “introduced” basis (in other words, you trade products outside of those mentioned in the previous paragraph and you have a relationship with both IBUK and its US affiliate, IBLLC), a mix of conduct of business rules will currently apply to you. For instance, with respect to the introduction of your business to IBLLC, the Financial Conduct Authority’s conduct of business rules will apply (see above in relation to these). Once introduced to IBLLC, the relevant U.S. Securities and Exchange Commission and U.S. Commodity Futures Trading Commission rules and regulations (among others) will apply to IBLLC’s role (including its obligations in relation to best execution and custody).

Please note that it is of course possible that your business is split across these two scenarios (in other words some of your business is conducted on a “carried” basis while some of it is conducted on an “introduced” basis).

Going forward, the distinction between “carried” and “introduced” business will no longer apply and in each case set out above, Irish conduct of business rules will exclusively apply to your relationship with IBIE. Similar to the UK Financial Conduct Authority’s rules, the Irish conduct of business rules are based on MiFID and IBIE’s obligations in relation to best execution will largely mirror those that currently apply to IBUK.

In our view, while the rules that apply to our relationship will change, we do not consider such changes to be material or to result in a lesser degree of protection being afforded to you.

3. How will my investments that I custody with IBIE be held from a legal/regulatory perspective? Are there any material differences that will apply to my relationship with IBIE compared to those that apply to my existing relationship with IBUK?

The rules that currently apply depends on the sort of business that you presently have with IBUK (please see the response to Question B2 above). Where you conduct “carried” business with IBUK, the Financial Conduct Authority’s client asset (or “CASS”) rules will apply. These rules are based heavily on MiFID. Where you conduct “introduced” business with IBUK and IBLLC, the US custody rules will apply to your custody assets.

Going forward, as set out above, the distinction between “carried” and “introduced” business will no longer apply and in each case set out above, Irish custody rules will exclusively apply to your relationship with IBIE. Like the UK Financial Conduct Authority’s rules, the Irish conduct of business rules are based on MiFID. Please consult the Client Assets Key Information Document attached in the Important Information section in relation to the Irish custody regime.

4. How am I protected against loss? Are there any material differences that will apply to my relationship with IBIE compared to those that apply to my existing relationship with IBUK?

Currently, your eligible assets are protected from loss either under the US Securities Investor Protection Corporation at an amount of up to USD 500,000 (subject to a cash sublimit of USD 250,000) or the UK Financial Services Compensation Scheme at an amount up to £50,000 (which regime applies depends on the relevant segment of your IBUK account, as explained in the response to Question B2 above). After the Proposed Transfer, the Irish Investor Compensation Scheme, which is administered by The Investor Compensation Company DAC, may protect your assets from loss should IBIE default and be unable to meet its obligations to you.

Ireland’s compensation scheme is similar to the compensation scheme you have access to in the UK, albeit with a lower limit. The purpose of the Irish Investor Compensation Scheme is to pay compensation to you (subject to certain limits) if you have invested money or investment instruments in either of the following cases:

• A firm goes out of business and cannot return your investments or money; and
• A Central Bank of Ireland determination or a court ruling has been made under the Investor Compensation Act 1998;

The Investor Compensation Company DAC (ICCL) administers the scheme. IBIE will be a member of the scheme.

The scheme covers investment products including:

• Public and private company shares
• Units in collective investment schemes
• Life insurance policies (including unit-linked funds)
• Non-life insurance policies
• Tracker bonds
• Futures and options

Usually, you can only make a claim after a firm goes out of business and its assets have been liquidated and distributed to those who are owed money. Please check the details of the schemes for any limits that apply – not all losses will be covered as there are maximum levels of compensation. The ICCL will pay you compensation for 90% of the amount you have lost, up to a maximum of €20,000.

5. How do I make a complaint to IBIE? Are there any material differences that will apply to my relationship with IBIE compared to those that apply to my existing relationship with IBUK? What if my complaint relates to something that happened while I was a customer of IBUK?

The new Customer Agreement sets out how to lodge a complaint with IBIE. The complaints handling procedures are materially similar to those that apply to your existing relationship with IBUK. If the substance of your complaint relates to something that happened prior to the Proposed Transfer, then you should address your complaint to IBUK. IBUK will remain authorised as an investment firm post-Brexit. Its current contact information will stay the same should you need to contact IBUK.

6. After the Proposed Transfer, will I still have access to the Financial Ombudsman Service?

In case of complaint, investors should follow the complaints procedure as referred to in the Customer Agreement. As explained in the Original FAQs, once the Proposed Transfer has taken place, the UK Financial Ombudsman Service will cease to have jurisdiction over any complaints that you may have in respect of IBUK. However, please be aware that Ireland has a dispute resolution scheme in the form of the Financial Services and Pensions Ombudsman (“FSPO”) The FSPO is a free and independent statutory dispute resolution scheme for financial services. You may be eligible to make a complaint to the FSPO if you are an “eligible complainant”. Details of who are “eligible complainants” can be found on www.fspo.ie. The FSPO can be contacted at:

Postal Address

Financial Services and Pensions Ombudsman

Lincoln House,

Lincoln Place

Dublin 2

D02 VH29

Telephone

+353 (0)1 567 7000

Email

Info@fspo.ie

7. How will my personal data be processed and protected? Are there any material differences that will apply to my relationship with IBIE compared to those that apply to my existing relationship with IBUK in this context?

Please see the Original FAQs for further information. In summary there will be no material change.

 

PART C – OTHER PRACTICAL QUESTIONS AND NEXT STEPS

1. Who should I contact before the Proposed Transfer takes place and after the Proposed Transfer if I have any questions in the ordinary course?

Generally speaking, you should contact IBUK with any questions that you may have prior to the Proposed Transfer, and you should contact IBIE with any questions that you may have following the Proposed Transfer taking place. Regardless of who you contact at Interactive Brokers, we will ensure your query is promptly dealt with and we will help you to connect with the right person or department.

2. Will the range of products offered be the same?

Our current expectation is that the same range of products will be offered by IBIE as are offered by IBUK.

There might be a restriction on Foreign Exchange transactions that would create a negative balance or would increase a preexisting negative balance in either component currency (i.e., "Leveraged Forex"). However, the same currency pairs can be traded as a Forex CFD. Contracts For Difference are complex instruments, and we invite you to carefully review the CFD risk warnings before trading these instruments following the transfer of your account.

Please note that IBIE offers financing for securities and commodities trades but cannot support withdrawals of borrowed funds. You will be free to withdraw any free cash not needed to support your open positions. If you would like to withdraw additional funds, you can sell positions and withdraw the proceeds.

3. I currently trade OTC derivatives with IBUK – what will happen to my open positions?

Your open positions will be transferred to IBIE and you will face IBIE rather than IBUK. You will no longer have any legal relationship with IBUK in relation to those positions. We will separately provide you with an updated Key Investor Information Document (please follow the link to the PRIIPs KID landing page in the Covering Letter).

4. What happens to any security I have granted to IBUK/IBLLC as part of a margin loan?

If you have granted security or collateral to IBUK/IBLLC this will transfer to the new Irish entity – IBIE - upon the Proposed Transfer taking place.

We do not anticipate you needing to take any steps to reflect the change in beneficiary, although we may need to take some administrative steps of our own to update security registers with the change in details. This should, however, not affect our priority or otherwise affect the date from which the security is valid.

5. Will I have access to the same trading platform or be subject to any software changes following migrations?

The migration will have no impact upon the software you use to trade or administer your account. The technology will remain the same as it is today.

6. Will all account balances be transferred at the same time?

All balances, with the exception of accruals (e.g., interest, dividends) will be transferred at the same time. Once accruals have been posted to cash, they will automatically be swept to the migrated account. 

7. What will happen to my current account following migration?

Once all accruals have been  swept, your current account will be closed and inaccessible for trading purposes. You will still be able to access this closed account via the Client Portal for purposes of viewing and printing archived activity and tax statements.

8. Will IBKR’s commissions and fees change when my account is migrated?

No. IBKR commissions and fees do not vary by the broker your account is maintained with.

9. Will my trading permissions change when my account is migrated?

Subject to the Leveraged Forex limitation discussed in (2) above, we do not expect any changes to your trading permissions when your account is migrated.

10. Will open orders (e.g., Good-til-Canceled) be carried over when my account is migrated?

Open orders will be not carried over to the new account and we recommend that clients review their orders immediately following the migration to ensure that the open orders are consistent with their trading intentions.

11. Will I be subject to the U.S. Pattern Day Trading Rule once my account is migrated?

Accounts maintained with IBUK are subject to the U.S. Pattern Day Trading (PDT) rule as the accounts are introduced to and carried by IBLLC, a U.S. broker. The PDT rules restricts accounts with equity below USD 25,000 to no more than 3 Day Trades within any 5-business day period.

As accounts migrated to IBIE will not be introduced to IBLLC, they will not be subject to the PDT rule.

12. Will I receive a single, combined annual activity statement at year end?

No. You will receive an annual statement of your existing account which will cover the period starting January 1, 2020 through the date of migration and a second annual statement for your new account which will cover the period starting from the migration date through the end of the year.

13. Will the current cost basis of positions be carried over when my account is migrated?

Yes, this migration will have no impact upon the cost basis of your positions.

14. Will the migrated account retain the same configuration as the current account?

The configuration of the account following migration will match that of the current account to the extent permissible by regulation. This includes attributes such as margin capability, market data, additional users, and alerts. In limited instances, an account will be migrated to a jurisdiction where the full scope of product eligibility cannot be offered. Client’s holding restricted products may migrate and maintain or close such positions but won’t be allowed to increase the position.

15. Will my login credentials change?

No. Your username, password, and any 2-factor authentication process in place for your existing account will remain active following migration. You will, however, be assigned a new account ID for your migrated account.