Retail investors will soon get a composite platform to trade in foreign securities and derivatives in multiple stock markets.
Retail investors will soon get a composite platform to trade in foreign securities and derivatives in multiple stock markets.
Interactive Brokers, an NYSE-listed broker will give its Indian clients direct access to over 80 exchanges in 17 countries from a single screen. Interactive is a member of NSE and has recently received regulatory clearances to launch its India operations.
Through the IB universal account, which Interactive plans to launch by early March, one can trade stocks, options, futures, forex, and bonds, all from the same Trader Workstation screen. The client’s transaction history and positions are all reported in a single statement.
London-based Gerald Perez, managing director, Interactive Brokers, who is in Mumbai for the launch, told DNA Money, “We will be focusing on individual investors. We will allow individuals to trade internationally in addition to the local market on the same platform. The experience is going to be one low-cost solution for trading in markets around the world.”
While it will allow individuals to open both cash and leverage accounts for local trades, foreign trading will be allowed only on cash basis.
At present, Indian investors have access to global markets through their local brokers. But most local brokers do not have direct membership in overseas exchanges. This considerably increases the cost of trading for individuals.
However, being a member of top stock exchanges around the world, including NYSE, LSE and leading options exchange CBOE, Interactive will be able to cut down lot of these costs, said Perez. “In the channel process, as the number of layers go up, everyone wants money. For us, we are a member of 80 exchanges and we are our own technology company. Therefore, end-user cost is significantly lower. Also, a number of Indian brokers are reviewing their models after the recent meltdown.”
Interactive’s system allows trading in multiple markets without opening multiple currency accounts. When you want to trade a product denominated in another currency, a loan is created which is secured by your deposited currency. If you wish to eliminate the loan, you may do so at any time by trading currencies through the broker’s IB Ideal network or depositing money in another currency.
For each account, a single base currency designation must be made that determines an account’s statement and margin requirement translation currency.
Interactive also has plans to allow foreign traders to participate directly in Indian exchanges once the regulatory hurdles are off.
“Our goal is, in eventual future, to allow foreign investors to trade in Indian markets. But right now, there are regulatory issues. Unless they are cleared, we won’t offer those services now,” Perez said.
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