Leveraging Technology To Save On Fees
Finance Tips Interactive Brokers shows us how owning their own trading platform has allowed them to cut costs and pass the savings onto their clients.
Jean-François Bernier, Managing Director at Interactive Brokers Canada Inc., informs investors on how to maximize their return while keeping costs low.
Mediaplanet: What would you consider Interactive Brokers to be — a robo advisor? A brokerage firm? An investment platform?
Jean-François Bernier: This is a very good question. Some people often confuse us with trading technology providers that only sell technology. Many also consider us to be “just another broker,” who offers very little in terms of technology. Neither of these views are correct.
MP: So then, how would you describe yourselves?
JFB: Interactive Brokers is a global brokerage firm that provides its clients with sophisticated and automated trading tools that are not only at par with — if not superior to the best technology platforms available, but are normally offered by third-party technology providers that do not offer brokerage services.
Our trading platform is a gateway to the world markets and is free to our clients. If a client at one of these other brokers wants to use a sophisticated platform, he or she has to pay a very high monthly service fee to a technology company on top of a brokerage fee to the other broker.
MP: How are you able to offer lower prices to customers without compromising on quality?
JFB: By owning and developing our own trading technology, scaled across all countries in which Interactive Brokers is present, we are able to generate economies of scale that we pass on to our clients. Our guiding principle is automation of every process within our organization. This makes us cost-effective, which is reflected in our low-cost offering to our clients.
MP: Do you think price always signifies quality?
JFB: Getting the best execution price when trading requires technological quality; however, lower trading commissions do not necessarily signify quality of service or execution. Being penny smart and dollar stupid in the long run does not pay! Investors should consider other important factors, such as quality of execution and price when trading securities or derivatives. Unfortunately, these are not discernible to the untrained eye.
MP: Who uses your platforms?
JFB: We cater to both individual and institutional investors. We service institutions such as portfolio managers, mutual and hedge funds, and even other brokers who use us to gain access to marketplaces to which they cannot connect.
MP: How can I get set up with IB?
JFB: Very easily. You just go to our website www.interactivebrokers.ca and start an online application for an account with us. It takes about 20 minutes to complete. No more complicated than that.