Client Protection - Strength and Security

Whilst IBA is a market participant of the ASX and the Cboe Australia markets, IBA has appointed a third-party, BNP Paribas, ABN: 23000000117, AFSL 238043 ("BNP"), to clear and settle the transactions that IBA executes on behalf of clients on these markets, as well as ensuring that these shares are recorded on a HIN sponsored by BNP. Please note that IBA holds clients' Australian assets at BNP in a client sub-custody account separately from its own assets.

There are pros and cons of holding your Australian Shares on a HIN directly in your name versus the nominee and custody model provided by IBA. The choice of broker and, thus, the choice of how to hold your shares always remains entirely with you, the client. However, it is important to understand that many of the reasons clients choose an individual HIN model over a nominee and custody model may not always be as relevant when you have an account with IBA, as can be seen below:

Direct ownership – In most cases your account name reflects the registered legal owner of the shares via the CHESS subregister should you select an individual HIN. As CHESS has a three-person limit, trusts with more than three trustees may not have all legal owners reflected on the HIN. Please note the HIN name-on-register approach does not always reflect beneficial ownership, such as in the trust account scenario where the beneficiaries of the trust are not always the legal owners. Under the IBA nominee and custodial model, whilst the Australian shares are held with our custody bank, BNP Paribas, you, as the client, remain the beneficial owner of the shares. It is crucial to understand that you, as the client, have the commercial "benefit" of the shares, meaning the right to sell, receive dividends, etc. IBA does not have that commercial benefit (beneficial ownership) of the assets held for clients.

Perceived simplified portability – If you decide to switch brokers, you can, in theory, take your HIN number with you. How important that is to you, the client, is ultimately your choice. With IBA, you hold all your assets (shares, futures, options, bonds, etc.) and currency balances across every market in one account under our unique universal account. For any other broker that allows you to trade and hold products beyond Australian market shares, those other assets would obviously NOT be recorded in your HIN, and hence, you would need to potentially manage any number of different accounts.

Voting rights – As an ordinary shareholder in a company, you have the right to vote at general meetings and on decisions related to directors, remuneration and other company business. While every broker is different, some who operate a nominee and custody model do not pass voting rights onto shareholders. However, that is not the case with IBA, where you, the client, retain your voting rights to Australian shares.

Corporate action processing, including dividend payments – Most brokers who offer individual client HINs expect the clients to process their own corporate actions, including receiving corporate actions notices via mail, making your own elections, completing the appropriate paperwork, and arranging any payments where necessary, all before the various due dates with any number of share registries. In fact, some brokers require clients with individual HINs to register their bank details to get dividend payments, for example, and failing to implement that may result in delays in your dividend payments. This is not the case with IBA; we will allow you to elect your corporate actions online via our Client Portal, and we will process your corporate actions for you, and payments and allocations, including dividend payments, will go straight into your IBA account. There is no need to BPAY or wire funds to the relevant share registry or return corporation action instructions by mail, as IBA will process the requests online via the funds available in your IBA universal account.

Unlike many other brokers in Australia, there are so many other benefits for clients who choose IBA as their broker to trade and hold Australian shares, such as:

Access to more products and asset classes – IBA's depth and breadth of products have almost no comparison in Australia. IBKR offers all clients access not just shares but options, futures, currencies, bonds, CFDs, and more on over 150 global markets, across 28 global currencies from a single unified platform and a single universal account. Our nominee and custody model also supports fractional investing in some international shares – where you can buy and sell shares in fractional amounts, which IBA can offer in several markets (see here for more details).

Low commission and fees – IBA's global coverage and its efficient nominee and custody model mean lower trading costs than those borne by brokers offering individual HINs. See here for more details on IBA's commission rates. In addition, IBA boasts exceptionally competitive margin rates (see here for more details) and, unlike many other brokers in Australia, IBA allows clients to earn a competitive return on idle cash held in their IBA universal account (see here for more details).

Strength and Security – When placing your money with a broker, you need to make sure your broker is secure and can endure through good and bad times. IBA is part of IBKR Group, which has an exceptionally strong capital position, conservative balance sheet and automated risk controls are designed to protect IBKR and our clients from large trading losses. See here for more details.