Information Regarding Australian Regulatory Status Under IBKR Australia

Introduction

Australian resident clients maintaining an account with Interactive Brokers Australia Pty Ltd (IBKR 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 IBKR Australia.

Australian Regulatory Status

All new clients of IBKR Australia default to being classified as a retail investor unless they produce to IBKR Australia the required documentary evidence to allow IBKR Australia to treat them as a wholesale or professional investor. Investors of IBKR 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 IBKR Australia.

What is a Wholesale Investor?

The most common way to be classified as a wholesale investor 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 IBKR Australia with a new qualified accountant’s certificate prior to expiration in order to retain your wholesale investor classification. We have prepared a wholesale investor booklet, including a pro forma certificate for your accountant to complete, that can be downloaded here.

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 imperative that you provide an updated qualified accountant certificate as soon as possible prior to your wholesale status expiring.

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 IBKR 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)?

IBKR 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”)

IBKR’s 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 IBKR -Australia their shares and in exchange IBKR-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 IBKR- Australia to on-lend the shares, less IBKR -Australia’s fees .1 IBKR -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 IBKR-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 IBKR 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 IBKR Australia will make available please refer to our website.

  • For further information on IBKR 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.

 

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