Ask HN: Can I trust brokers with my stocks? • Hacker News Board

Re: Ask HN: Can I trust brokers with my stocks?

#51

Post by tony0x02 » Sat, Feb 20, 2021, 3:48 PM UTC

mortehu wrote: post #26

peterkouvaris wrote: post #23

Earlier quoted context omitted.

Seconding IBKR. I've always viewed them as the most ethical broker and also the one with the highest skill ceiling. They do not sell order flow, they offer programs like the above so you can earn interest when they loan your shares out to other individuals or institutions, and let you get very granular about things like your exchange routing.

They don't sell 100% of their order flow, but their firm 606 disclosure says they send significant amounts to Citadel and Virtu.

During one of the interviews, I think he says that payment for order from is like 1-2% of their revenue.

Re: Ask HN: Can I trust brokers with my stocks?

#52

Post by tony0x02 » Sat, Feb 20, 2021, 3:50 PM UTC

portmanteaufu wrote: post #10

Disclaimer: IANAL or a financial expert. This information is relevant in the US, but Swedish brokerages may do something similar. In the US, brokers cannot lend out your shares without your knowledge. Brokerage customers can opt into a program called Fully Paid [Securities] Lending, in which the broker pays you a monthly fee to lend your shares out to short sellers. The fee you're paid is higher for securities that a…

If you lend out shares, any dividends are taxed differently too I think.

Re: Ask HN: Can I trust brokers with my stocks?

#53

Post by stunt » Sat, Feb 20, 2021, 4:21 PM UTC

It's a common practice for big brokers to have a custody option where your securities are held separately (as far as you are concerned), but usually it comes with more fees. If you don't want to take the risk of brokerage lending, then you have to enable custody and agree to have some extra fees.

Whether the benefits will outweight or not depends on your investment habits and which brokerage you use.

Re: Ask HN: Can I trust brokers with my stocks?

#54

Post by mortehu » Sat, Feb 20, 2021, 4:38 PM UTC

austhrow743 wrote: post #33

mortehu wrote: post #26

Earlier quoted context omitted.

They don't sell 100% of their order flow, but their firm 606 disclosure says they send significant amounts to Citadel and Virtu.

Even if they don't receive payment for it, one would certainly hope they're sending their orders to wholesalers and not an exchange. They'd be screwing their customers otherwise.

There's no point in hoping, because the 606 forms on their website clearly say they send lots of orders to exchanges too.

Re: Ask HN: Can I trust brokers with my stocks?

#55

Post by sideshowb » Sat, Feb 20, 2021, 5:02 PM UTC

rtlfe wrote: post #45

ex3ndr wrote: post #42

Earlier quoted context omitted.

CEO of IBKR openly admitted that they halted GME trading "because stock was too expensive" and will open it again once "it would cost 17$". And laughs in between. In what world this is "ethical"?

How is it not ethical? They're stopping people from losing money buying something that is overpriced.

But causing people to lose money who already bought it and couldn't sell, presumably

Re: Ask HN: Can I trust brokers with my stocks?

#56

Post by molticrystal » Sat, Feb 20, 2021, 5:16 PM UTC

portmanteaufu wrote: post #10

Disclaimer: IANAL or a financial expert. This information is relevant in the US, but Swedish brokerages may do something similar. In the US, brokers cannot lend out your shares without your knowledge. Brokerage customers can opt into a program called Fully Paid [Securities] Lending, in which the broker pays you a monthly fee to lend your shares out to short sellers. The fee you're paid is higher for securities that a…

Here is an idea of how much you'll need invested into a rarer stock or your typical retail brokerage account:

Fidelity: "*You must have at least $250,000 in your Fidelity brokerage account(s) to apply."

Schwab depends on the stock, but it seems many people get an email when they have over $100k of an eligible, especially rarer, security.

TDAmeritrade does not offer it, but they were bought out by Schwab so that will likely change as your account is transferred over.

"Interactive Brokers earns 15% annualized income from lending shares with a value of $10,000 and it posts $10,000 cash collateral to a participant's account"

Re: Ask HN: Can I trust brokers with my stocks?

#57

Post by capableweb » Sat, Feb 20, 2021, 5:21 PM UTC

rtlfe wrote: post #45

ex3ndr wrote: post #42

Earlier quoted context omitted.

CEO of IBKR openly admitted that they halted GME trading "because stock was too expensive" and will open it again once "it would cost 17$". And laughs in between. In what world this is "ethical"?

How is it not ethical? They're stopping people from losing money buying something that is overpriced.

Isn't the whole purpose of a free market with stock trading that people make those decisions themselves? I've certainly made bad trades in the past, but no one stopped me. Shouldn't I have been stopped as well then?

And if everyone is protected from losing money, we should just disable buying stocks at all for everyone, because you can always lose money.

Re: Ask HN: Can I trust brokers with my stocks?

#58

Post by fuzzfactor » Sat, Feb 20, 2021, 5:25 PM UTC

karl11 wrote: post #28

seaman1921 wrote: post #24

Earlier quoted context omitted.

You should watch their CEO Thomas Peterffy's interview during the gamestop situation - he basically said "shorting is illegal" and a lot of other such nonsense .. completely lost respect for IB after that, even though I still maintain an account. https://streamable.com/ycdec9

Naked shorting is illegal

>Ask HN: Can I trust brokers with my stocks?

I'm not so sure I would be able to trust most of them with my laundry as much as the average dry cleaning professional.

Which one would be most likely to be wearing your best suit more often than you do while it is not in your possession?

>Naked shorting is illegal

Probably less obvious when wearing someone elses' outfit instead of nothing at all.

Re: Ask HN: Can I trust brokers with my stocks?

#59

Post by Temporarily21 » Sat, Feb 20, 2021, 7:03 PM UTC

fuzzfactor wrote: post #58

karl11 wrote: post #28

Earlier quoted context omitted.

Naked shorting is illegal

>Ask HN: Can I trust brokers with my stocks? I'm not so sure I would be able to trust most of them with my laundry as much as the average dry cleaning professional. Which one would be most likely to be wearing your best suit more often than you do while it is not in your possession? >Naked shorting is illegal Probably less obvious when wearing someone elses' outfit instead of nothing at all.

Where do you put your money?

Re: Ask HN: Can I trust brokers with my stocks?

#60

Post by fuzzfactor » Sat, Feb 20, 2021, 7:25 PM UTC

Temporarily21 wrote: post #59

fuzzfactor wrote: post #58

Earlier quoted context omitted.

>Ask HN: Can I trust brokers with my stocks? I'm not so sure I would be able to trust most of them with my laundry as much as the average dry cleaning professional. Which one would be most likely to be wearing your best suit more often than you do while it is not in your possession? >Naked shorting is illegal Probably less obvious when wearing someone elses' outfit instead of nothing at all.

Where do you put your money?

Best place I've found is into a company where I own the majority of shares.