Why declare income?

Apersoons

Junior member
11 1
Hello,

I'm currently in the process of registering with Interactive Brokers.
They're asking me to declare:

-Estimated Net Worth
-Estimated Liquid Net Worth
-Annual Net Income
-Total Assets

Does anyone know what the reason for this request is?
Does one need a certain minimum of income/assets to day trade conveniently with let's say $30k?
Or is this simply asked to then inform your local tax man with this information?


Any help would be greatly appreciated,
 
L

Liquid validity

0 0
Its a legal requirement:
Broker-Dealers: Why They Ask for Personal Information

Although you can legally refuse to provide it,
its also in the brokers interest that say you have the funds
to cover margin.
If you did refuse, they would probably deem you unsuitable anyway,
or high risk of defaulting on margin payments etc.

Just put down the truth.
Nothing to hide, nothing to worry about.
 

timsk

Legendary member
7,396 2,179
Just put down the truth.
Nothing to hide, nothing to worry about.
Hmmm,
The only issue there L_v is that let's suppose the OP doesn't have a dime to his/her name and a poorly paid job - or no job at all. Then the compliance dept' are likely to refuse the application. Whilst I'm not advising anyone to lie about their circumstances, there's no harm making them aware of the situation and the likely consequence of their actions.

I remember when I closed my account with IB which had a base currency of USD$ as I day traded U.S. equities at the time. The most expedient and cost effective way for me to withdraw my funds was to make a USD/GBP trade for the full balance of my account. To do that, I had to sign a ridiculous amount of paperwork to say that I was an experienced and knowledgeable forex trader. The reality was that the only forex 'trade' I'd ever done was to buy a few Euros to go on holiday with! So, I asked customer services what they advise in situations like this. "Oh, just lie. It's fine, it's what everyone does" they said - or words to that effect. I felt uncomfortable about doing it, but that's what I did and, irony of all ironies, of the 1,500 or so trades I did when I was with IB, my one and only forex trade was by far and away the biggest and most profitable.

So, in summary, I'd say to the OP that all brokers have this red tape and it's there to protect them - not you - in case you blow your account and then do a Mark Barton. They just want to show that they've done their due diligence on you and have the necessary paperwork to prove it in case the SEC and Police come knocking at their door.
Tim.
 
Last edited:

Splitlink

Legendary member
10,850 1,233
Hmmm,
The only issue there L_v is that let's suppose the OP doesn't have a dime to his/her name and a poorly paid job - or no job at all. Then the compliance dept' are likely to refuse the application. Whilst I'm not advising anyone lie about their circumstances, there's no harm making them aware of the situation and the likely consequence of their actions.

I remember when I closed my account with IB which had a base currency of USD$ as I day traded U.S. equities at the time. The most expedient and cost effective way for me to withdraw my funds was to make a USD/GBP trade for the full balance of my account. To do that, I had to sign a ridiculous amount of paperwork to say that I was an experienced and knowledgeable forex trader. The reality was that the only forex 'trade' I'd ever done was to buy a few Euros to go on holiday with! So, I asked customer services what they advise in situations like this. "Oh, just lie. It's fine, it's what everyone does" they said - or words to that effect. I felt uncomfortable about doing it, but that's what I did and, irony of all ironies, of the 1,500 or so trades I did when I was with IB, my one and only forex trade was by far and away the biggest and most profitable.

So, in summary, I'd say to the OP that all brokers have this red tape and it's there to protect them - not you - in case you blow your account and then do a Mark Barton. They just want to show that they've done their due diligence on you and have the necessary paperwork to prove it in case the SEC and Police come knocking at their door.
Tim.

My story is much the same, Tim. Tick the box and, if it is not what they want they make you do it again until they get the answer that they do want. Your conclusion as to "why" is the same as mine.

In fact, their trading platform was the easiest part of their site. Getting around the rest of it was a nightmare for me. Maybe they don't like too many questions.
 
Last edited:

Apersoons

Junior member
11 1
Hmmm,

So, in summary, I'd say to the OP that all brokers have this red tape and it's there to protect them - not you - in case you blow your account and then do a Mark Barton. They just want to show that they've done their due diligence on you and have the necessary paperwork to prove it in case the SEC and Police come knocking at their door.
Tim.

Tim

I'll just send them a note saying that I have no intentions of going on a killing spree if I have a bad day in trading.

On a more serious note, I'll just declare it to truth.

Thanks,
Axel
 

timsk

Legendary member
7,396 2,179
. . . On a more serious note, I'll just declare it to truth.
Hi Axel,
Fair enough.

As an aside, I notice you have a vendor badge in your profile (the market stall icon). Are you selling anything, or is that a mistake? If it's the latter, I recommend you update your profile accordingly as members are liable to respond to you differently if they think you're a vendor!
:cool:
Tim.
 

Apersoons

Junior member
11 1
Hi Axel,
As an aside, I notice you have a vendor badge in your profile (the market stall icon). Are you selling anything, or is that a mistake?
Tim.

That must be a mistake, I think it's changed now on my profile, does it still show up?


Many thanks,
Axel
 
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L

Liquid validity

0 0
Hmmm,
The only issue there L_v is that let's suppose the OP doesn't have a dime to his/her name and a poorly paid job - or no job at all. Then the compliance dept' are likely to refuse the application. Whilst I'm not advising anyone to lie about their circumstances, there's no harm making them aware of the situation and the likely consequence of their actions.

To do that, I had to sign a ridiculous amount of paperwork to say that I was an experienced and knowledgeable forex trader.

So, in summary, I'd say to the OP that all brokers have this red tape and it's there to protect them - not you - They just want to show that they've done their due diligence on you and have the necessary paperwork to prove it in case the SEC and Police come knocking at their door.

I can see what you are saying and agree to a certain extent.
The red tape is just to protect themselves and meet legal requirements.
The other points you make are also true to an extent,
there is an element of telling them what they want to hear.

TBH though, the main point is that if you don't have a dime to your name,
it probably isn't a good idea to be doing this in the first place...
No regular day job or low income may not be an issue if you have a decent
bankroll, without that, its a disaster waiting to happen in my view.

It is potentially possible to turn a couple of K margin into decent gains,
without going red on cum. profit.
Is that the reality for most people though...
 
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Reactions: timsk

NVP

Legendary member
37,586 2,009
Hello,

I'm currently in the process of registering with Interactive Brokers.
They're asking me to declare:

-Estimated Net Worth - $15m
-Estimated Liquid Net Worth - $5m
-Annual Net Income - $1m
-Total Assets - $25m

Does anyone know what the reason for this request is?
Does one need a certain minimum of income/assets to day trade conveniently with let's say $30k?
Or is this simply asked to then inform your local tax man with this information?


Any help would be greatly appreciated,

fill it in like above ......you will get a better service from day 1 :LOL::LOL:

N
 

Joseph Trader

Member
54 0
Hello,

I'm currently in the process of registering with Interactive Brokers.
They're asking me to declare:

-Estimated Net Worth
-Estimated Liquid Net Worth
-Annual Net Income
-Total Assets

Does anyone know what the reason for this request is?
Does one need a certain minimum of income/assets to day trade conveniently with let's say $30k?
Or is this simply asked to then inform your local tax man with this information?


Any help would be greatly appreciated,

Hello,

This is not broker requirement. If these things were in power of brokers, you would probably would not need to enter even a name during registration, just deposit funds :)

It is actually regulatory issue. They require these things. AML policy and etc.

Regards,
Joseph.
 

Joseph Trader

Member
54 0
fill it in like above ......you will get a better service from day 1 :LOL::LOL:

N


LOOOOOOOOOOOOOL

You just buried topic starter, if he does like that his phone will get on fire as he will be called every minute, asking how is he today and why he would not deposit some more money :)
 

Splitlink

Legendary member
10,850 1,233
I can see what you are saying and agree to a certain extent.
The red tape is just to protect themselves and meet legal requirements.
The other points you make are also true to an extent,
there is an element of telling them what they want to hear.

TBH though, the main point is that if you don't have a dime to your name,
it probably isn't a good idea to be doing this in the first place...
No regular day job or low income may not be an issue if you have a decent
bankroll, without that, its a disaster waiting to happen in my view.

It is potentially possible to turn a couple of K margin into decent gains,
without going red on cum. profit.
Is that the reality for most people though...

TBH, I decided to cut it and be happy spreadbetting!:). It's horses for courses, isn't it?
 

Apersoons

Junior member
11 1
LOOOOOOOOOOOOOL

You just buried topic starter, if he does like that his phone will get on fire as he will be called every minute, asking how is he today and why he would not deposit some more money :)

I can't deny it didn't cross my mind..

As far as phone calls go, I would be a little more wary from a phone call from the IRS, to inform me that they'd like to take a closer look at my taxable incomes, following a statement I recently made to a broker. :whistling
 
L

Liquid validity

0 0
TBH, I decided to cut it and be happy spreadbetting!:). It's horses for courses, isn't it?
Yeah pretty much, all depends on a variety of factors.
If you don't need exchange volume and slightly higher SB pricing doesn't affect you,
and so on, then an account with IB would be overkill.
Lee Shepherd swing trading with IG is an example of that.
No need for an IB account in that situation.
 

Splitlink

Legendary member
10,850 1,233
Yeah pretty much, all depends on a variety of factors.
If you don't need exchange volume and slightly higher SB pricing doesn't affect you,
and so on, then an account with IB would be overkill.
Lee Shepherd swing trading with IG is an example of that.
No need for an IB account in that situation.

:)

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I hope that you are saying nice things about us, there!
 
 
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