Thursday, October 06, 2022

Strategic Retreat #2 : Details on deleveraging from margin brokers


I was meaning to update this blog a while ago, but I think I better wait for all my funds to arrive in my bank account before I piss off my margin brokers any further. 

But before I do this, an update on my health. I saw a specialist and it is likely that my situation is not deadly or urgent, so I tried to get blood test in two weeks just to see whether my numbers improve, if they do, I may skip the scans and go back to the public medical system. The downside is that I need to test whether lifestyle changes can actually improve my numbers. I've been hiking quite aggressively for the past few days and refrained from eating dairy products and red meat. 

Ok, deleveraging totally from my margin accounts and moving them into my bank account took a while and is not as orderly as I expected. I'm sharing my notes here in case some readers employ the same platforms as I do.

I will begin with my more pleasant experience with Interactive Brokers :
  • Selling from Interactive brokers is easy, but it's safer to use the Close button rather than the Sell button because it's harder to make a mistake on selling quantity. I'm dealing with over 30+ counters per broker.
  • Note that you cannot use the "Sell Everything" feature in the platform for SG stocks. 
  • Transferring from platform to bank account was fast and I transferred on Monday and received my funds on Tuesday evening.
  • The system will say that sometimes a rep will call me up to confirm my fund's transfer if the amounts are large. This did not happen. 
  • After the transfer, I have about $1,000+ left worth of fractional lots so IB is prompting me with threats of margin calls and liquidation, which can be daunting if the money has yet to arrive in your bank account.  
My more unpleasant experience was with Maybank Kim Eng :
  • I sold my stocks on the mobile app and my sale was incomplete. The reason was that the mobile app did not display the number of stocks I own correctly. The rep told me that stocks gained from corporate actions in the past are not reflected in the mobile app at all.
  • This means that I need to go through two rounds of selling. My second round was sold via the mobile app and I referred to a screenshot of my desktop app that reflected all the stocks I actually owned. 
  • Why such a convoluted method of selling? Simple, the desktop app is extremely slow during market operating hours and sometimes may hang. The mobile app responds quickly.
  • This has the unpleasant effect of allowing my broker to earn more commissions even though it is already unhealthy compared to the alternative. 
  • The money came a day later than IB, I received it yesterday evening.
All things considered, I don't want to be too harsh to Maybank Kim Eng because at least they have a responsive team and were able to use human contact to soften the edges of their drastically inferior technology so they may be better for folks desiring a human touch. I used to have a margin account with DBS Vickers and no one was there to even answer my call during the March 2020 crash, and I closed the account after my retreat. 

Also, IB margin financing rates are now over 5% for SG stocks while MBKE is 3.8%. 

Finally, I've decided to maintain both my accounts and prepare for my releverage sometime in the future. 

But which system will I employ as my primary margin broker is anyone's guess at the moment. IB's rates are high, but I think it might be determined by an algorithm so it may come down faster in the future. 

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