Information Regarding Australian Regulatory Status Under IB Australia

Introduction

Australian resident clients maintaining an account with Interactive Brokers Australia Pty Ltd (IB Australia), which holds an Australian Financial Services License, number 453554, are initially classified as a retail investor, unless they satisfy one or more of the requirements to be classified as a wholesale or professional investor according to the relevant provisions of the Corporations Act 2001. This article outlines how this process is handled by IB Australia.

Australian Regulatory Status

All new clients of IB Australia default to being classified as a retail investor unless they produce to IB Australia the required documentary evidence to allow IB Australia to treat them as a wholesale or professional investor. Investors of IB Australia will only have their regulatory status change from retail investor to either wholesale or professional investor subsequent to the required documentation being received and approved by IB Australia.

What is a Wholesale Client?

The most common way to be classified as a wholesale client is to obtain a qualified accountant’s certificate stating that you have net assets or net worth of at least $2.5 million AUD OR have a gross annual income of at least $250,000 AUD in each of the last two financial years. The qualified accountant’s certificate is only valid for two years before it needs to be renewed. You are required to provide IB Australia with a new qualified accountant’s certificate prior to expiration in order to retain your wholesale client classification. We have prepared a wholesale client application, including a pro forma certificate for your accountant to complete, that can be downloaded here. IBA’s wholesale client application booklet has important information about being classified as a wholesale client.

  • If you do not have access to a qualified accountant, and believe you meet the net assets or gross income criteria, you can take advantage of an arrangement offered by IB Australia with an external qualified accountant. If you wish to use this service, please complete the wholesale investor booklet (that can be downloaded here) and provide appropriate certified supporting evidence, preferably all in one pdf.

  • Some examples of appropriate certified supporting evidence to support your wholesale investor status request are:

    • If you qualify via the income test (i.e. have gross income is at least AUD $250,000 in each of the last two financial years), then certified copies of your last two income tax returns, or certified copies of a recent payslip and one year ago and two years ago, or certified copies of other documentation such as bank statements, or

    • If you qualify via the asset test (i.e. your net assets or net worth are greater than $2.5m AUD), then certified copies of relevant documentation such as bank statements, mortgage statements with property valuations, etc.

  • The cost for this service will be AUD $110 inclusive of GST which is charged regardless of whether you are actually certified as a wholesale client or not (see here for IB Australia’s pricing and fees).

  • Some further important information on this wholesale client certification service:

    • Please ensure to obscure/remove your TFN on any information you provide to IBA.

    • Your information is being provided to a third party, the certifying account, which IBA does not control. By participating, you are agreeing to provide your information to this accountant. Important information about the wholesale client services is provided in IBA’s wholesale client application booklet. Please contact us for further information about the accountant which provides this service.

When your qualified accountant certificate expires, you will be re-classified as a retail investor and as a result trading restrictions may be applied to your account, some of which may result in serious consequences, including but not limited to, forced position liquidations and restrictions on your margin account where applicable. As a result, it is very important that you provide an updated qualified accountant certificate as soon as possible prior to your wholesale status expiring to ensure we can continue to provide the same products and services to you.

What is a Professional Investor?

In order to qualify as a professional investor, you must have an AFSL, be a body regulated by APRA, be a superannuation fund with at least $10 million AUD, be a listed entity or related body corporate thereof, and/or have or control gross assets of at least $10 million AUD. If you rely on the financial criteria (i.e. $10 million AUD), or can demonstrate you a related body corporate of a listed company or body regulated by APRA, you will need to complete and submit to IB Australia the professional investor declaration contained within the professional investor booklet that we have prepared, which can be downloaded here. However, if you meet the criteria by virtue of having an AFSL, being a body regulated by APRA, or are a listed company, no booklet needs to be submitted.

What about Self-Managed Super Funds (SMSF’s)?

IB Australia have decided to treat all SMSF’s as retail investors, notwithstanding that they may meet the requirements to otherwise be classified as a wholesale or professional investor.

What about trusts?

For a trust to be considered as a wholesale investor, all trustees must be considered a wholesale investor based on the tests described above. Similarly, for a trust to be considered as a professional investor, all trustees must be considered a professional investor based on the tests described above. As a result, if at least one trustee is considered retail, the trust is considered a retail trust, regardless of the status of any other trustees (if applicable).

Stock Yield Enhancement Derivatives Program (“SYEPD”)

Our Stock Yield Enhancement Derivatives Program (“SYEPD”) allows wholesale and professional clients to earn extra income in their IBKR account. The client will need to agree to lend IB-Australia their shares and in exchange IB-Australia will deposit cash collateral into their IBKR account and pay the client a return that is broadly equivalent to the revenue that may be earned were IB- Australia to on-lend the shares, less IB-Australia’s fees .1 IB -Australia’s fees will be 50% of the revenue that could have been earned if the client’s shares were onward lent (unless otherwise agreed by the client explicitly in writing). Granting authority to IB-Australia to enter into SYEPD does not limit the client’s ability to sell their shares whenever they like and the client may withdraw their authority to participate in SYEPD at any time.

Other eligibility criteria may apply.

To sign up to the IB Australia SYEPD program, log into the Client Portal, click the User menu (head and shoulders icon in the top right corner) followed by Settings. Under Trading, click Stock Yield Enhancement Program Derivatives.

Click here for more details on the SYEPD program.

Other

  • For a full list of the disclosure documents and legal terms which govern the services IB Australia will make available please refer to our website.

  • For further information on IB Australia, click on our Financial Services Guide.

  • For more information or assistance, please contact our Investor Services.

  • Please note this information is general in nature, meaning it does not take into account your objectives, financial situation or needs. Consider consulting an independent financial and/or tax advisor before making an investment decision.

 

1IB- Australia acts as principal when it issues SYEP Derivatives to eligible clients.