Trading ASX Options: Why you should choose Interactive Brokers

Overview of Options Trading in Australia

Interactive Brokers Australia Pty Ltd ("IBA"), which holds an Australian Financial Services License ("AFSL" No. 453554), is headquartered in Sydney and provides services to Australian clients. One of the many products offered by IBA are various option contracts available on the Australian Securities Exchange ("ASX"). IBA is a Market Participant of ASX and a Clearing Participant of ASX Clear, the clearing house for ASX exchange traded options ("ETOs"). Via the ASX Clear Derivatives Clearing System ("DCS"), all ETO trades executed by IBA for its clients are allocated to specific client accounts in DCS. Each client of IBA has an equivalent account at DCS for their ETO positions, or what is known as "Individual Segregated Accounts." As a result, all IBA client positions in ETOs are fully segregated from other client positions. IBA does not hold any proprietary or house positions.

As IBA is the clearing participant of ASX Clear for ASX ETO positions, IBA is obligated to meet all margin requirements directly with ASX Clear. As a result, IBA will, in turn, impose its own margin requirements on you as IBA's client.

Why choose IBA to trade ASX options?

There are many benefits and risks in trading options, which are outlined here. The purpose of this article is not to cover these but to illustrate why IBA should be your clear choice to trade and hold your ETOs on ASX, as detailed below:

  • Low commission and fees – IBA's ASX ETO fees are by far the LOWEST in the Australian market, where ASX stock option commissions range from AUD 5c per contract up to AUD 0.25 per contract with a minimum of AUD 2.50 per order (plus relevant third-party exchange fees) [1] as shown here. Add to this IBA's global coverage and exceptionally low commission rates on all products (see here for more details on IBA's commission rates), IBA's exceptionally competitive margin rates (see herefor more information) as well as offering clients a competitive return on idle cash held in their IBA universal account (see here for more details) makes IBA an immediate choice.

  • Efficient risk-based real-time margining model - Many other brokers offer clients the ability to lodge or reserve some portion of their ASX shares in a subposition in the client's HIN in CHESS [2] in favor of ASX Clear to offset part of the client's ETO margin requirements. However, with IBA's unique universal account, you hold all your assets (shares, options, etc.) and all your currency balances across every market in one account. As a result, when IBA calculates your margin requirement via our real-time risk-based margining system, depending on the type of account you hold with IBA, we will consider ALL the assets and liabilities in your account. This means that your margin requirement may automatically be met or offset by any other assets you hold without the need to perform any laborious and imprecise request for subposition movements. Our margin efficiency is unique in Australia and is another reason IBA's ASX ETO offering is far superior.

    • For example, if you write (or sell) an ASX stock option, many other brokers allow you to lodge the equivalent securities that you may hold in your CHESS HIN in favor of ASX Clear as cover against the clearing house's margin requirements. Those securities lodged in a subposition on your HIN are unavailable for trading whilst they are in that subposition. With IBA, there is no need to do that, as IBA's real-time margining system automatically uses ALL your assets, where applicable, as collateral to reduce your margin obligation. Moving securities in and out of a subpositon requires no cumbersome process. IBA also uses a variety of assets in your portfolio (not just ASX shares) to minimize your margin obligation with appropriate haircuts, all in real time.

• Professional trading platforms and advanced options trading tools. Powerful, award-winning trading platforms* and tools available on desktop, mobile, and web. View market data, positions, and trade multiple asset classes and products side-by-side on a single screen.

• Choose from four levels of options trading permissions to find choices more precisely aligned with your options trading strategies. For more information on this, please click here.

• Options trading education available at IBKR Traders' Academy features strategies, tips and tools for success for beginner to advanced investors.

• Access to more products and asset classes – IBA's depth and breadth of products have almost no comparison in Australia. IBKR offers all clients access not just shares but options, futures, currencies, bonds, CFDs, and more on over 150 global markets across 28 global currencies from a single unified platform and a single universal account. Our nominee and custody models also support fractional investing in some international shares – where you can buy and sell shares in fractional amounts, which IBA can offer in several markets (see here for more details).

• Strength and Security - When placing your money with a broker, you need to make sure your broker is secure and can endure through good and bad times. IBA is part of IBKR Group, which has an exceptionally strong capital position, conservative balance sheet and automated risk controls designed to protect IBKR and our clients from large trading losses. See here for more details.

For more information on trading options via IBAU, click here.

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.

• The information provided is of a general nature only and has been prepared without considering your objectives, financial situation or needs. Consider if this is appropriate for you before making an investment decision.

[1] Excluding GST, which is applied to Australian resident clients.

[2] CHESS – or Clearing House Electronic Subregister System – is used by the ASX Settlement Pty Ltd ("ASXS") to record shareholdings and manage the settlement of share transactions executed on Australian securities exchanges. All Shares held on the CHESS subregister are held through a HIN – or Holder Identification Number. Each HIN is unique and represents the legal (but not necessarily beneficial) owner of the securities (name-on-register approach). All HINs within CHESS are controlled or "sponsored" by an ASXS participant.