the fees contributing to UBSâ earnings per share growth on the other hand not
True. Does it matter exactly why though?
If boring retail bank has a different clientele with different trading patterns, I consider that a useful diversification of brokerage providers.
To be clear, IBKR literally suspended any opening of position in GME.
They literally prevented me from submitting a buy order for the ordinary stock from my cash account. No margin, no options - and enough settled cash on my account.
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Just to make sure we are clear about the mechanics of this:
- When trading securities like GME (or any other marketed security) you are not trading with a direct counter party on an agreed price that will be as âagreedâ on at trading time, you instead trade with a broker who will broker a deal for you ⊠hopefully.
Trade Date (the moment you click to trade) and Value Date (the date by which the trade is effective, aka is settled and actually reflected in your account) is typically T+2, i.e. the Value Date is two days after the Trade Date.
Often, actually mostly, the broker end user interfaces make it look as if trades were effective immediately, making it look like the Trade Date/Time were immediate. - [This probably does not matter much in your considerations, but I will mention it for completeness:]
the moment you decide to buy/sell GME, your broker will check the balance of your settled cash amount in your cash account (i.e. checking what outstanding balances are to be settled like obligations on your behalf and expected incoming cash per the value date of your trade (to make sure there is still sufficient balance on your account by the time your trade is settled, typically a couple days out from the day you make your trade. Letâs say this all checks out ⊠- the moment you make your trade, letâs say you want to buy GME like you seem to indicate, you will typically deal with your broker who will sell you GME, will take a cut (part of the spread) and who will take the sell/short position on their own book with the intention of finding another trader who will sell to them the GME positions, again taking a cut (part of the spread), before the trade is settled (or after, with taking on additional risk on their own book).
- when volatility is high, having positions like GME on their book (or having those positions âin transitâ, i.e. theyâll be sold or bought, but theyâre in the settling window) means having risk as a company, as the price of the positions on the trade date and the value date may differ substantially.
Hence, as a brokerage, you may want to limit trading such tickers in volatile times, or you may be forced to limit trading them by the settlement companies that settle the trades. Your negotiating power is about zero in that case.
Do you believe you would have gotten pricing and execution with boring retail bank X on those titles at the times you wanted to trade GME? If you believe so, by all means, stay at or change to boring retail bank X.
Maybe youâre right, and boring retail bank X would have given you prices and perhaps even eventual execution (and maybe would even take losses by your devine trade timing onto their own book).
If you instead believe that all brokerages - literally all of them - depend on settlement companies (like DTCC in the case of GME) that actually settle all the trades on behalf of the traders and brokers involved, and that those settlement companies want to manage risk between trading and value date (like the risk of one of their brokers having a book going belly up because of volatility during that settlement time span), youâll realize that you canât have both a stable and reliable boring broker X and a broker that will offer you prices and execution for any memestock at any old time.
Itâs really just the mechanics of the system, with risk restrictions passed up from the ground / settlement level up to brokerages and finally to market participants.
I am curious if I misunderstood your phrasing and if there are more nuanced views.
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Yeah, the broker stands between the customer and the clearing house. Thatâs what Peterffy explained on TV. Before having the audacity to call a short squeeze âillegalâ and âmanipulativeâ (if anything, he should point the fingers at the short sellers that sold more stock than probably existed!).
Why do I need to deal with IBKR and why would they take it on their own books?
Does IBKR offer and advertise trading on stock exchanges? Are they able to route my order to a stock exchange? Just route my order to the exchange, get me the price quoted on the exchange and settle with my fully paid-up and settled cash. No need to take it on their own book, is there?
No ifs, woulds and beliefs 
- they in fact did.
Boring retail bank did in fact provide pricing and did execute the buy order on the day that IBKR restricted trading. I have the order confirmation and settlement confirmation as proof.
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If the broker is splitting the trade with you and the eventual counter-party in two distinct transactions there is a timeframe (however small it may be) that the broker is at risk. But that is the brokerâs active choice. Nowadays there is technically nothing holding back the broker from facilitating the full three-party transaction in one go without a pricing or counter-party risk on this side. Or in technical terms: IBKR could have switched from trading with other market makers to directly trading with the exchange / settling with DTCC. They chose not to.
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That was totally unrelated to market maker etc, the collateral was asked by the clearing house.
Details from the SEC report:
Clearing agencies (i.e., NSCC and, to a lesser extent, OCC) played important roles during
the January 2021 GME market events. The risk management mechanisms of these clearing
agencies effectively led others in the transaction chainâsuch as retail broker-dealersâto pause
and manage the risk exposure that arose as the rate of transactions accelerated. Both NSCC and
OCC experienced record volumes cleared on January 27, 2021. âŠIn highly volatile trading where share prices whipsaw by hundreds of dollars, NSCC may require more margin to guard against an increased risk of defaults (which may occur if, for example, buyers do not carry-through on paying for a stock that has plummeted or sellers do not carry-through on delivering a stock that has skyrocketed). On January 27, 2021, in response to market activity during the trading session, NSCC made intraday margin calls from 36 clearing members totaling $6.9 billion, bringing the total required margin across all members to $25.5 billion. Of the $6.9 billion, $2.1 billion were intraday mark-to-market calls, while the remaining $4.8 billion was a special ECP charge. Specifically, NSCC observed unusual volatility in certain securities, including GME, which presented heightened risk to the clearinghouse and its members.86 As a result, it calculated and assessed against certain affected members the remaining $4.8 billion as an additional special charge pursuant to its established rules. NSCC imposed this charge on 18 members, all of whom provided the additional margin. NSCC subjected one additional member to the special charge, but that member ultimately did not have to meet that charge after offsetting its exposure with a transfer from an affiliate.
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I have switched to PF now and in the process of moving my securities there. Did my first buy and compared fees, yeah itâs worth it also considering trading fees are account fee credits up to 72CHF/year.
An annoyance is that the ETFs I have already have far fewer asks/bids vs UBS (single digits/tens in PF/Swissquote vs tens of hundreds/thousands in UBS), so I am considering buying VWRL moving forward given, annoyingly, VWCE is not there.
Another annoyance is that VWRL is distributing, and dividends are paid in USD⊠I am considering using the USD dividends to continue buying BRK.B going forward without conversions. Any ideas?
Many brokers had to suspend certain trades due to the soaring collateral requirements.
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Somewhat surprising. Searching for its ISIN IE00BK5BQT80, I see it at various exchanges, in EUR, GBP or USD (and with large differences in volumes traded)
Note also that e-trading of PF automatically opens accounts in CHF, EUR and USD. Receiving and reinvesting USD is doable without currency exchange.
Thanks, should have been clearer, I should have added I donât see it in CHF on the SIX, this is why I wouldnât buy it.
Thatâs right about the different currency accounts, it makes sense to keep dividends and invest as USD. Whatâs the tax status for VWRL dividends in CH?
The cost of reinvesting in CHF is about 0.02% p.a. (~2% dividends and a 0.95% exchange fee). May make a difference long term but itâs also not that bad. If youâre worried about such a fee, you should probably switch from VWRL to VEVE & VFEM to reduce the TER from 0.22% p.a. to 0.13% p.a.
The withholding taxes paid by the fund (e.g. 15% for US dividends) are lost and you donât get a tax credit in Switzerland. You have to pay full income taxes in Switzerland on the distributed amount. No DA-1 needed as Ireland doesnât tax dividends of ETFs.
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Cheers, I think Iâll just go with VWRL then.
Hello fellow Mustachians,
Iâve finally decided to put my life savings to work instead of letting it rot in a bank account. Iâve been lurking the forums for a while now, and I know there are already a lot of topics regarding the age-old question: Swissquote or IBKR.
While Iâm fine with paying a little premium for some artificial security in working with a Swiss broker (especially since IBKR is not exactly some shady random broker firm), Iâm sure that extra cost is not as small as it seems at first glance.
Did anyone face the same uncertainty at the beginning of their investor career and bother to calculate the actual difference between VT with IBKR and VWRL with Swissquote? What would a CHF 50k investment look like with those parties in 5, 10, 15 years? Assuming 5%pa while not considering inflation. Iâm not exactly sure how to calculate as those different fees and costs are still pretty opaque to me.
As far as I know, IBKR does not charge the Swiss stamp fee, while I would be required to change the currency back to CHF once I sell a few years down the road. The exchange fee is probably a minor factor. But what about TER of the products? VT seems way cheaper. Apparently, IBKR also changed the fee structure and doesnât charge any deposit fees anymore.
Am I missing something?
I also noticed that almost every Swiss finance blog recommends Swissquote and doesnât even mention IBKR. Not even when they compare different brokers. Iâm probably a cynic, but referrers on IBKR are limited to 30 referrals total and I suspect this is the reason.
Thank you for your time
The reason is referral fees. I can give you a referral code if you want 
.
TER of products has nothing to do with brokers.
There are following factors
- Brokerage costs
- Availability of ETFs and other instruments
- Ease of investing
- Stamp duties
- Regulations
- Custody fees
- Forex charges
If you compare Swissquote and IBKR, I would say the following because I have accounts in both
#1 -: IBKR is by far the best . Only Saxo even comes close.
#2 -: both are good and I think availability of Swiss bonds and funds on SQ is a plus. But if you mainly want VT , VWRL, SWDA, CHSPI, both have everything
#3 -; not much difference for buy and hold investors
#4 -; SQ has disadvantage because of Swiss law. Itâs not their fault but it does increase costs (0.15% for buy and sell of Foreign ETFs, 0.075% for buy and sell of local CH domicile ETFs)
#5 -: both are well regulated. Only difference is SQ is governed by Swiss law and IBKR seems to have other jurisdictions. But I donât see much issues
#6 -: IBKr is 0, SQ ranges from 80-200 CHF depending on asset value. Above a million there is a premium on SQâŠ
#7 -: FOREX charges, also IBKR wins
I started with IBKR and only added SQ as a backup broker. Going forward I would keep both but maybe higher value at IBKR. I had same dilemma for many months. But in the end I decided that I donât want everything in one broker and if the cost to do so is ~100-200 per year then so be it.
If you are in dilemma , just open account in BOTh. You can buy Swiss ETFs in SQ and World ETF in IB. And just to be clear , you CAN buy and Store VT in both platforms. Just SQ is more expensive in terms of #1 and #4
And you said if anyone compared VT vs VWRL. Actually they are not same indexes so its not apple to apple comparison. VT contains small caps too which VWRL does not. You also need to keep in mind that VWRL shows higher TER but that is not really its Tracking difference, so real cost of management is much lower than 0.22% mentioned on Factsheet. . But I remember that the dividend withholding tax advantage of VT (better) vs VWRL with 40% marginal tax rate is about 0.1%. I read it on this forum, there was a brilliant analysis done by someone.
I checked some data and here is performance for 100 USD invested in VT vs VWRL from June 2012 to Feb 2024. I used JustETF for VWRL and Portfolio visualizer for VT. I am not 100% sure what is assumed dividend tax in these simulations but following is result. It is exactly the same.
1 Jun 2019 to 29 Feb 2024
VT - 325 USD
VWRL - 325 USD
P.S -: I can share referral if you need. But I guess you already have it :). You can also buy in IBKR and then in 1-2 years transfer to SQ for no fees. But of course eventually you might incur selling fees.
For some of us the quality of our sleep is worth more than a few CHF per month in fees.
By the way , since you said that you are ready to invest your savings which currently are in bank account.
I recommend to think a bit about how you will react in a 20% downturn if you go all in. The emotional pressure to live through that can be really challenging. Take this into account while making your allocation.
100% stocks is highest return but also highest volatility. If you are seasoned investor then ignore my comment.
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Thank you for your offer, but I already have an account 
Yes, that was some unfortunate wording on my part. I was thinking about the TER difference between VT and VWRL in addition to the broker costs.
Wow, thank you for your detailed reply. I especially like the idea of a backup Broker, I might actually do just that. VT in IBKR and SMIM or CHSPI in SQ.
My point exactly. I wouldnât care about a difference of a few CHF per month, but I suspect the gap widens after a few years. Iâd rather not look back in 10 years and realize I âlostâ 10k
There are some good points above, including numbers and me being schooled to move to PostFinance if I have to have a brick and mortar Swiss bank as my broker from VERY expensive UBS.
Objectively speaking, if we assume equal level of safety between IBKR and a Swiss bank, IBKR is better, I just couldnât sleep with my savings there.
Iâm inclined to call you Onion Bro, not sure how many will get the joke here