Broker and Brokerage Information Exchange

We have lots (a really lot) of messaging that deals with various brokers and what is allowed/not allowed by them in terms of buying/selling new issues on the Over The Counter (OTC) markets and many other issues.

For instance some brokers allow pretty much any transaction. I personally like eTrade as I have never had a trade rejected by them–while I have an account with Fidelity it restricts my ability to buy Fixed-to-Floating rate issues.

This area is for an exchange of information on all the various brokers–good, bad and otherwise.

Like all the various discussion pages if folks could ‘stay to topic’ the page will be more valuable to all, but staying to point.

If you want to start a new thread go to the bottom of the page and do a comment–instead of a reply.

367 thoughts on “Broker and Brokerage Information Exchange”

  1. tdA charges $6.95 commission on OTC trades. This is now added to all of the newly changed issues. If you trade in multiple small increments you’d better be aware of the charges. They are not prominently displayed.

    1. Martin – FWIW a long time ago, before free trades, I managed to talk TDA down to 4.95/trade and that still stands for me today on the charged trades….I am assigned to the Private Client group or something like that but it’s not because I’m an extremely big hitter or especially active trader, but I mention it now because who knows, maybe commissions will once again via this backdoor way become important again…

  2. Email from Schwab today.

    “On September 28, 2021, new amendments adopted by the Securities and Exchange Commission (SEC) go into effect to enhance investor protection and improve issuer transparency. These amendments restrict the ability of market makers to publish quotations for those companies that have not made required current financial and company information available to regulators and investors.

    Ahead of the regulatory enforcement date, Schwab will only accept orders to liquidate positions (i.e. no new buy orders) starting in late August 2021. Please note: After the amendment officially goes into effect on September 28, 2021 it may be more difficult to liquidate these securities. Quoting and market liquidity may also be very limited.”

    CNUTF is the only listed security although I also own CUTLF which are both Canadian Utilities. I suspect other OTC symbols will soon become restricted.

    1. Another case where the implementation of the new Rule is problematic. These two issues are identical from a regulatory point of view yet one is black-listed and one is not.

      CU is a 20-billion dollar company (utility) whose finances are readily available at the company’s website and at it’s own country’s version of the SEC. Whether or not CU’s securities were the intended target of the new Rule, this is an example of what, in practice, will get caught up in the silliness.

      The new SEC rule, all 297 pages of it, is poorly conceived, poorly written, and will be poorly implemented. That’s my call.

      Are you feeling protected yet?

      1. Total waste of time, and money.

        Schwab was very good at opening OTC symbols. I suspect those days are gone.

      2. On that list, and along the same lines, is BKFAF, which trades in Toronto as (I think) BAM.PR.B. It’s a preferred issued by giant Brookfield.

        I have a short-term gain in that position at Schwab. I could just sell it and re-buy on the Toronto at IBKR but I hate to pay the tax man.

        What do you all think, is there any chance I could get them to swap it into the otherwise mostly useless Schwab Global account? What’s the over-under on how many hours I’d have to spend on the phone to get someone who knew what I was talking about?

        1. Mike – I’ll take a knowledgeable stab at this.

          Clearly Brookfield does not belong on the banned list. They are SEC reporting and trade on the NYSE. The situation you describe arises because the BAM preferreds are not SEC registered (some exceptions). You are correct about this being BAM.PR.B. You can find the prospectus at SEDAR. For no good reason, some of the BAM preferred are Pink OK and some are Pink not OK.

          I am inclined to believe that misclassifications of major issuers like BAM and ENB will get straightened out on OTC in the end and they will end up as Pink OK. But I may be wrong. You may end up with an untradable security. Pays like clockwork but you can’t sell it.

          I do not believe that you can migrate from the OTC ticker to the TSX ticker without it counting as a sale for tax purposes. I know that IBKR won’t accept the transfer of “F” OTC tickers.

          Regarding IBKR, if you want to be a serious buyer of Canadian preferred or other Canadian equities (especially those without NYSE tickers) you should do it through IBKR. By “serious” I mean probably 100k plus; otherwise it isn’t worth the time.

          To buy Canadian issues at IBKR you need to first buy CA$, which you can do easily at IBKR. Then you buy. It is truly a multi currency account which American are generally not very familiar with.

          If you really want global go to IBKR. You can buy almost any major exchange in the world but you do so in local currency.

          1. Thanks Bob. I’m inclined to take my chances and let them ride, but any further buys will be at IBKR. I do have the Lite account even though the amount I have in Canadian preferreds is far from the $100k “serious” mark. More like “comical”!

            1. I am holding CNUTF. Same issue decent capital gains and nice dividend (5.6% at the price I brought it at). I suspect CNUTF will be called in Sept 2022 and replaced with a fixed rate reset (4.5% fixed rate coupon).

              It reports enough to Schwab to be a qualified dividend. Dumb to be on the list. I suspect Bob is correct, they will fix issues like BAM, Emera, and Canadian Utilities

    2. Oddball Stocks says it is covering this regulatory change in it’s subscription newsletter. I have never paid for the newsletter, but I’ve followed the blog for a number of years and the author is very savvy and, as you might guess be the blog’s name, has his universe of stocks being significantly impacted by the change. So I’m going to bet that he is digging into this topic more than any of us and probably has some good input (but as I said, I’ve never subscribed so I don’t know for sure). But for those who want to understand these changes to the best of their ability, maybe it would be worth the price.

      http://www.oddballstocks.com/2021/07/sec-rule-15c2-11-restricted-securities.html

  3. IMHO Schwab has really gone down hill since reg TD merger . The main thing I see is that if you call for service. They used to be great knowledgable etc. Now you call you get “hold On’ ” I will check”. The reps that answer now are dumb as dirt, and seemed very confused. Im really think of moving back to Fido.

  4. Who gets my vote?

    I bought a bunch of METCL today. My efforts began at about 830 AM, when I saw the issue had made its way onto NASDAQ. I would have bought all my shares at Vanguard if possible but Vanguard didn’t recognize the ticker. TDA did, as did IBKR, but I held off to see if Vanguard would get it up on the platform.

    They didn’t, so at 9:15 I entered pre market orders at two separate IBKR accounts and a TDA account, all at the same time/price. The two IBKR orders executed immediately. I paid $1.00 per 100 shares for the privileged. That’s $1.00 per $2,500.00 in face value.

    The TDA order sat there until market opening and then executed. For the delayed execution I paid a flat $6.95 fee. Why I was charged the fee I’m not sure (this should be commission free I believe) but I’m not going to call TDA over $6.95. I think they depend on that.

    I still wanted additional shares but those had to be bought at Vanguard, as they were headed to qualified accounts held there. By this time Vanguard had the issue up on the platform but you had to call to do the trade. Not going to spend an hour on the phone with Vanguard, sorry. Been there done that too many times.

    By about 10:30 Vanguard was allowing buys without the phone call, but the price had gone up 30 cents/share. I bought anyway. The additional cost was an order of magnitude more than the combined commissions at IBKR and TDA.

    So, for this one, my vote and the trophy hands down goes to IBKR. Saved me time, money and aggravation. More money coming out of Vanguard and headed to IBKR.

    1. FWIW, Bob – I bot METCL @ TDA at about 9:50AM yesterday and was not charged anything.

      1. Same here, 2WR. TD actually had the issue loaded Monday so I entered bid then, but it quickly jumped right over the 25.10 bid next day, so I reloaded at 25.30 to hit. This doesnt seem like a 2WR purchase… Boredom creeping in and need a bit of excitement? 🙂

        1. Grid – It hits the 2wr screen primarily due to its 5 year maturity…… Dicey perhaps, but not 9% dicey imho. So bot at same prx you did but with hopes like Bob that I overpaid and could add more lower.. darn! up 1.8% complaints complaints complaints…

          1. Well I feel better now you bought it. I should have sold everything and just bought up the float. I mean your so conservative, you wont buy a bond from a company, unless they have zero debt! 🙂

          2. It was inherently hard to predict a price path for METCL. Small company, short operating history, no other outstanding issues, no good comps, and so forth. I would not be surprised to see this trade at 30 at some point, or 20. So I just let ‘er rip. In 5 years I’ll either be sipping Dom Perignon or Two Buck Chuck.

            In the last 6 months I have erred on the side of caution too many times so if I like an issue I’m in big and fast these days.

            1. Bob, it doesnt matter as the world is coming to an end anyways. Our Phoenix baby bond just cleared $18 today. The dead are rising from the grave.

              1. Vanguard still has Phoenix marked at my original acquisition cost. I would buy more if it dropped under 14.

              1. Glad we’ve got somebody else fueling the QVC coffers too, micahc. This vicious cycle of buying QRTEP solely to have the divvies pay for wifey’s purchases is killing me. At least we get some good food out of it sometimes…. but I’d be happy to have yo mamas purchases take over for mine…. lol

                1. Would feel blessed to receive an assorted bag of mixed nuts. She sticks mainly in the nick knack lane.

                  Loves Christmas. Will become Santa’s elf next week as I start the yearly pilgrimage to the basement bringing up her treasures. Has to have them all.

                  1. Ah yes, Christmas in July – all day every day, the true $pirit of Chri$tma$…. You must be from the South…I can’t even begin to count the number of truly dedicated Christmas stuff storage rooms we’ve seen when we go to estate sales in TN…fully dedicated and not closet sized either…

  5. Here’s another email response to sort thru with TDA, this time having to do with the miniscule amount of BMTX I received from CUBI when it was spunoff via a SPAC in January….. Trying to get the restrictions removed that I thought had to do with a lockup period and nothing else… They’re trying to say it has something to do with Rule 144… Say what???????????????? To their credit, I’ve received this from TDA. I’ve received no responses from Fidelity where I also have shares acquired the same way. I’m awaiting further input/clarification from BMTX.

    Dear ,

    We have received your request to remove the restriction on shares of BM Technologies Inc. in this account. The certificate is marked with a restriction under Securities and Exchange Commission (SEC) Rule 144, prohibiting the sale, or other transfer of ownership, of the security, until the legend is removed. This email includes the needed forms as attachments and contains information on the removal process.

    The following documentation is needed in order to complete this request:

    –Rule 144 Non-Affiliate Packet
    –Minimum Account Requirements ($250 in available funds)

    Please complete the necessary forms and return the originals to a TD Ameritrade branch or send them by mail to the address below. Please do not email or fax these documents, as originals are required.

    TD Ameritrade
    Attn: Cage/Restricted
    P.O. Box 2760
    Omaha, NE 68103-2760

    or for express delivery

    TD Ameritrade
    Attn: Cage/Restricted
    200 South 108th Ave.
    Omaha, NE 68154-2631.

    What you need to know:

    — We are providing forms and information on the document requirements for Rule 144, since it is one of the more common stock restrictions. If your securities are restricted under another rule, please contact a TD Ameritrade Restricted Stock Specialist at 888-723-8504, option 7, for further information.

    — TD Ameritrade provides short-term (30 days) safekeeping for clients to provide the documents needed to complete a deposit.

    — The Securities Exchange Commission (SEC) regulations vary based on your Affiliate status with the Issuing Company of this stock. If you are an Affiliate of the Issuer, please contact the Restricted Stock & Safekeeping Department at the number above, so we can provide alternate paperwork. (If you are not certain of your status, please feel free to call us for more information.)

    — Non-affiliated clients must have at least $250.00 in available funds in the account, above the value of the restricted shares, to process the removal. Fees charged to TD Ameritrade (“Pass Through” fees) may also be assessed to your account. These fees may vary in amount. If funds are not available in the accounts, you will be contacted to deposit additional funds. Fees involved in the removal process are not credited or refunded. Please determine if the value of the stock is equal to or greater than your expenses in removing the restriction.

    Below are detailed instructions:

    — Restricted Stock Handling Guidelines, Non-Affiliate – This document is a reference and fact sheet for you to review and keep. Please review it thoroughly, and feel free to contact the Restricted Stock & Safekeeping Department with any questions.

    — Rule 144 Client Pledge, Non-Affiliate – This document must be completed by all shareholders listed on the certificate. Please read each statement carefully and answer each to the best of your knowledge unless directed to leave blank by the Issuer’s attorney. Please return it to the address listed at the top of the form.

    — Restricted-Stock Questionnaire – This document will assist TD Ameritrade in processing your securities quickly and efficiently, in accordance with SEC regulations, by providing use with important information. Please complete it in its entirety and mail it back, along with the Rule 144 Client Pledge, to the address listed above. Investor Relations for the Issuing Company can usually provide the name and phone number (voice/fax) for the attorney; should Investor Relations tell you there is a blanket legal opinion on file, you can write “blanket on file” on the Corporate Counsel line of the questionnaire.

    TD Ameritrade requires that your account have at least $250.00 in cash in the account to meet the minimum account requirements. The minimum requirements do not include pass through fees that may be charged from the transfer agent or attorney. We will notify you if additional funding is required to proceed.

    Please keep in mind that these documents are only for use in clearing a security under SEC Rule 144. If your security is restricted in a way other than SEC Rule 144, please contact us for alternate paperwork. If you have any questions, please reply to this email or call a Restricted Stock Specialist at 888-723-8504, option 7. weekdays, excluding market holidays, between 9:00 AM and 5:30 PM Eastern, if you have other questions.

    Thank you for choosing TD Ameritrade.

    Caleb Miner
    Asset Clearing Services
    TD Ameritrade Clearing

    1. Doesn’t ring true with me. No way it should be 144 and even the lock up sounds wrong. Lock ups are founders. I’ve acquired shares in spin offs many times and I don’t recall a one that had any trading restrictions.

      1. That is boilerplate. They received a non registered security, which happens a lot with no -US spin-offs. Most of the time they just sell the shares in the home market and get cash. Not sure why this is different, but it is.

        1. BMTX had filed a registration statement and all the entities involved were U.S. No reason for TDA to mess this up.

          I just got Bermudian shares spun off from a Canadian company in my U.S.-based Vanguard account and had zero issues.

          1. Yes, but TDA is not alone. I received shares at Fidelity too. They still only identify the shares as CUSIP, not symbol and have heard no response from them yet.

        1. Justin – Thanks for the reminder. I had read that way back when but had forgotten the details….. HOWEVER, BMTX’s CFO declared that “the restriction was lifted on July 1st.” Based on conditions in your link, I suspect that they qualified to be lifted based on “(iii) the date on which the closing sale price of the common stock of BMT equals or exceeds $12.00 per share (as adjusted, in certain circumstances) for any 20 trading days within any 30 trading day period beginning at least 150 days following the closing.” So what’s that to do with Rule 144 as TDA is claiming??? I believe TDA’s sending me unnecessary forms to fill out that will do nothing to lift the restriction. Somebody internally or whereever needs to do something…

          Thanks again for the reminder…

          1. the 144a is boilerplate language they use for all restrictions, but the trading restriction lift from the market price is something that the transfer agent should be sending through DTC to all participants that the previous “legend” has been removed from the shares. Unfortunately, even though the restriction was lifted automatically, TDA will probably charge you a restricted fee to remove it.

  6. Don’t know if this has been posted before, but got this notice yesterday from TDA:

    On September 28, 2021, new amendments adopted by the U.S. Securities Exchange Commission (SEC) go into effect to enhance investor protection and improve issuer transparency. These amendments restrict the ability of market makers to publish quotations for those companies that have not made required current financial and company information available to regulators and investors.

    Ahead of the regulatory enforcement date, we will only accept orders to liquidate positions (i.e. no new buy orders) starting August 13, 2021. After the amendment officially goes into effect on September 28, 2021, it may be more difficult to liquidate these securities. Quoting and market liquidity may also be very limited.

    What this means for your account(s).

    You are receiving this notification because you currently hold one or more of the impacted securities in your account. We’re including the list below but be aware that it may not include all of your impacted securities. There is also a chance that the impacted companies could come into compliance with the regulatory requirements ahead of this date and be removed from the list. For a current list of all securities (which is subject to change), please visit http://www.tdameritrade.com/retail-en_us/resources/pdf/TDA101550.pdf.

    EBBGF

    To be candid, I don’t really see how this is enhancing my “protection.”

    1. NH – you’re in need of an attitude adjustment. You need protection, even if you don’t know it. Why, ENB is a small outfit. Oh, wait, it has an enterprise value of a couple hundred billion. Scratch that argument.

      But it’s not an SEC reporter, it didn’t just do a US$1.5 billion SEC registered issue.

      https://www.sec.gov/Archives/edgar/data/895728/000110465921085731/tm2120459d2_424b5.htm

      Geez, guess it did. But, still, you need protection. I’m from the government and I’m here to help!

      1. Bob, its “protection” with assistance from “computer screened” criteria without a lick of common sense added to the procedures. Who needs logic and common sense when the computer can do all of that?

      2. Bob, here is government at its finest…It creates a regulatory enforcement that bans buying of a security whose genesis was from the government creating it in the first place… AGRIP is on the TD “no no” list, despite its birth from legislation. Oh, and also being recognized as one of the 50 safest banks in the entire world. If this wasnt true, it couldnt be made up.
        President Theodore Roosevelt planted the seeds of the Farm Credit System in 1908, when he appointed a Country Life Commission to address the problems facing a predominantly rural population. The commission documented a lack of adequate agricultural credit, where a farmer could readily secure loans on fair terms. Its findings led to additional government studies, which included extensive analysis of other nations’ rural credit systems. Lawmakers chose a cooperative credit structure based on 12 Federal Land Banks, using $125 million in government seed money but financed by private capital from investors.

        1. Grid – one can go online today and “invest” in funeral homes, some guy named Joe fixing up his basement, dilapidated real estate, and a lemonade stand. All with the SEC’s blessing.

          But try to invest in some of the largest financial and industrial companies in the world and the SEC will shut you down.

          1. If some desk jockey with just a modest cranial capacity from OTC went through that TD list, within an hour many of the “offensive” issues could be culled from the hit list. But that would take too much effort.

      3. Which is unsurprising, since those issues are all pink sheets and should be bought and sold in their home market.
        And this list is preliminary, I expect a not insignificant number to get removed from the list as challenges to particular issues come in.

        1. Justin, the regs are totally fine with these entities to trade Pink going forward. For example huge common stock market cap internationals Nestle and Daimler trade on Pink sheets. They just got things incorrect such as listing many Enbridge preferreds as pink sheet current and a few of them as not current which they cant be both.
          Surely, as you mentioned, some of these will get corrected in time though. Its just ironic how they spew videos and info to tell people to get current and knowledgable on the new regs, but are totally clueless on cleaning their own house up first.

    2. Man that is some long list

      Just took a VERY quick glance and I saw names from Brookfield, Canadian Utilities, Toronto Dominion Bank then a ton of Ishares issues, JP Morgan, a bunh of Vanguard issues plus names mentioned here like IPWLG, IPWLO , Ladenburg Thalmann Financial Services, Ocean Spray

  7. Interactive Brokers is doing away with its month low activity fee. Was $10 per month unless you generated $10 or more in commissions in a month of had a 100k balance. Now, if you want to try IBKR starting with a small balance it’s a bit cheaper to do so.

    1. Thanks for the heads-up, Bob. So I guess this means I can move from Lite to ‘regular’ for no additional cost?

      1. Bur – rather than give you my interpretation I just reproduce the notice:

        Dear Client,

        While many of our clients actively trade or maintain substantial equity in their account, we have decided to eliminate our monthly inactivity fee so there are no impediments to maintaining an account with IBKR.

        Effective July 1, 2021, you will no longer be charged USD 10 for not maintaining a minimum balance or transaction activity for account U********. This change will be reflected in your August 2021 account statement.

        Our decision to remove inactivity fees aligns us with industry standards and reflects our ongoing commitment to provide clients with low-cost trading solutions.

        1. I like how they put such a marvelous spin on it.

          Look at their sentence:

          “Our decision to remove inactivity fees aligns us with industry standards and reflects our ongoing commitment to provide clients with low-cost trading solutions.”

          Should be:

          ” we admit that we have NOT been aligned to industry standards from the get go, and are now forced to change as customers start to realize we are screwing them up & down. This reflects our admission that we have been gouging our hapless customers with nuisance fees all this time notwithstanding our stated commitments to provide low cost trading. We were seeing lots of departures and so we were forced to do this to survive. We don’t give a crap about our customers but we sure need their business.”

          1. Inspy – and I thought I got cynical at times!

            Price is what you pay; value is what you get (hey, I just thought of that!). Of the 4 U.S. brokerages I use IBKR is my favorite. That’s based on my criteria. Assets at IBKR have grown substantially since I began with them 2 years ago, while others have shrunk. Most of that is asset movement, not appreciation, although I’ve had plenty of that, too.

            I am voting with my feet.

            1. Bob – it’s those ‘market data fees’ and clunky platform that made me relocate away in 2012 – along with the horrendous FX platform that I traded on for a year or more – man that was terrible. I only used it because it spared me from having to open a separate FX broker account, but after I did transition to Oanda (FX) I realized I was literally overpaying thousands in spreads.
              The Pro is excellent for active equity traders, and you have mentioned that you’ve had access to foreign issues and early OTC preferreds (on Pro or Lite?), which is good.

              1. Fredson – things have changed. IBKR is fantastic for foreign exchange trading. I can buy any amount of FX, any currency pair, in 5 seconds, right off the brokerage platform. The pricing is institutional for trades of US$20k and above. The spread for major pairs will be a few pips.

                Getting quotes is the same as it used to be. You can “trick” the system into giving you live bid/ask without paying for them by pretending to enter a new order. But truth is I get my market data elsewhere. Freerealtime has great charts and will give you the last 30 trades. I will use Vanguard for quotes, too, and TDA for Level II, and FINRA for bonds.

                During the trading day, if I’m at my desk, I will have them all open at the same time.

                For foreign, you have access to most exchanges in the world. One thing they don’t trade is US OTC grey market issues, so no temp ticker trading.

                IBKR doesn’t have funds, doesn’t manage money, doesn’t do underwriting. They only do brokerage, so they work hard at it. That is my perception.

  8. My statement from Fidelity is showing the SCE Trust VI 5.00% Trust Preference Shares (SCE-L) dividends as non-qualified. This site lists them (and the others) as qualified. Which is correct?

    TIA

    1. SCE-L dividends are qualified. If this is a recent acquisition you may not have met the holding period yet. If it’s not new it is an error. In my experience such errors are almost always corrected by the time you get a 1099. It’s only the 1099 that matters. If that’s in error you want it fixed.

      1. OK Yes, recent purchase.

        Looking at my YTD report I see they also have AGM, EQH, and AHL preferred dividends listed as non-qualified however on last years 1099 they end up properly listed as qualified. So there you have it – they should get it straight by the time YE tax docs are issued.

        Thanks

  9. IBKR continues to do good things …

    Couple of examples. One, they run great webinars. From beginning level material to expert topics, from macro, to nitty gritty trading subjects ….

    https://ibkrwebinars.com/?source=WBNewsletter_WBlogo

    Two, they make tax time much easier by providing cap gains trading detail as a PDF separate from the rest of the 1099. (For Form 8949.) Just attach the whole document; no need to parse it like I have to do with other brokerage statements. A great time saver.

    Phone support may be mediocre but IBKR puts a lot of thought into every aspect of their brokerage platform and they do a lot of things that none of my other brokers do.

    They send me emails when an issue I own is about to flip from short term to long term. Acts as a reminder to sell if you want a short term loss or not to sell if you want to hold until a gain goes long term. Nobody else does that.

  10. What is everybody’s list of annoyances with their broker tax statement that their:
    1. Broker does wrong (other than a certain broker getting qualified dividends wrong, I already know about that ha)
    2. wish they had been warned about it before the statement
    3. An Explanation would be nice to have

    Both regular accounts and 1099R/5498’s.

    1. E*TRADE never correctly reports fractional share values (which I have a lot of because I DRIP a bunch of holdings), and then contradicts itself between a) the initial transaction, b) the portfolio holdings, and c) the 1099.

      I once spent 15 minutes on the phone stepping a rep through the issue, got them to acknowledge it and promise to file a support case, which (of course) disappeared into a black hole. Admittedly I’m talking pennies (thousandths and ten thousandths of shares), so I never bothered to follow up. But it still gripes my a**.

      Vanguard and TDA hit it right on the money.

  11. I mentioned a few weeks back that Schwab sometimes shows a tighter (but never wider) bid/ask spread than TD and Fidelity. You can see this at the moment with GMLPF. TD and Fidelity show 23.40/23.50 right now while Schwab shows 23.40/23.41.

    P.S. Watch out if you’ve traded GMLPP at TD. Now that it’s OTC, there is a $6.95 transaction fee!

  12. Any opinions on this? Got this today from ETrade
    ———————————————————
    New rules will affect your ability to buy and sell “Pink No Information” securities, including at E*TRADE

    On September 28, 2021, new requirements take effect that will impact the market for—and value of—certain “over-the-counter (OTC) securities” you currently hold or have held in the past. The new rules apply to “Pink No Information” OTC securities of companies that fail to publicly report and keep current financial and other company information and will restrict the ability of U.S. brokers, like E*TRADE from making these products generally available.

    Some background on the new requirements

    The Securities and Exchange Commission (SEC) recently adopted amendments to SEC Rule 15c2-11 governing the submission and publication of OTC quotations. These amendments will prohibit broker-dealers from submitting or publicly disseminating bid/ask quotations for OTC securities of issuers that do not meet enhanced information filing requirements.

    Securities of issuers that make the required information publicly available by the deadline in the rule should not be affected.

    What these changes mean for you

    Starting September 28, 2021, you will no longer be able to buy or sell “Pink No Information” OTC securities through E*TRADE. Other restrictions related to the purchase of these securities may apply sooner. Please keep in mind that the upcoming changes will negatively affect the value of any “Pink No Information” OTC securities you hold now or in the future.

    1. I wonder if there exists a Master List of all OTC ” Pink no information ” securities, so we can see if any of our holdings fall into that category?

      1. On otcmarkets.com you can use the stock screener, select for market = pink, type = preferred, and USA issue (in my case), then sort by market until pink-no-information is at the top.

      2. You can produce such a list at otcmarkets.com.

        Vanguard banned pink no info issues a couple years ago.

        1. Thanks for doing the Spreadsheet, Bur. I was also able to obtain the info from the OTC website, but yours is more compact.

          Does the restriction coming on September also include “No pink information” Common Stocks as well? OTC website says there are about 5400 of these.

          1. Inspy, I don’t know. I should add that to create that spreadsheet I simply followed Farwell’s spec; I don’t claim that what I posted accurately captures the list of pfds which will have trading restricted.

            Also, note there’s a lot of discussion about this issue over on Reader Initiated Alerts.

  13. Not sure if this is the right area but I saw some institutional comments. In any case, is there a decent quality source people use for basic features of institutional prefs / bonds i.e. quantum but for the institutional space? FINRA is typically missing call dates/floating coupons, same for IB and Schwab, ETrade/Tradeweb is ok but it only shows maybe 10% of the population at any one time.
    A.

    1. re: institutionals

      You can go to Bloomberg or Eikon (Reuters) but you will pay richly for the privilege.

      Personally, I do my own spreadsheet for those issues in which I have an interest. The FINRA bond site can help in identifying issues of interest and provide pricing information. You can build your own watch list at FINRA, too, for current price information.

      For terms, I almost always go to the FWP for the issues I follow. FINRA links to the 424 but the FWP is much easier to follow, and provides the CUSIP.

      Be sure you understand the terms of the issues of interest as there are meaningful differences between institutionals and exchange traded issues.

      If you’re going to be serious about trading institutionals I recommend IBKR. Better availability and better pricing than other platforms, although I also hear good things about Fidelity’s bond platform. I also buy through Vanguard but only if it’s buy and hold forever as spreads are not tight enough for my liking.

      1. thanks mcg, Bob. Was hoping to avoid Bloomy/Reuters as I no longer have access.

        Not all cusips have a prospectus linked from FINRA e.g. 174610AH8 from Citizens Financial etc. In fact, I couldn’t find complete details about that issue anywhere.

        1. 174610AH8

          I loosely follow the issue and it is one of the few for which I could not find a prospectus. It probably was issued by a predecessor company. But look through other SEC filings and you will find terms.

          Info I have is it went to floating as of Apr 6 at 3mL+3.96% and trading right about par, so about a 4% yld on a callable floater. Wish I’d bought it (and many others) a year ago when it traded down to 65.

          CFG had, if I recall correctly, has a total of 4 preferred on the institutional list.

            1. Good research! Appears that at one point they were issued as 144A securities and later registered.

  14. In the ongoing saga of getting-to-know-IBKR… In addition to a $1/bond commission (expected), IBKR is charging me a varying amoung of “Misc Fees”. Anyone know what these could possibly be?

    These Misc Fees seem to have no relation to volume (I was charged a few bucks more in ‘Misc Fees’ for a *smaller* order).

    I’ve never seen these fees with other brokers, though I’m not complaining: I’ve never been able to place a limit order on bonds with other brokers the way I can w IBKR.

    1. Bur asked: “Anyone know what these could possibly be?”

      Bur, the “miscellaneous” fee is just another form of commission for bond trades. You have to add these two together to get the actual commission that was charged. And you never know in advance exactly how much you will be charged for any bond trade. The reason for this is that IB uses many different bond trading exchanges to place your trade. It seems that they do NOT all charge the same amount and IB just reflects the actual charges. In general the maximum you will be charged is $1.5 per bond on buys. However it can be larger for small quantities of corporates and/or CD.s Say you have a buy order for 25 ($25,000) corporates and only get filled on 2 ($2,000) In that case you might get charged up to ~ $4 per bond. Getting fills this small are NOT the norm when you have an open order to buy a larger quantity but it does happen. . . Not bad, not good, just another quirk you have to deal with.

  15. BMTX – Does anyone else own BMTX at Fidelity from the original spinout from CUBI????? To this day Fidelity is still identifying it only as 232CNT014 and not by symbol BMTX. To the best of my knowledge I still cannot sell it at Fidelity if I wanted to… Call to Fidelity ends up with a line of crap about them still waiting for the info to come from the company. Yeah, right! Pick up the phone and find out why 3 months after the rest of the world has it identified as BMTX you are still waiting on the company…. Having owned CUBI at both TDA and Fidelity, I know TDA got the info to take care of this months ago. Keep waiting for Godot, Fidelity… don’t do anything proactive…. grrrrrrrrrrr… Anybody else still own “232CNT014” at Fidelity?

    1. Can you sell it by replacing the symbol with the Cusip #? If not ask the phone rep to do that, sometimes it works but not all reps know that.

      1. Martin – I’ve not toyed with it at all because the amounts are small and I planned to take a wait and see attitude on the position anyway to see if they can make something out of this fintech…. But it does bug me that it’s still not shown properly or valued at all in my account… After the fact I began to wonder whether or not there’s a lock up period for those who acquired this directly via that CUBI spinoff, but nevertheless, it makes no sense that TDA has my position there properly identified as BMTX and Fidelity doesn’t… Also in the back of my head, I keep betting myself that within a few days time Fidelity will have miraculously fixed this despite their excuse making blaming the problem on external forces… We’ll see.

    2. 2wr: It’s times like that I wish they’d offer a pay-as-you-go support option with one of their web engineers. You just know that 5 minutes on the phone with one of those folks would lead to an ‘aha’ and a bug fix in short order. Although I’m probably underestimating the size of their bug stack…

  16. I moved my portfolio of mostly Canadian preferreds from Schwab to Fidelity after Schwab refused to correctly classify them as qualified dividends and feedback from this board indicated that Fidelity didn’t have the same problem. That was incorrect information, Fidelity misclassified them all, except for one small holding in a Brookfield preferred issue. I did a write-up of IRS regulations which clearly allow for qualified treatment and submitted a spreadsheet showing the results. My CPA is going to report them as classified on my tax return. Fidelity’s service team told me I could pound sand. I then reached out to their private client support service team, which is at least being polite enough to read the regulations that I sent them. Hoping for the best.

    1. TW my first hand experience is that Schwab misclassified 100% of Cdn pref dividends. Vanguard got them 100% right as did IBKR and TDA. No experience with Fidelity on the subject.

      Vanguard got the withholding on one Cdn pref wrong initially but corrected after some persistence on my part.

      Go where you are treated best.

    2. Tim, I’ve had experience with this issue at Fidelity. Well. not Canadian preferreds…but other preferreds that were reported by Fidelity as non qualified when I knew they were qualified. I too was told to pound sand by customer service. Actually, they flat out lied to me and said they had verified the info from the company’s website. I asked for a link…no response. I eventually got it solved with an email from the CFO at the company verifying that the dividends were qualified. Situation resolved by the TAX department…Call them, not the regular service group. Rep there actually listened. Good luck.

      1. Thanks, I’ll let you know how it turns out. They’ve said it will take a while to address it. Better a slow “yes” than a quick “no”

    3. Fidelity has taken up Schwab’s position asserting via a servicing processor that Canadian Preferred issues must be registered with the US Treasury department as equities for their dividends to be treated as QDI. IRS regulations do not include this requirement, under IRS Publication 550. Disappointing. Any moron with a computer terminal can look up (for example) the Bank of Montreal’s investor relations information and see that their preferred stocks are equities. If I can get the exact treasury department filing repository I’m willing to ask my issuers to make such a filing. Other suggestions welcome.

      1. Stop beating your head against the wall. Vanguard, IBKR and TDA (for now) get the taxes right. Don’t be Don Quixote, just move.

  17. C Schwab Baloney

    I haven’t got my 3/31 LTSL payment. Of course LTSA came in just fine. Hear is what Schwab said after two chats and four useless reps;

    I do apologize, it appears that the payment for LTSL has not arrived yet. We will only post payments to your account once they arrive from the respective company, but not before. Typically the payment will arrive on the payable date or soon afterwards, but it appears this one is late. We will post it to your account as soon as it arrives, most likely later today or over the weekend, or you could reach out to our Fixed Income specialists directly at 800-626-4600 for more information on this

    What a crock….they were a day late last month giving me my CPTLA payment because it was a “weekend”. No weekend this time and more buffoonery. Aaarrrggghhh

    1. It wasn’t just Schwab. That is what happens with delisted securities. They get paid by wire instead of automated and the payments can get lost for a few days.

  18. Sticking my toe in the water with IBKR and I have a quick survey question for you IBKR clients: which of their platforms do you use?

    I have an IBKR Lite account. I’m on a Mac using Chrome. I finally learned (after finding that phone is useless (no one ever answers) and spending almost two hours with crap chat technology and support reps with widely varying knowledge) that I can’t use the their “Client Portal” for the paper account. Instead I am forced to download and install Trader Workstation.

    Is that others’ experience as well?

    1. a) could not locate “bottom” for posting new item after massive scrolling. Anyway, vanguard is having big tech troubles. Most trades ex 4 stock/etf have to be via phone. I made an on line trade whose purchase price not “right” and a commission charge of $25. which should have been zero. Online ? page says answer in up to 7 days. Think care is needed.

      3/29 @ 11:15

    2. Can’t help with that, but would love to know in a few months if you’re happy. I have way too much under the schwab umbrella now with the TDA buyout (multiple accounts that used to be with different companies) and am considerint Etrade and ibkr as the next ones to open. Not comfortable having that many eggs in one basket, and not looking for app only platforms.

    3. This isn’t exactly timely but ……

      No brokerage is perfect and that includes IBKR. If you need a lot of telephone support IBKR isn’t the best. I find that I can get the answer to almost any question online. Sometimes just by searching in your browser. If it’s an account specific question I use messenger in Portal. Get an answer within 24 hours. In 2 years I have called support exactly twice and probably didn’t need to.

      I get my calls to Vanguard answered in 5 seconds but then I can’t buy Canadian issues, institutional issues, and lots of other thing that I can through IBKR. Want issues traded in Singapore or an Irish ETF or a Guernsey royalty trust? Try getting that on Vanguard.

      A lite account gets you Portal or TWS but not Web Trader, which is too bad because it’s my favorite. A standard account will get you all 3 platforms but comes with a 10$ monthly fee if you don’t have 100k in the account or don’t generate 10$ in monthly commissions. I have over 100k in my 2 IBKR accounts so no limitations You do pay commissions but then most of what I buy at IBKR is either unbuyable from other brokers or comes with a commission. At the end of the day my IBKR accounts cost me zero incrementally. The money I save on institutional issues at IBKR overwhelms any fees that I might pay.

      1. IBKR is my top pick hands down for great features. But as others have noted, there is no effective or timely support and the products have a steep learning curve. I use TWS in Mosaic view, and I’m still learning new ways to use the many algos.

        1. IMO IBKR is not a good choice for probably 99%+ of investors. Maybe folks that read III posts fall into the 1% where it is a good choice. An extreme example would be an investor that wants to spend one hour per year on their investments just to rebalance would NOT be well served on IBKR. At the other extreme is an investor that spends 10 hours a day investing might be well served on IBKR. And the 10 hour a day investor better need a feature(s) where IBKR has a clear advantage over other brokerages. If that investor can get everything he/she wants on Fido,Schwab, Etrade, Vanguard etc they would be better served there. Brokerages are like spouses, they all have quirks. It is just a matter of finding what works best for each investor.

          In addition to the steep learning curve for Trader Work Station that Qniform mentioned, it is VERY easy to “fat finger” a trade on IBKR. There are less “guardrails” or “bumpers” compared to other brokerages. You might consider this a good feature or a bad bug, just depends on your approach. If you want to buy a preferred for $25.00 but accidentally type $52.00, you just bought your full order quantity. Depending on the quantity, the last share you just bought MIGHT be as high as $52. Maybe you can “bust” the trade, but maybe you can’t, it just depends. Say you bought some shares at $26.00 and some at $27.00, they probably would NOT bust the trade. If most of the shares were @ $52.00, they would attempt to bust the trade, but you are never guaranteed it will be busted.

          Just understand which brokerage best fits your needs and understand a perfect match might not exist.

          1. the clearly erroneous guidelines are pretty straightforward so they’ll likely bust all trades above the threshold reference price

      2. Bob, qniform, Tex–thanks for your perspectives and the sanity check. I am attracted to IBKR by the promise of lower-cost fixed-income trading and access to more investment vehicles (EIX is a good example for starters: nice to be able to trade it directly rather than calling a bond desk). I think my eyes are pretty wide open. Definitely just testing the water for now. We’ll see how it goes.

  19. Recently I noticed on E*trade, the cost basis no longer matched the actual trade on some securities. I wrote support and they said they had readjusted the cost basis to subtract dividends reclassified as RoC. What surprised me was that a preferred, CMO-E was readjusted as well. Since preferreds have a face value redemption, I thought RoC did not apply. Am I wrong? Also some of the computation appeared to be off.

    1. CMO is a REIT, so if they paid out more than they made it would be ROC (even on the pfd’s) which deducts your purchase price basis. Most if not all REIT pfd’s are like that (In addition to a few other categories). The good news is the ROC adjusted basis can’t go below zero (at least that’s what my tax dude told me)

  20. It’s that time of year again (tax time) and Schwab has once again displayed their ineptitude. Every year they incorrectly report qualified dividends as non-qualified. At least this year they didn’t claim a MLP distribution was a non-qualified dividend as in past years. This year they reported TNP-C, GLOP-C and the since renamed Seaspan preferred as non-qualified. It is one thing to make an error but something else when they display an attitude when requesting they correct their error. Another brokerage firm I use has never made such errors. Case in point, last year I held TNP-C in both firms. Schwab got it wrong and the other firm got it right. I contacted Schwab about this years errors and got the typical response, “I’ll pass it on”. Going on past years experience, it will be weeks and more emails before I see a corrected tax package.
    One has to wonder how many hundreds of thousands dollars in tax is collected in error. I’ll wager that most people who use a tax accountant overpay their tax because the accountant does not question the brokerage supplied 1099.

      1. Good luck getting Schwab to fix it. Please let us know if they do. Not holding breath.

    1. Received a corrected 1099 from Schwab. They corrected the errors noted in my previous post. Wonder how many tax preparers, if any, question brokerage supplied 1099’s?

      P.S. Saw today (not an official IRS announcement, but close enough) that April tax deadline has been extended one month.

  21. In the “You have got to be kidding me”….
    https://www.businesswire.com/news/home/20210220005020/en/BG-Foods-Announces-Tax-Treatment-of-Common-Stock-Dividends-Paid-in-2020
    From the release.
    “Holders are urged to check their 2020 tax statements received from brokerage firms in order to ensure that the cash distribution information reported on such statements conforms to the information reported herein”

    Here is the subject of the press release. Note the date of the accountants signature at the bottom….

    https://bgfoods.com/wp-content/uploads/2020-Common-Stock-Distributions.pdf

  22. Anyone noticing problems with TDA today ?
    They have a banner posted saying they are having problems posting customer accounts correctly and information may not be accurate.
    I also noticed when looking at the Chart for IPLDP the 3 yr wasn’t showing correctly

  23. A cautionary tale –
    My wife has been trying since the beginning of the year to transfer a BNY/Mellon Roth IRA to her E-trade Roth IRA. BNY/Mellon has been slow and uncooperative every step of the way. When Etrade was called in to help, they got the same stall as we did, with BNY/Mellon eventually insisting Etrade submit BNY’s special forms – by mail.

    After all this, BNY/Mellon finally descended two days ago to suddenly requiring a mailed, signed authorization from my wife (first time this is mentioned!)

    I would never leave money with them again. Although they seem to be trustees for billions and billions of dollars, I found them untrustworthy with my wife’s pittance of a Roth IRA.

  24. Opportunity is knocking!

    IBKR now has a page set up to facilitate investments in hedge funds. You can’t invest directly off the platform but many of the funds provide documents and a subscription agreement from the IBKR platform.

    So, paying 2% annually and 20% of profits isn’t just for the big boys any more; you, too, can get in on the deal. So, if your Game Stop short blew up on you you have a chance at redemption.

    Line forms to the left.

  25. TD withdrew NGHCO shares yesterday. Got the $25 principal per share, but dividend credit was only 3.9 cents per share instead of the 9.375 cents that it should have been. Anyone else have this problem?

    1. nhcoast. Rec’d .093@ from Fido and .039@ from TD. Did you call TD. If not, I’ll call today. Txs.

  26. Not sure of what to make of this headline…
    Interactive Brokers client margin loan balance $40.8 bln at end of Jan., up 49% from a year ago

    IBKR clients are generally not the ones who borrow on margin like that…

      1. IBKR was by far the most open about what they were doing, when, and why. I don’t like to see intermediaries interfering in markets but I conclude IBKR did what they did for the reason they stated. They were protecting themselves from over margined customers and not trying to protect any particular client or client group. IBKR, unlike some other brokers, did not treat “retail” differently from “institutional”.

        Unfortunately, in protecting themselves they also helped the shorts. But as I said, I am convinced this was not the intent, just an unavoidable consequence. IBKR lifted the restrictions very promptly. None of this you can buy one share BS that you saw from RH.

        I also note that unlike Robinhood, IBKR does not sell order flow. The practice benefits the broker at the expense of the investor and creates a conflict for the broker.

        1. Yes, IBKR does sell order flow under their lite offering. The clearing collateral issues were street wide, undercollaterized clearing firms had to restrict trading in order to not exponentially increase their capital requirements going into the next settlement day. Unfortunate how it played out, but thats the risk of working with discount brokers that use undercollaterized clearing firms to increase margins.

          Which brokers treated institutional different than retail? Also, note that brokers can use multiple clearing firms which can cause different treatment across client accts

          1. It will be interesting to see RobinHood CEO Vlad Tenev explain this to the House Finance committee. chaired by Maxine Waters. They have scheduled a hearing for February 18th. Maybe congress can pass a new law that says brokerages cannot limit trading . Might legislate PI= 3.0 at the same time, just to simplify things.

  27. Does anyone know what is going on at Fidelity? This past week when a put in a Preferred Stock Symbol, an example – Ford Series “C” I get the following message: “Sorry, no results were found for ‘fprc’, please try a new search!” Yet the Symbol in my positions is still FPRC. I am only using Ford as an example. I seems to be happening with all the Preferred Symbols I put in.

    1. The search function is garbage at Fidelity. I find that I often have to spell the name of the company and let Fidelity’s computer populate the symbol(s). Sometimes when there are many issues, they don’t all fit on the dang drop down suggestions. Again, spelling the whole stupid thing usually works.

    2. I get around that by pretending to buy something else, then change the stock symbol in the buy menu.
      If it’s research you’re looking for, I do that at some other site.

  28. Fidelity’s nanny state just banned the purchase of LMICL, and I presume LIMBL too. I’ve been trading it for 5 months for multiple small but steady profits, over 10% APY with low risk.
    Time to take that money somewhere else.

    1. I own both LMICL and LIMBL at Fidelity and what it says now seems as though what they’re doing goes beyond just Legg Mason: “Opening transactions for Pink Sheets (without information) are not permitted because of the risks associated with these securities and all microcap securities.” You could be right, Martin – it might be time to move… I wonder if my Nanny will let me?

      1. Then Fidelity is catching up with Vanguard. Vanguard banned trading in all but a few categories of OTC issues. They won’t trade certain issues of such fly by night outfits as BNS, BCE and SLF.

        TDA will trade almost anything but the commissions can add up.

  29. This is sort of off-topic, but the CEO of IBKR said something interesting on CNBC.
    All of IBKR customers are now net short in position. This can’t be good for the markets.
    Question and answer start at 2 minutes in the video linked below.

    https://www.cnbc.com/video/2020/12/29/interactive-brokers-chairman-thomas-peterffy-on-handling-record-volume-and-volatility.html

    “A fantastically unusual thing happened among our customers about a week ago. Our customers are traditionally long the market. A week ago it has changed: our customers tend to be on the selling side of options and there is such demand for out of the money options that our customers became sellers so they overwrite their long position in stocks, and it’s usually about Tesla, Amazon and Apple – that’s where most of the action seems to be. So the Robinhood folks are long these options, and IB customers are short these options. It’s a very interesting situation, it has never happened in our history that our customers as a whole were net short the market. But as of yesterday. that is the case.”

  30. I contacted Ally.com about buying Canadian preferred stocks and this was their reply: “OTC stocks with 5 letter stock symbols ending in ‘F’ are charged a $50 foreign settlement fee in addition to the normal commission rate.” Just thought you would like to know. Will stick with TDA.

    1. Ally is not a good place to trade preferred stocks. Don’t be surprised if you try to sell and get a warning message that you don’t own it.

  31. TDAM Comment and warning:
    I just got off the phone with TD Tech. I have built extensive, categorized Pref Watchlists on their tool; QDI, IG, Banks, REIT, nonIG, CN OTCs, etc.
    Over last weekend all but five (of the least used lists by the way) of the lists were deleted and one was duped fourteen times. Somebody flipped a button in tech and whooooopppps!
    Whatever happened, I could suddenly delete the dupes, but ALL THE REST were PERMANENTLY DELETED.
    Their tech can NOT RECOVER. I am in mourning.
    ******Lesson: Use the EXPORT DATA on the gear icon, use EXCEL to Save, which I am told is the best fit. Periodically delete the old and just export the new data when I groom the lists.
    Lesson hard learned…JA

      1. 2wr, I do not use TorSwim. Just a regular account.
        I keep about nine account linked there so I can do only one logon.
        I love the Combined Positions Watchlist which combines all linked accounts and positions into one global view.
        The Watchlists which I organized from many sources and mental constructs are washed.
        I suppose this gives me an opp to have a fresh view of my whole construct and (neurosis speaking) it may be a blessing in some disguise? Maybe it just happened too.
        The Watchlists seemed to be available in whichever account I was in.
        Also, I have migrated about 25% of our funds to IBKR and have been digging in on their screens and tools. I would think there is prob a Global View Linking there too. Want to be ready if Schwab ends up being a vacate scenario.
        Thank God for Tim and Yuriy’s resource as a known go to source too.

        1. Boy, there’s so much I can relate to in your reply, Joel… I love your sentence, “I suppose this gives me an opp to have a fresh view of my whole construct and (neurosis speaking) it may be a blessing in some disguise,” because sometimes I think the same way…. I’ve got a ton of watchlists, 7 pages of them, on TOS, and yet in the back of my head when I go thru them, I can’t help but think why am I watching all this crap” It’s the wrong things to be watching and I’d probably benefit from a complete scrapping and starting all over… Yet I don’t. And BTW, I mentioned TOS because in it, you have an ability to save your save your workspace so that if anything goes wrong and TOS all of a sudden opens up in a format that’s not of your design (It’s happened!), you can choose to revert to the saved format. Somehow, it does that reversion normally without losing any additions to lists you may have made since the last save, so that comes in handy. Not sure it would have saved you, but it does give some backup peace of mind.

          Also, as you mention neurosis, I could mention paranoia…. You speak of using a Combined Position Watchlist at TDAM… As convenient as that sounds, I am paranoic about consolidating account info across various brokers in a single place… It just seems to me that that’s an invitation to hacking. I’m so cynical about this that I won’t even give Norton 360 all my various info so they can protect me from the dark web like they want… to do that, you have to begin by trusting Norton 100%. To quote Dan Carvey as H.W., “not gonna do it.”

          1. “Wouldn’t be prudent.” –Dana Carvey

            I keep 4 simple watchlists on ToS: Ute qdi, other qdi, non-qdi, and CEFs. It has worked well this year. Or I have just been lucky.

            I am up a bit, but I don’t care about that. Only income–which has increased ~12% YoY. Not as well as many, I would assume, but I’ll take it. Nothing fancy or exciting. KISS is my motto at this point; not trying to maximize anything anymore.

            Looking forward to next year (except for Schwab taking over my holdings again) when I hope to trade less and increase my income even more.

            Life is a bitch & then, well, you know.

            GLTA

            1. Camroc – “Well isn’t that special” – D.C…….. You know, I’ve never really quite understood what the meaning is when someone says something like “I’m up a bit but I don’t care” [if I’m up or down] because my income is up 12%. I don’t understood it when the HDO crowd swears by it nor do I now either… How do you measure “income” to say it’s up 12% and then once you do, still not be concerned about whether or not your investment portfolios’ net worth is up or down at the same time? Are you measuring it by estimating how much higher your reportable income is going to be this year vs last and, if so, how can that be a good thing if at the same time your portfolios total values are up just “a bit?” I think I have an SA dialog in the back of my head between Pendy and shall we say an “anonymous” but griddy source when saying this, with P justifying his investment in XOM at 80 as being a good thing because it increased [or generated his expected] income even though XOM went from 80 to 30 immediately thereafter. I’m guessing from some of your prior posts that you’re a person fortunate enough to not need to take much out of your investment portfolios to live so how’s it a good thing to have “income” up without concern for the overall portfolio’s value?

              If this is not the proper forum for an answer, I’d love to have a better understanding of your philosophy if you’re willing to share and I can be PM’d via SA. To me, whether or not it is measured by “income” or “appreciation,” what matters is an ability to increase net worth of the portfolio because I don’t need to withdraw much income from my portfolio to cover day to day living expenses and feel good knowing if I have a growing asset base I should be better prepared for the inevitable emergencies that come with age, aka “old age.” And yes, I do tend to focus on achieving that growing base thru the more conservative approach of focusing more on div and interest bearing vehicles moreso than vehicles expected to appreciate but I do have both. BTW, personally I’m probably not far off from your same performance numbers this year though to be honest, I’ve only ballparked them to date and haven’t a clue to what degree “income” is either up or down..

              1. Sorry to have alarmed you with my flippancy, 2wr. But I really do not worry much about being up or down in the market. Here are a few things about me:

                1. I don’t follow Pendy & his gang. Nor do I read when Grid and others take them to task. In fact, I asked Grid why he bothers doing that and he said he’s really just trying to warn others. Now that’s truly noble & altruistic, much like the nobility of what he gives away gratis here and elsewhere. I have profited greatly from his wisdom and bow to the light within him.

                2. I was down greatly during the March swoon. For example, I watched my overloaded EPD drop from the high 20s all the way to 10.27 and I never flinched. In fact, I bought a lot more of it until the yield dropped back below 11% again. Imagine that. Ten percent was no longer good enough for me. lol

                3. At one point during those darkest days, my portfolio was down almost 40% and I didn’t panic. So being back to 1 or 2% over last year at this time seems pretty pretty pretty good to me. As I said, I’ll take it, but I’m really only interested in income because I’m ancient and only hold things I believe will pay me for the rest of my days.

                4. I also made almost six figures trading this year: Illiquids for beaten-down quality liquids and back again. I stayed on the high ground and never once followed Grid into the weeds where he is very agile. A man’s gotta know his limitations.

                5. My portfolio, the one I SWAN with: MLPs 35%, Illiquid preferreds 40%, CEFs 13%, old treasuries with floored 4+% yields 10%, and the rest in miscellaneous REITs and foreign common stocks. I believe it will last me out.

                6. I have led an exciting and satisfying life, a real adventure, I tell ya. I’ve been ‘ever direction’ as my pappy once said on one of my rare visits home. And I’ve ended up in my dotage debt-free, with decent healthcare and more than enough income to support my wants and needs. I live in a comfortable house in a nice town and drive decent but not showy cars. I don’t try to impress anybody. My only real vice now is drinking very good wine, which I do almost every day. And Lou Gehrig thought he was the luckiest man alive. Ha!

                “Woodrow, it’s been quite a party.” –Augustus McCrae

                1. Only here on III could I ever expect to receive such a wonderful response to an esoteric question….. Many thanks, Camroc…

                  Sometimes when I take life’s downs and ups too seriously, I try to keep in mind the sage words of John Popper:

                  “Sit at the pier watch the sun go down
                  Another lost little boy in a big old town
                  I want to laugh I want to cry
                  But no matter how hard I try
                  It won’t mean a thing in a hundred years”

                2. Camroc – good philosophy. I am along the same lines. I used to worry more about the portfolio value but now my main focus is income.

                  I do think it is part of human nature to focus on the overall portfolio value but over the years, I have focused less and less on that. Like most people, my portfolio value dropped this spring but even while it did, my projected dividend income really did not change and now the overall portfolio is a bit higher than before.

                  Now I am 59 and retired early a few years ago and part of what helps me with this philosophy is how I structured my overall portfolio. I did not want to worry about ups and downs in the market before my wife and I started drawing social security. So besides my investments, I committed an amount in CDs and online money markets to basically fund living expenses til I reach 65. And my wife was still working part time (she just retired a few weeks ago). So I don’t need to draw the dividend income hopefully for another 5-6 years.

                  Not worrying about the portfolio value allows me to take the long view on things. Everything in my portfolio earns a dividend. I am probably 40% preferreds, with the other 60% split among REITs, a handful of MLPs, Common stock of long time Dividend Payors and a few BDCs. Like you and others, I took advantage of the spring crash, selling some things that held up and buying ones that were oversold – not only on the preferred side but also the common side.

                  My goal has always been to craft a portfolio to generate sufficient income to live off without having to sell investments. If one can do that, you really learn not to focus on the portfolio value

                  But everyone is different

                  1. great discusssion from all of you, have some of all the assets that have been discussed in our accounts mlp’s, reits, taxable bonds, Canadian dividend commons, prefferreds, cef’s, fixed annuity in retirement accounts,US stock qualified dividends, and triple tax free muni’s in our taxable accounts and right now a lot of cash, since cd’s and short treasuries are a mute issue. the only thing I’ve ever been concern with was “cash flow” an SWAN. This portfolio has changed some over my “semi”to then full retirement starting with taking two company pensions early at 55 and SS early at 62. Just getting old now 72 but wouldn’t change a thing but my birth certificate. been folllowing “III” for about a year, bunch of great folks!!! thanks to all

              2. 2WR, If my words of caution helped some with Pendy, that is great. But mostly I did because it because he is pi$$ poor investor and mostly an arrogant POS. If he knew half as much as he thought he did it would actually be twice as much as he really does know. I liked poking the pig. He has me blocked off so I cant reach him anymore. SA likes protecting the “Mario Mendoza” investor hacks of the world if it nets them a buck.

        2. Joel, IBKR has a function to import a ticker list from a text or csv file into a tab on Trader Workstation. If you maintain your watch lists in an excel or text file, you never have to worry if IBKR somehow deleted your lists. Separate from that, IBKR lets you back up your settings to your local box. So even if they deleted your entire setup, you could restore it from the local copy. Trader Workstation automatically saves the last 7 days of setups, so even if you did not manually save a copy, you have some ability to recover.

          Unfortunately the stock ticker import function has been broken for the last few software releases, but you can still manually enter them into a tab. Yes, it is a pain, but you should only have to do it once. (I have notified them that their software developers broke this function.)

          I only mention this since you already have an IBKR account. It is not a sufficient reason for anyone else to open an IBKR account. Like all brokerages, there are pluses and minuses.

          1. I wondered why importing tickers didn’t work. Hopefully the software guys at IB fix that soon.

            In addition to the backup of your IB TWS settings, which is stored both locally and with IB, you can also export each page/watchlist as a text file via

            File->Import/Export->Export Page Content

            I do this from time to time just in case my settings files get corrupted and I don’t notice until the week’s backups have been overwritten.

            The above will save both the tickers on a page as well as any other formulas, notes, etc, you might have made. I have a lot of notes like that, so I sometimes search for a ticker in the exported text files to get all the context (for Mac/Linux users, grep -C10 -i TICKER FILE.csv).

  32. I know IBKR had software problems yesterday. I got a nice email this AM telling me why they are SOOOO SORRY. No problem.
    I have need to talk to a broker today, before I am gone until next week.
    Their queue is answered after a half hour wait, then qualified and immediately transferred, with out any hesitation to “someone who can help you”. They don’t even want to say , ‘this is Mr Broker by name.”
    I have now been on hold for over one hour with a simple question. It would have taken less than one minute to resolve, but the management over there does not set behavioral guideline for their employees.
    While waiting I emailed a detailed complaint to them as well. I will be interested in their reply…if any.
    I have had issues with IBKR being a bunch of goombas in a swagger krewe, but this last interaction is completely unprofessional and what is to be expected if you do business with them.
    Like DE-Bob has suggested, paper trade their account until you have good command of it. It can be retained even if you have an account and can be toggled over to for ‘practice and understanding’.
    A report from real, factual experience with them…AGAIN!
    Tim’s site here is a good group-learn exercise. JA

    1. Joel – that was the first outage in my year+ at IBKR. But the timing was certainly terrible.

      Use the secure email system for questions. Rarely is anything urgent and they do answer the emails within 24 hours.

  33. Good evening,

    I am looking to open an account at a new broker since I got tired of Fidelity not letting me purchase some things (fixed to floating preferreds for instance) without having to call them, which I don’t want to do. Funny enough they have no problem if I purchase them when they trade on a temporary ticker, but not afterwards.

    Any recommendations? Moving the IRA out of Fidelity would be a hassle due to size, but at least a portion of the taxable account where I can buy these few things that Fidelity is “protecting” me from. I just don’t want to open an account at Schwab or TDA, etc. and find they also will not let me do this.

    Thanks in advance,

    Miguel

    1. Generally speaking, Schwab and TD will let you buy these and most any other preferred you want. I’m sure there are exceptions. One thing to watch out for with TD is that they do still have $6.95 transaction fees on OTC securities, so if you trade any of those, be aware. And, of course, TD will be merged into Schwab in the next 18-24 months, so factor that in if you want. I have a captive account at TD, otherwise I wouldn’t have much there – but I would keep an account open just to have the Thinkorswim quote streamer.

      1. Thank you for the info. Would “grey ticker” preferreds be considered OTC? I have had OTCs purchased through Fidelity and that is generally not an issue, but I am not sure what the status of grey ticker preferreds is. I will double check with TD.

        Thanks again!

        1. Miguel, Greys are part of the OTC. But they are the “bastard” area of it. You will be flying blind being no bid or ask spreads are posted, and pricing can be hard to nail down. Greys are subject to $6.95 fee too, provided of course a transaction even occurs.

          1. Thank you. That is what is funny about Fidelity. I can (have) buy fixed-to-floating preferreds when they come out with their temporary tickers, and pay no commission. But once the permanent ticker comes online, I can only sell them, and cannot purchase more of what I already have. It makes no sense whatsoever. But I guess it does not have to.

            In any case, I can then have an account at TD to buy fixed-to-floaters and keep mine at Fidelity for other things (such as temporary tickers) or other investments. The limitation on Fix-to-Float that Fidelity imposes is frustrating; it works pretty well otherwise for everything else I need.

            Thanks!

            1. Hi, Miguel
              I’ve had same frustrations with Fid, but haven’t left (I’ve had an account since the late 70’s when I first had some cash and MMs were paying ~ 15% IIRC, and they have my workplace retirement account, so easy to move funds, do a Roth conversion, etc.).
              FWIW I’ve used Wells Fargo Advisors (again mostly for historical reasons, including 100 free trades/yr when everyone else charged $8, then 5, etc., before free) to buy F-F or BBs, although I dislike navigating their website. If you leave your holdings page, eg, to place order, when you go back, it defaults to their format, even if you’ve set up a custom format, and prices reverts to 15 min delay, so you have to re-update. Never set up an IRA, so BBs or REIT preferreds taxed at non-qualified rate.
              Now using Vanguard, as my old mutual fund IRA there was quickly converted to a brokerage account. Able to buy BBs and F-F without difficulty so far.

              1. Vanguard may be another option, yes. Anybody has any experiences (good or otherwise) with Interactive Brokers? BTW, thanks for all the help.

  34. Another reason to watch UBTI …………..

    Unrelated Business Taxable Income is generated by many partnerships and MLPs. It’s a bad thing and an especially bad thing when it happens in a qualified account (IRA). If you go over $1,000 a return has to be filed and tax paid, notwithstanding that it may be in an IRA.

    In the case of an IRA, custodians, not investors, are responsible for filing the return. They don’t like doing it. Some brokers won’t let you put MLPs in an IRA. Others charge punitive fees. This is Vanguard new policy:

    “Master limited partnerships (MLPs) in an IRA. Vanguard Fiduciary Trust Company (VFTC), the custodian for IRAs held at Vanguard Brokerage Services (VBS), is responsible for IRS Form 990-T tax filings for MLPs. VFTC will begin charging a $300 fee per account for these filings.** VBS will facilitate collection of the fee by deducting the fee amount from a client’s brokerage account when a filing is required.”

    The solution is simple: don’t put things that generate lots of UBTI in a qualified account. The amount of UBTI generated can almost always be predicted in advance from information provided on a company’s website.

    1. The IRS has been stepping up enforcement in this area and broker’s are responding accordingly.

  35. Schwab did right by me. They had trading system problems on the busy morning of Nov 9 when I was trying to liquidate my REITs that had gone up 25% in one day. Many trades couldn’t complete but one $25,000 trade got sold twice. Didn’t want to cover the sale because wasn’t sure it really happened and couldn’t get thru phone lines for 4 hours and by them price had gone up 10% more. They told me to cover and dispute and today 2+ weeks later they credited my account for the $2500 loss. Can’t imagine how many millions of losses they had to cover on that day since they told me they usually can handle disputes in 24 hours.

  36. Merrill edge unavailable?

    I get that msg trying to login. Is it me, or is it @ Merrill?
    Anybody?

      1. Merrill has been down for more than 2hrs. No explanation to be found thus far… Typical Merrill.

  37. RE: IBKR

    Also worth a mention that IBKR gives you a fully functional monopoly money account with a million dollars. You can test drive all the features before you put in real money.

    I still use the paper account, to try things I have not done before to be sure I understand how the platform will behave before I use real $.

    I don’t know what other brokerages have something similar but I know that Vanguard doesn’t.

    1. Bob – since you seem to be familiar with IBKR functionality, can you shed some light on their pricing? I have looked at the info on their website but I am confused.

      The Trader Workstation system looks powerful and is one of the biggest draws for me but I am unsure if it’s worth what appears to be extra fees for some basics like real-time data, book depth, news etc. I use Fidelity and TOS now which don’t carry those extra charges. Aside from commission to trade stocks/bonds/equities, what additional monthly charges would one incur for getting some plain vanilla streaming info?

      I am willing to pay something extra to be able to use their powerful TW system, I just don’t how much in additional fees/services I would have to subscribe to in order to get real time actionable data from it.

      1. Kapios, for IB Pro, assuming you are not a professional investor, the minimum you will pay is $10/month. But that fee is waived if you make enough trades each month. If you want Level 2 data from different exchanges, that costs ~ $1/2 per exchange. If you want to buy bonds or CUSIP based preferreds, you have to pay $1/month. If you want bond/preferred ratings it will set you back $3/month. You can get a reasonable group of data for ~ $16 total, with $10 of it waived if you make enough trades.

        You will have to fill out a questionnaire each year to certify you are not a professional money manager. That roughly means that you do NOT get paid for managing anyone else’s money.

        Link to their ala carte pricing:

        https://www1.interactivebrokers.com/en/index.php?f=14193

        1. Tex, I had looked at their pricing maybe over a year ago now, and I recall that the minimums were waived if your account was above a certain size but I can not find that in their current pricing. Did they do away with that?

          So, it looks like it would be less than $20 per non-active month, with some months being less than that, depending on trading? My trading tends to be lumpy – that’s why I’m trying to figure out what the “fixed” cost would be.

          In reading thru the TWS online info it seems that there is a unit count of streaming info for tickers on watchlists/graphs etc. for which you pay for above a certain threshold. Is that right? If I’m watching a bunch of futures/options/equity tickers over the day across a couple of monitors over a 10 hour period does that add up? That’s what’s giving me pause.

          1. Kapios, I think the fee waiver is based on how much trading commissions you generate each month, independent of account size. To get the $10 snapshot bundle fee waived you need $30/month in commissions. For stocks that would be about 6,000 shares. For bonds or $1,000 preferreds, that would be <= 30 bonds. (Since you never know exactly how much you will pay per bond trade, it could be less.)

            The streaming fees are capped per month at low rates, $1.50 for NYSE, $1.50 for NASDAQ.

            I have not heard of anyone that got charged an outrageous amount for any data on IB. So I think your guess of ~$20 in fees on a low trade volume month is a reasonable assumption.

      2. Tex has replied and he has more details than I do.

        I don’t pay for any data packages and I don’t use TWS. For what I do I don’t need them.

        For my trading, I “coax” live bid/ask and volumes from the system by clicking on “new order” on an existing order. One click. Other information I pick up from other sources: FINRA, the TSX, etc. It is sufficient for my needs but perhaps not yours.

        Tex has it right in that the pricing structure favors high balances and active trading. For Pro anyway. Lite is “free” for bread and butter things.

  38. IBKR after a year + of experience …

    Bottom line I like it and I’m keeping it. For some of what I want to do there is no reasonable alternative or no alternative. For you, it may or may not make sense.

    The basics. 3 trading platforms, from least to most complex, 1) Portal, 2) WebTrader, and 3) Trader Workstation. Plus they have a separate mobile platform. I do all of my trading through WebTrader and only use Portal for administrative functions but it does have good trading functionality.

    I have zero experience with Trader Workstation and have only used the mobile platform as a market monitor when I’m on the go and not for trading. My take is that 99% of III readers would be fine with either Portal or WebTrader as their trading platform.

    2 pricing plans, Pro and Lite. Pro gives you a few more capabilities but not many. Pro charges commissions (albeit low), and gives you better margin rates and higher interest on cash balances. Lite gives you commission free trading on U.S. exchange listed stocks and ETFs and a thousand+ OEFs. You pay commissions on just about everything else (as with other brokers) but, again, rates are good. My sense is that Lite would serve the needs of 90% of III readers.

    The bad. Very little from my perspective but this is my list:

    The platforms are “quirky” compared to those of most other brokerages. Not a biggy for me but takes some getting used to the look and feel. Once you’re used to it, it’s great.

    Telephone support is not their strength. Waits can be lengthy and the support person you reach may not be in the U.S. But they do know their stuff. I don’t know if the phone support gets better with a bigger account (as it does at Vanguard, for example).

    Offsetting the weak telephone support is a robust online help system and a very responsive email inquiry system. The amount of online help is extraordinary and will answer just about any question you may have, other than account specific questions of course, for which I use the email system. You just have to look for it.

    If you are the type that needs a lot of telephone support, IBKR is not for you.

    No OTC trading. If it’s U.S. issues you’re buying on the OTC you won’t be able to buy them on IBKR (this includes new preferred trading on temporary OTC tickers). But if it’s foreign issues with “F” tickers you’re after, then you can buy them on their native exchanges, as described below.

    And that’s it.

    The good. A long list:

    Access to trading markets. This is the key one for me. IBKR gives you DIRECT access to trade almost any major exchange in the world (and quite a few non-exchange products, too). London, Paris, Tokyo, Sydney, Toronto, whatever you want to trade. Like Vanguard’s extensive suite of Irish-based unit trusts? You can’t buy them at Vanguard (if you live in the U.S.) but you can buy them at IBKR.

    For me, the initial attraction was the ability to trade Canadian preferred directly on the TSX. If you are at all serious about trading Canadian preferred you should be doing it through IBKR. You can buy 100% of the market, not just the 20% or so with U.S. OTC tickers. And you will have no problems with off-limit tickers (Vanguard, for example, will only trade about a quarter of the available tickers), no execution problems, and no foreign trading fees.

    IBKR also gives you access to most Capital Securities, meaning bonds and preferred that are not exchange traded. Not by calling the bond desk, not at the bond dealers take-it-or-leave-it ask price, but at a limit price that you input online.

    You like BK (Bank of New York Mellon) preferred? Well, you’re SOL because their one and only exchange traded issue has been called for December 20th. But they do have 5 non-exchange listed issues that can be bought through IBKR.

    Easy currency and currency futures transactions. If you’re going to trade foreign securities you’ll want to buy foreign currency in most cases. IBKR makes it very easy and you get institutional rates on anything above US$25,000. Anything less is an “odd-lot” and may get you slightly less favorable rate. Even if what you want to do is just old-fashioned currency speculation, you can trade in and out at IBKR at very tight spreads and low commissions.

    If you want to hedge currency exposure with currency futures, it’s also done on the trading platform and is very easy to do.

    Execution. Never had a single execution issue.

    Lots of online seminars and videos. Good if you are new to IBKR or new to some aspect of trading.

    No tax treatment errors. Not on QDI issues, not on foreign securities, not one.

    Ease of trading. Very fast to enter orders, especially repeat orders, as you might do buying an issue 100 shares at a time all day long. Many of the trading defaults (number of shares, warnings, etc.) can be custom set.

    Outstanding statements. Incredibly detailed statements and the ability to customize just about any aspect of a statement.

    Low margin rates. By far the lowest among retail brokers, but not as low as institutional brokers.

    The trading platforms never crash. At least not when I’ve been on. Never slow; never down.

    Strong “back office” on the platform. IBKR has all the usual administrative functions available online and few more that are rarely seen. One can convert from Pro to Lite (or vice versa) online.

    You get notified when positions are about to go from short term to long term. Very useful feature for tax based trading (i.e. taking losses before they go long term, or waiting on gains until they do).

    So, that’s my take. I have 2 IBKR accounts, using 1 for Canadian trading only (makes the book keeping easier for me) and a 2nd account for everything else. Both are Pro accounts but I’m planning to convert the everything else account to LITE soon as it will lower costs a bit. (Pro or Lite I would still pay commissions on the Canadian trades so there is no advantage to LITE there.) I’ve not transferred any positions from other brokerages to IBKR but as cash becomes available that’s where it’s going.

    1. Very helpful, Bob… Thanks very much for posting.. I’ve been wondering about the buzz on IBKR and your summary pretty much seems to tell the story. Regarding bonds, when you say, “IBKR also gives you access to most Capital Securities, meaning bonds and preferred that are not exchange traded. Not by calling the bond desk, not at the bond dealers take-it-or-leave-it ask price, but at a limit price that you input online,” you’re saying you can set your own bid price or offered price on essentially any bond that’s being offered within their system? Can you do something like set a bid for 25k but with a minimum of 2k that you’d accept as an example? That’s one of my pet peeves with the Fidelity platform – you cannot set a minimum amount on either your bid or offer amount.

      1. 2wr – on the buy side you input whatever price you want, and quantity. Bids may be rejected as not being enough shares. I have been able to make buys for as few as 5 ($1,000) shares, so it’s not like you have to be trading institutional quantities.

        I have only made 1 sale of a capital issue on IBKR and that was for 10 shares and it took a couple of days to execute all 10 because I had a high price on it. Beyond that I don’t know the rules on selling.

      2. 2WR, a few other points on IB’s bond platform:

        1) You cannot set a minimum quantity. For example on a corporate bond where the minimum was set at the IPO time at 2 aka $2,000 face, you can get filled anywhere from 2 up to your order size.

        2) The selling bond dealer might set a higher minimum quantity than was specified in the IPO. There are quite a few corporates that had 1 or 2 minimum specified at IPO, but the dealer specifies a minimum order size of 200 or 250. So IB requires the 200 or 250 to place the order.

        3) You never know exactly what the commission will be until after the order is filled. The most extreme case is you get filled for one bond and pay a $8 commission, which is ~0.8%. For ~ 25 bonds, the commission is typically 0.1% to 0.15%. For >=100, the commission is typically 0.05%. The variable that you cannot control is who the selling dealer is. Each dealer seems to have a different commission schedule with IB.

        4) You never know exactly what the margin percentage is if you are buying on margin. IB will show you what the margin percentage is when you first place the order. That percentage is only applicable to the quantity you ordered. This is more of an issue on munis than corporates. The higher the quantity you buy, the higher the margin percentage might be. It is complicated and IB does not publicly disclose the algorithm they use to calculate the margin requirement. In an extreme muni case, you might buy 5 bonds and have a 33% margin which increases to ~ 100% when you buy say 100. Part of IB’s calculation is what percentage of the issue you are buying. So if you buy a very small percentage of the float, your margin rate will be stable. This is less of an issue on large corporate offerings unless you are dealing with say >=$ 1 million order sizes. IB can and does change the margin requirements with minimal notice and you have no recourse. Broadly speaking they increased all corporate and muni margin rates since the March 2020 sell off. In an extreme case, you can get an electronic margin call where they automatically start selling positions WITHOUT your input before today’s close.

        Not good, not bad, just a few quirks you should aware of before you get married.

        1. Thanks for the added color, Tex….. It sounds to me as though there’s no advantage for bond trading at IBKR vs trading at Fidelity with the possible exception of it being easier to locate non-listed preferreds…. At Fidelity I do like knowing exactly what I’m going to be charged no matter what the size ($1/bond but I think there’s a minimum and I know there’s a maximum) but I do not like the inflexibility of setting a bid or offer amount…. I understand what you’re saying about IPO amounts but I’m talking about bidding (or offering) in the secondary… I want to be able to say, for example, I’m bidding for 50k on an issue, but if there’s a seller out there for say 11k only, that I will accept those 11 at my bid…. You can’t do that at Fidelity but if I understand you correctly, I can’t do that at IBKR either.

          1. Let’s use an example: 857477AQ6

            If you go to Vanguard, TDA or Schwab, it can’t be bought on the platform. You may be able to buy it by calling the bond desk, but you’ll be given a dealer ask price and it will be take-it-or-leave-it. And it’s effectively fill-or-kill; you can’t leave a bid.

            AT IBKR I can buy it on the platform. It will show ask and quantity, bid and quantity, and last and quantity. If I check at FINRA I can see the whole trading history.

            I then input any price and quantity I want. After that, it fills or doesn’t fill like any exchange traded issue. If you’re prepared to be patient you can get filled much close to the bid than the ask. Same as buying exchange listed preferred. You can’t specify a minimum quantity.

            On this particular issue I expect I could buy it for about for at least 1% less at IBKR than at the bond desk at Vanguard. And without sitting on the phone for 30 minutes.

          2. 2WR, I will contrast Fidelity and IBKR for a 50 piece ($50,000 face) bond order in the secondary market:

            1) Fidelity allows you to place a “fill or kill” or “day” order to buy for any bonds they are showing for sale. In general you are allowed to put in a lower bid price than the ask price. Fidelity has “bumpers” or “guard rails” that limit how far below the ask price you can go. If the ask price is 101, Fidelity requires your bid price to be ~>=97.3. If you put in a bid price > the ask price, Fidelity will NOT let the order be placed.

            If your order is to buy 50 pieces, Fidelity makes the order minimum and maximum 50 pieces. So if someone wants to sell say 10 pieces at your bid price, the order will NOT be filled.

            2) IB allows you to place a “Fill or Kill”, a “Day” or a “Good till Cancelled” buy order. This is a MAJOR difference compared to Fidelity, Schwab, etc where you CANNOT place a GTC bond order. IB lets you put in any bid price you want, regardless of the ask price. The risk is that you fat finger a buy price. Say there are 50 bonds offered at 101 and you want to enter a 99 bid, but type in 999. You just bought them at 101. So IB does NOT have bumpers like Fidelity.

            If your buy order is for 50 pieces, IB will allow it to be filled at any quantity from the minimum up to 50. The minimum might be 1 or 2 for corporates and is typically 5 for munis. You never know for sure how many will get filled until the order goes through. On munis, it is common for IB to show 2X to 3X the bonds available than are real. If IB shows 30, there might be 10, 15 or 30 available. You don’t know until it gets filled. This is less of a problem on corporates.

            IB in general will let you place corporate bond buy orders even if none are listed for sale. Fidelity will NOT let you do this. And since you can place a GTC order at IB, this is a difference. In general, IB will NOT let you place a muni bond buy order if none are showing for sale, which is the same as Fidelity.

            Hope this helps.

              1. Bob, I just tried the State Street Cusip you provided. Fidelity does not show any offered up and therefore will NOT let you place an order. IB shows 80 bid @ 99.244 and 200 ask @ 100.5. IB will let you enter an order for quantity of 1 on up. This issue might be on the Fidelity “forbidden, we have to save you from yourself” list which is why they don’t offer it you. Not sure.

                1. This may not be the best day to be asking a question like that of Fidelity, Bob, at least not if everyone else is having the same problem I am experiencing…. When I attempt to find all bonds for a specific company name, system is telling me “System unavailable at this time. Please try again later or call Fidelity at 800-544-6666.” It would allow me to find your Cusip # 857477AQ6, but it does not show any inventory. That may be solely because of their “system unavailable” problem… Anyone else having the same problem??? I have not called the desk and will just wait to see if problem is resolve by tomorrow.

                2. Tex – ty for the info. This is State Street we are talking about. A-rated debt, BBB-rated preferred. A Low risk non-bank bank. F2F, but then almost all institutional preferred are F2F. Agribank, Cobank and NTRS are the only higher rated preferred (all BBB+) in the banking world.

                  I’ll be interested to see if anyone finds it on Fidelity but I am 100% certain I can buy it at IBKR, at a price I name. Without a phone call. I used this one CUSIP as an example but there are hundreds in the same boat, meaning generally not available at most brokerages but readily available at IBKR.

                  Tell ’em Bob sent you, and I deserve a kickback!

              2. Bob – I just noticed in the details of your State Street 857477AQ6 that it’s a floating rate issue….. That probably seals the deal of not ever being able to buy it online at Fidelity without having to call as their Nanny state mentality normally wants to save you from your own assumed inability to know what you’re buying if a bond floats.

                1. 2wr – then I’ll give you 2 others, both fixed rate bonds:

                  74348Y6V8 can’t be bought online at Vanguard or TDA, but at IBKR you can buy and name your own price.

                  21871NAA9 is buyable online at Vanguard at 83.00 (no choice) or at TDA at 82.41 (best price) or at IBKR at whatever you input. The bid/ask is 81.50/82.275, and last sale at 81.41. I’m guessing I could get it at 81.50, that being 1.50 under Vanguard or 0.91 under TDA.

                  1. It’s 5:37 right now and I see the Corecivic issue available at Fido @ 82.301 theoretically….. (you can’t buy afterhours) . No luck on the Prospect issue…

            1. IB also lets you do OPG orders, which means in essence to execute as close to the market opening as possible (subject to your limit). In other words, they go to the front of the cue, ahead of day, fok, or gtc orders.

              I have been using them on the equity side.

  39. TDA Merger with Schwab.

    Have an issue with FOREIGN TAX WITHHELD from a dividend of a Mexico based company (KCDMY) in my IRA. TDA withheld ~10-15% from this dividend payment for the first time after owning the stock for years.

    Complained on email and got a computer generated response.

    I’ve been a very long time customer of TDA and love the TOS platform but I fear I’ll not be happy with this merger.

    Is anyone else having similar issues?

    1. Dear valued client,

      Received a reply (below) and sounds like I’ll be unable to appeal. Are others having similar experiences recently?

      I’d be happy to explain.

      We are not able to reverse this charge, because it is not charged by TD Ameritrade. It is a pass through fee, charged by the transfer agent who handles the dividends for that stock. A foreign tax withholding fee is charged at the discretion of the company, and will not necessarily be applied to every dividend. It may be applied for every diviend, or it may be applied only once a year.

      1. Oh, yeah, they didn’t do what they could have done. They are supposed to tell the clearing agent after the record date how many shares are held by retirement accounts so they don’t get charged the foreign tax as the treaty allows for an exemption.
        The system for brokers to do it is outlined here:
        https://www.dtcc.com/-/media/Files/Downloads/Settlement-Asset-Services/EDL/Tax_Services_Guide.pdf

        What you should ask them is whether this is a permanent change as a result of the merger, or a one-off.

    2. I don’t know the answer but what you’re getting from TDA is not sufficient.

      The answer lies in the US-Mexico tax convention. It is NOT at the discretion of the paying agent. If the convention says no withholding then it’s no withholding. But TDA won’t do the work for you. If you can show them there should be no withholding they will get the paying agent to back off.

      I’ve been through exactly this issue with Vanguard albeit on a Canadian issue held in a Roth. Turns out the paying agent was JPM.

    3. Greg, is this a case of your having benefited in the past from TDA not applying the rule correctly?

      Having a refined hatred for Foreign Tax Withholding but not having direct experience w MX companies, I looked and found https://www2.deloitte.com/content/dam/Deloitte/us/Documents/Tax/us-tax-ice-country-highlights-mexico.pdf, which asserts that “A [Mexican] company that distributes dividends … to a nonresident or
      to a resident individual must withhold a 10% tax….” So it may be that someone in the TDA back office finally started applying the rule correctly?

      Also, is the holding in a taxable account? If so, you can claim it back at tax time (apologies in advance if you already knew that).

  40. Can anyone with a Schwab account tell me if they allow online OTCbb/ pink/ gray, etc trading, and if so, are they charging a commission if the company traded is a foreign entity; examples BREUF, DREUF, which are Canadian.
    Thanks

    1. Howard – I can’t answer your question but I can tell you Schwab won’t get the taxes right on BREUF. It should produce a qualified dividend but Schwab will list as non-qualified. DREUF is a REIT.

      What you will loose financially by Schwab not reporting QDI correctly will overwhelm whatever you pay in commissions. Many investors pay zero taxes or close to zero on QDI income while paying 20%+ on ordinary income.

      If you’re going to invest in foreign QDI issues go anywhere but Schwab.

  41. Schwab-TDA-ThinkorSwim update

    “As all necessary approvals of the proposed acquisition have now been received, Schwab expects to close the transaction on Oct. 6, subject to the customary closing conditions set forth in the merger agreement,” it said in a statement late Wednesday.

    The Fed released its statement on the deal at 5 p.m. Wednesday. Moments later, former TD Ameritrade Institutional executive Dani Fava tweeted: “It’s official – ⁦@TDAmeritrade has become ⁦@CharlesSchwab.” (Fava is now head of strategic development at Envestnet).

    The full integration of the two firms — which announced the transaction 10 months ago — should take 18 to 36 months to complete after the deal officially closes. This means the technology tie-up and related efforts won’t be done until April 2022 at the earliest and by October 2023 at the latest.

    Until then, Schwab and TD Ameritrade will operate as separate businesses.

    https://www.thinkadvisor.com/2020/09/30/schwab-td-ameritrade-to-merge-oct-6/

    1. I never had a big Schwab account and what I had I have been draining ever since the problem with tax treatment of dividends. The other brokerages I deal with got the tax treatment right most of the time and when they got it wrong they corrected the problem. They took my calls, researched the issue, and fixed the mistake, none of which Schwab did.

      I do not look upon the acquisition of TDA by Schwab as a positive. I use TDA because they allow the trading of certain OTC issues that other brokerages do not. TDA also get taxes right. If TDA gets Schwabbed I will have no reason to do business with them. One of the things I don’t think Schwab took account of when they did the acquisition of TDA were the accounts they would loose as a result of the acquisition.

      I would be doing ten times the business with TDA that I do presently if not for the overhang of the Schwab acquisition.

    1. Speaking of brokerages, you reminded me Dave, my TD rep told me Schwab was going to “leave us alone” for another 18 months or so.. The longer the better in my mind.

      1. Yeah, I asked my TD guy about that, a few months ago. At the time, he had no idea what was going to happen. I’m not familiar with the Schwab platform, but I like the TD platform quite well, and am hoping they don’t bungle it up too much — or maybe they’ll make it even better.

  42. Anybody having problems with merril Lynch website?

    Can’t login and the customer service was very useful as they are with other customers but can call me back in “more than 3 hours”.
    Thx!

  43. Is there anyone with a Charles Schwab account that could send me a ‘refer a friend’ code? The code is needed to get the $500 new account promotion. Is there a way to get private messages on this board?

  44. Forbes has a nice writeup on how Robinhood makes money and was the first brokerage to offer commission free trading. “Payment for Order Flow” accounts for 70% of their revenues. This is where large algorithmic trading firms like Citadel and Virtu pay brokerages for their orders. They pay Robinhood 1.7 cent/share for their stock orders, which is higher than other brokerages receive. Obviously Citadel and Virtu think it is profitable to buy the orders from Robinhood. I am guessing you would have less limit orders filled for the low liquidity preferreds we discuss around here. But Robinhood probably works fine for high liquidity issues like the FAANGS.

    Robinhood has added 3 million new customers this year, far more than the other brokerages. It has 13 million customers, close to Schwab’s 14 million. The tone of the article is negative on Robinhood. Personally I do NOT have a Robinhood account, but if you are considering opening one, the article is worthwhile.

    Link
    https://www.forbes.com/sites/jeffkauflin/2020/08/19/the-inside-story-of-robinhoods-billionaire-founders-option-kid-cowboys-and-the-wall-street-sharks-that-feed-on-them/

  45. The Charles Schwab Corporation (“Schwab”) today announced it plans to integrate the award-winning thinkorswim® and thinkpipes® trading platforms, education and tools into its trader offerings for retail and independent advisor clients following its acquisition of TD Ameritrade.

    “Our plan to adopt the thinkorswim suite of products and educational resources reflects its status as one of the strongest retail active trader platforms in the industry,” said Barry Metzger, Senior Vice President of Trading Services at Charles Schwab. “For users of Schwab’s StreetSmart Edge® platforms, there is no change. As we look ahead, we intend to thoughtfully combine the great capabilities, tools and service at both firms to provide a unified, world-class trading experience for clients.”

    https://www.businesswire.com/news/home/20200805005865/en/Charles-Schwab-Announces-Plan-Adopt-thinkorswim-Trading

    1. This should have been the press release….

      Charles Schwab Announces Plan to Rename thinkorswim Trading Platforms to sinkorswim(mostly sink) as Part of TD Ameritrade Integration
      08/31/2020

      SAN FRANCISCO–(BUSINESS WIRE)– The Charles Schwab Corporation (“Schwab”) today announced it plans to rename the award-losing thinkorswim® to sinkorswim(mostly sink) following its acquisition of TD Ameritrade and numerous outages of the platform.

      “Our plan to rename the thinkorswim suite of products and educational resources reflects its status as one of the most volume challenged retail active trader platforms in the industry,” said Barry Metzger, Senior Vice President of Trading Services at Charles Schwab. “For users of Schwab’s StreetSmart Edge® platforms, there is no change. As we look ahead, we intend to thoughtfully combine the great capabilities, tools and service at both firms to provide a unified, third-world-class trading experience for clients.”

  46. Schwab’s “Street Smart Edge”….

    Account details screen shows I am up $68 today…bar at the top shows I am up only $38. My “position dollar value” is less than my “total account value” by a whopping $3,000…. And my positive cash balance is not included in the former, but supposedly is included in the latter.

    Schwab says this has something to do with current prices vs. liquidation value. I say pick one and stick to it.

    1. Yes, very confusing to say the least. These variations in value seem to have worsened with the last upgrade of StreetSmartEdge.

      1. Yes….now my “today’s change” is plus 2623 while my account details day change is plus $397…maddening. I don’t think the Schwab system is set up for securities with wide spreads.

  47. Buried in a New York Times story about RobinHood was this:

    Robinhood’s website has also gone down more often than those of its rivals — 47 times since March for Robinhood and 10 times for Schwab — according to a Times analysis of data from Downdetector.com, which tracks website reliability. In March, the site was down for almost two days, just as stock prices were gyrating because of the coronavirus pandemic. Robinhood’s customers were unable to make trades to blunt the damage to their accounts.
    . . .
    Plaintiffs who have sued over the outage said Robinhood had done little to respond to their losses. Unlike other brokers, the company has no phone number for customers to call

    Tex comment: Not a pretty picture for RobinHood or Schwab on outages, but at least at Schwab you can call somebody and vent your frustration. They will not be able to get the platform back up but will be sympathetic.

    Link to full article:
    https://www.nytimes.com/2020/07/08/technology/robinhood-risky-trading.html

  48. Anybody own Great Ajax (symbol AJXA) notes in a taxable account?
    they had multiple 2018 and 2019 deemed (non-cash) dividends which my broker just got around to posting, so I just got a corrected 2018 form and will also be getting a 2019 corrected form with this and the First energy dividends.

  49. First Energy just reclassified their last 2 dividends of last year out of nowhere.
    So anyone who owns it in a taxable account may get a corrected 1099 soon.
    Silver lining is it went from 100% dividends to part ROC for one and all ROC for the other.

  50. TDA will not process sell orders on CTV until execution of the partial call on this issue. This is BS. So much for the quick flip.

    1. That is standard procedure at TDA. When a partial call is announced, the symbol is locked/untradable. It happens once in a while and is a tad irritating, but how can the call be instituted properly if the holders start selling off their shares ? or their whole position ? Look at it from their point of view. Thanks

      1. The segregating of shares do not require preventing the ticker from being traded. It should be an overnight process after 8pm before 4 am while the market is closed separate out all the shares being called and leave the uncalled ones as freely tradeable.

    2. HankLA – Are you sure you mean CTV? Qwest Corporation, 6.875% Notes due 10/1/2054. That issue was called in entirety August 7th according to a June 30 CTL press release.

          1. No, CTV was subject to a full call and is no longer active.

            6/29 partial call, 8/7 full call.

  51. Anybody own XYF?
    It paid an $.08 dividend in April 2019 that my broker got wrong.
    They reported it as non-qualified, but it is qualified.

          1. It is a mixed breed to be sure. US ADR of a Cayman Island Co holding Chinese assets.

            The prospectus is fair. The company THINKS the distributions will be dividends under US tax law (as opposed to return of capital), but even that is qualified by the statement that the company doesn’t keep US tax books. There is nothing indicating that they expected them to be qualified.

            But considering the nature of the assets held I would think that if one could unravel the thing you would find the divis are indeed unqualified.

            I’ve been down this road several times before, with different securities and different brokers. Absent clear evidence brokerages won’t change the tax characterization of dividends. In most cases, the brokers actually depend on third parties to establish the tax character of distributions.

            This is not one I’d go to the mat over.

            1. The qualified status is based on the fact that it trades on a recognized securities exchange.
              The fact that they don’t follow US GAAP means they will not qualify for return of capital treatment.
              They hedge the qualified status like everybody else because besides the exchange or treaty test, there is a holding period test as well, which is obviously unique to each investor.

              1. Justin – REIT “dividends” and not qdi, partnership distributions are not qdi, BDCs distributions are not qdi, and so forth.

                Trading on a recognized US exchange is not the only test. The principal tests are the underlying nature of the distributions and the tax characteristic of the payer.

                I did not do a deep dive on this security but a quick look did suggest to me that the distributions would not be qdi, even if it were a US entity.

                But go for it if so inclined. But do the rest of us a solid and let us know the details and the outcome so we can learn from your experience.

                I’m planning a bit soon on my 3-month battle with Vanguard and JPM on dividend withholding.

    1. Tax treatment of foreign payments is often a crap shoot. In most cases I know what the tax treatment should be but it often gets reported incorrectly on monthly statements or (more importantly) 1099s.

      My experience is that sometimes the fix is readily made and other time (Schwab) it will never be done. These days, I won’t invest more than one phone call in the process. If the brokerage can’t or won’t make the change I move my business.

      Lastly, I do point out that brokerages will often report dividends as non-qualified if recently purchased and flip them to qualified later.

      1. This is what one financial website says about holding periods:

        “For preferred stock dividends to be qualified, you must own the shares for at least 90 days during the 181-day window starting 90 days before the ex-dividend date.” When I recently asked Fidelity why my dividends weren’t showing up as qualified the 2nd level service advisor said they are extremely strict about the holding period and over the course of the year I should see this change on my accounts.

  52. TIAA-CREF’s money market funds.
    Expect others to follow.

    In a notice to investors, TIAA said it plans to temporarily waive fees on a pair of money market funds. Because US interest rates have dropped to near zero, even the funds’ low fees would cause investors to lose money in those investments. TIAA added that it cannot renew the waiver after the end of 2020. What’s more, it said it could recoup those waived fees as soon as next year, if US interest rates rise far enough to provide a positive yield.

  53. Received a survey from Fidelity’s bond desk. Below is the message I placed in the comments section. Feel free to use and send to Fidelity:

    I trade a lot of preferreds. Fidelity makes us call the bond desk to trade many of these preferreds, mainly fixed to floating….which happen to be most of the new issues. It is stupefying to think that I can trade Bitcoin, triple inverse ETFs and penny stocks online, but can’t trade preferred stocks from major corporations!

  54. Marcus (Goldman Sachs) dropped their MM rate to 1.30%. No penalty CD is still 1.55% but I don’t expect that rate to last long. Or 1-year CD is 1.60% and you have 30 days to decide if you want to fund it or add money at that rate.

  55. I just posted a reply to Gridbird’s comment down a few posts and realized that there haven’t been any posts on this thread in a week.

    Anyway….anyone have any experience with trading at J.P. Morgan? My preference has always been for Fidelity because of their platform, easy to understand tax reporting and excellent cash sweep. But the sweep is now less attractive with rates around zero (although one can get .4% in FZDXX).

    Anyway, my big beef with Fidelity is their aversion to FTF preferreds. JP Morgan is offering a nice bonus to move money there. $725 for $250K+

    1. Retired, I transferred some money to TD last year and got a bonus…And forgot about it..Well until I was reminded on my brokerage forms I downloaded into Turbo. Looked at it, and thought, “What the hell is this”. Well they didnt forget, and Uncle Sam got his cut from it also.

    2. Are you talking about You Invest or their managed accounts? You Invest is a primitive platform, you can trade but you can’t do much else. And you won’t get as much price improvement either. I opened an account last year for the bonus and free trades, hardly worth it and now that everybody has free trades I don’t recommend it. One advantage is if you want premium checking you can use your brokerage balance as part of your required minimum.

      1. I had to look up “You Invest”…that must be what is being advertised. Thanks for the analysis. We often forget the benefit of price improvement.

        The only “managed account” I would consider is an index ETF.

      2. Can I ask about your experience with youinvest from JP Morgan? Are you able to read research from JP Morgan? I would love to have access to their research, but outside of youinvest don’t think that I will qualify for it. I tried calling them, the guy I spoke to did not seem to understand my question at all.

  56. i just saw this comment.
    Brokers monitor what they can through data feeds from vendors. There is no thinking or common sense at all behind it. The NYSE has reporting standards. The pink sheets do not. A typical broker has 300,000 securities on their books. it isn’t cost effective to review them all.

    Remember that the way you can tell if a security is delinquent on their filings is that the ticker symbol changes.

  57. Just wanted to ask you all who you use as your broker/dealer and if you are very happy with them. I use Schwab and will just say I have a boatload of money with them (all of my assets) but I find their service horrendous. Several times now just lately they have really dissapointed me greatly. So if you feel you get top notch service and great research plus new bond offerings without getting shut out of deals I would love to hear from you. THANK YOU.

  58. Merrill, blocked my access to my accounts for the 2nd time in 2 months. I sold some of my sock drawer issues to free up cash for investments. I did this in early March. A few weeks later they audited my trades and blocked my accounts because IPWLK is considered low price is what they said. After 3 days i talked to 3 people and they unlocked my accounts in Mid March. Yesterday they locked my accounts again because they did another audit (another auditor found the same transactions and froze my accounts again. This is day #2 and my accounts are frozen, and already talked to 2 people.

    No alerts, no communication, no phone calls, and they have auditors that are shutting off accounts with no communication. Better yet, they are auditing stuff that took place in 1st week of March. They have no guarantee a 3rd auditor will come along and shut my accounts off again for the trades that happened in March.

    After talking with a guy today.. they have securities on a special list. If you sell them (not buy them)… at some point in time in the next several weeks and auditor will find it and shut off your accounts.

    After the 2nd call today (my accounts are still frozen) they have apologized a dozen times, but said there is not a lot they can do. It is in the hands of auditing and they set the rules.

    So i have begun the process of transferring a few million dollars out of Merrill. I cant deal with this any longer. In my last conversation, I said, “can you guarantee me someone in May will not shut off my accounts for what happened in March.” The answer was no. So i asked, “did i violate any laws? Did i break any SEC rules?” The answer was no. We have policies that are in place that are not communicated to clients. We have auditors that follow those policies and act upon them

    Finally i asked, “why don’t you call me? Why dont i get an email? Why dont i get a text message when my accounts are disabled?” The answer was we dont have that capability. They wanted me to call them when i do a trade so they can help with this process. I said, “how can you help me with that? You are already helping me and it is day 2 and you cant unlock my accounts. Last time it took 1 week with me calling in every day.

    This is all recorded… and i thanked them for their time, and said, i will begin the process of liquidating my accounts.

    1. Mr. L thank you for sharing. What did they mean by the trades were low priced? I haven’t made a decision yet on which new broker to go with as I don’t want to add to my account with TD which is scheduled to merge with Schwab later this year.
      My fear is which broker is maybe a sitting time bomb. Please anyone don’t laugh, with all that is going on in the market what do we know about troubles behind the scenes maybe happening at them? just last week IBKR had a 88 million dollar loss when it had to make up losses that exceeded the value of some clients accounts. Believe me, they probably were not the only brokerage affected. There was talk last week of liquidating some oil ETF’s and closing them out.

      1. Charles, I asked 2 guys that same question. When they told me it was blocked due to a low price policy, i asked, “What is low price?” One of them didnt know what that was. Both of them acted like they didnt know what to do and hasn’t seen this before. The 2nd guy said, “Well i think it is because it is low price. So then i asked him, you think low price means penny stocks or cheap stocks? He said, “yes.” So i asked him to check on the price of IPWLK. He said, “umm.. it is $104. Then I asked him, do you think this is a cheap penny stock? Both of these guys are assigned to platinum accounts. After these 2 incidents… I am thinking platinum doesnt mean a thing at all.

        1. Mr. Lucky, Did you really slap them silly by showing them this “penny stock” is also IG rated too?

          1. My next comment was that this was a preferred stock and was issued over 20 years ago, so this is no fly by night shop, and the questions was: Do you know what a preferred stock is? The answer from one of them was: “I have heard of them.” I didn’t ask the other guy as he didnt seem to sure about anything. I think both of them are customer friendly, can speak on the phone, and that is probably why they have their jobs.

            1. Mr. Lucky, Its not surprising they only vaguely know what a preferred stock is. I have ran into a 4-5 retired brokers past 2-3 years on golf course and they had no understanding of them either. BTW, IPWLK has several equal standing preferred issues still trading that were issued in WW2 era. And never missed a payment.
              The problem is the suits confuse, pricing, volume, size, and trading market with a blanket policy. What they dont realize is many of these preferreds actually traded on the “Big Board” and then got subsequently delisted by company itself. Which is immaterial because all the financials are there just like any others because the holding companies report them as that is what the holding company really is in the first place.
              Here is an example of Ameren doing this in 2007 before subsequently delisting more after there other acquisitions were consummated.
              http://ameren.mediaroom.com/news-releases?item=404
              ST. LOUIS, Nov. 14 /PRNewswire-FirstCall/ — The boards of directors of two utility operating subsidiaries of Ameren Corporation (Ameren) (NYSE: AEE) today announced they are taking steps to voluntarily delist a total of five series of preferred stock from the New York Stock Exchange (NYSE).
              This action is due to the small number of shareholders and small volumes traded and allows Central Illinois Light Company (AmerenCILCO) and Union Electric Company (AmerenUE) to reduce administrative costs associated with continuing to list the preferred stock.
              AmerenCILCO and AmerenUE will continue to file periodic reports with the Securities and Exchange Commission on Form 10-K, 10-Q and 8-K after the delisting of all five series of preferred stock and the deregistration of AmerenCILCO’s 4.50% Series preferred stock.
              With assets of $20 billion, Ameren serves 2.4 million electric customers and one million natural gas customers in a 64,000-square-mile area of Missouri and Illinois.
              There is no way they can justify in any manner these should be flagged more than say PW-A which is NYSE a tiny preferred of under $4 million. And its financials are certainly not any more robust…And if you look at the pricing of today, it is more volatile than these are.
              But you cant fight city hall, and these problems will continue because of their own catch all lazy procedures.

              1. Gridbird…not surprised that the retired brokers you have met did not know much about preferreds. I was about the only one in my office who did much investing in them. And heck…even I had never heard of many of the obscure issues you know about.

                The new $25 par issues paid a commission of 50 cents a share, which was not bad….especially considering I could tell the client that my commission was paid by the offering firm.

                It’s strange….back in the 80s and 90s brokerages were churning out tons of new closed end fund offerings at $10 with *cough* cough* no commissions. The firms had contests with prizes for those that sold the most. Brokers loved to sell those….and when the brokers pulled the support a few months later…the fund dropped to NAV…then proceeded to drop to a discount to NAV…it was blamed on market action. But wait…there is a new closed end fund on offer….
                Fortunately this nonsense pretty much dried up after the 90s.

                And mine was a large well respected firm….Merrill Lynch!

                1. Retired, Im not so sure your old method wouldnt have been a bad one. You call me up in 1968 and say “I got a preferred IPO offering of CNTHP 6.56% par, do you want some?” Then I buy them, get the stock certificates, put them in the bank vault and forget about them. You just collect the dividends quarterly and give no other thought to it. As you wouldnt be worried about how they were trading because preferred stock prices in the daily newspaper were not shown anyways. In fact, I bet they rarely traded at all back then, being what they were and no real active conduit for trading at the retail level. It was just an annuity with some residual value for the next of kin if they want to figure out how to sell, ha.

                2. Though never really a student of preferreds back then, or now for that matter, I knew enough to wonder why anyone bought a new issue preferred…. To generalize, the preferred market almost always seems to trade at a discount to NAV as an asset class and by definition, a new issue preferred would be priced at a premium to NAV because of issuing costs… So, the day the new issuer collects his cash to invest on a $10 issue, he has no more than $9.97 to put to work for the shareholders. So Day 1, you pay $10 and NAV is $9.97 and the market place has the tendency to value that NAV at a further discount once it begins trading…. So, if the fund looked interesting, it seemed always to make more sense to wait to buy it in the secondary. Those little contests must have worked well, RB! lol. One could almost always make the argument against buying new issue CEFs I make vs buying annuities in that I’ve always believed annuities, when they’re issued, are sold, not bought, only in the case of annuities, they’re never completely understandable by anybody anywhere at any time. lol

                  1. 2WR,

                    I think your post confuses preferreds and closed end funds. Substitute “closed end fund” for “preferred” in your first three mentions of preferred and you have it correct.

                    And it’s even worse than your think…funds were issued with a 3% premium to NAV, so the starting NAV was $9.70…not $9.97.

                    1. Not worse than I think, worse than I write! Thanks for pointing out my morning fog on both points. Yup, 3% and yup CEF, not preferred. Hopefully I’ve now exceeded my daily dose of DUHs!

                    2. 2WR, That stuff never ends despite how little or hard we try…I just noticed a comment I wrote in another forum. My word use intended was “accept”, but I wrote “except”…Really? Well nuttin I can do about it now, except look stupid…..

                    3. There knot gonna sea it sew don’t waist won idol our letting it way on you.

        2. To put some context around this.
          It isn’t “low price” per se.
          It is related to investments where data or liquidity is lacking. (which mostly happens among thinly traded pink sheets, and stocks below $3.00), hence the name.
          I don’t think it was auditing. It was likely compliance that flagged them. I don’t know about Merrill, but at other firms, there is an indicator on your account (related to suitability, and sophistication) that will allow these trades to go through, if you qualify for it.
          They are (and rightly so) trying to prevent lawsuits over investment losses.
          The problem is that these preferreds get lumped in with all the pump and dump stocks because to a compliance system, they have most of the same hallmarks. However, that being said, they don’t have ALL of the same hallmarks and could be easily flagged to avoid being picked up. (e.g. having an IPO in 1963 is one of them)

          1. Justin, having dealt with this as a consumer, its their lazy no brained reliance on catch all screening tools when the slightest bit of common sense could override this. One 10 second cursory look at the 10 year stock trading price and credit rating would give them an “oops” moment…I know what your saying but this saving from lawsuits is flimsy when many of same outfits allow 2x leveraged notes, CBL, and JCP stock and debt notes to be freely traded. They try to create a screening tool to solve the problem and it doesnt satisfy on either spectrum.

            1. Grid- that isn’t a fair comparison given the circumstances. None of your examples are low float, low avg daily volume that could be prone to pump and dump schemes that pop up in otc symbols which compliance is trying to avoid. From a customer point of view its frustrating, but from a compliance point of view I get what they’re attempting to do. That being said, there needs to be processes in place to whitelist securities and if escalating enough doesn’t solve it, probably time to find a new broker. Personally, I think there needs to be new rules & regs around suitability, sophistication and how the whole accredited investor qualification works.

              1. MCG, Risk is just as prevalent and in fact more looking at the charts of those liquid dirtbag stocks losing 90% of their value than tradeable issues being around upwards of 75 years plus and NEVER approaching those losses. That being said, I fully understand what your saying…But you havent dealt with losing appeals to transfer securities of these types…I got the online reps on my side and my local broker calling and supporting me…As they actually took the time to listen and agreed with me.
                But “The Suits” ,which are the downfall for many corps, denied the appeal anyways..And dont say its all about consistency..Because on appeal they did allow AILLL to be moved, but that was because it was the only stranded asset left in my Roth transfer. So that decision had nothing to do with quality control, but just “throwing me a bone”. Nothing else from 2 other taxable accounts…And yes IPWLK was a culprit here too. But also my CNIGO and half dozen or so others from regulated utilities with regulated and SEC filings.
                And the irony of it all is they will let me buy these “easily manipulated stocks”
                from their brokerage account….But transfer them? No that is too risky allowing these types to be transferred. What hypocrisy.

          2. Hi Justin, I could have posted hours of transcripts. Yes, I pointed out to them that “low price,” probably means low trading volume. Not sure they agreed with me, but said, “Hmmmm.” Their repeating phrases were more like, “I’ll check into that.”

            Yes, they repeated “auditor” and “audits” several times, so it was auditing. And that is what auditors do. They ensure compliance with policies that are in practice. Again, he said the auditors are looking at records that have taken place. They also said multiple times… “the auditors have their ways of doing things, and they can’t do anything about it.”

            I also asked each one of them, “How can we prevent this? What form can I sign? What can be done to my account so that it shows I know what I am doing? ” I also showed them that I bought at 101, and was selling at 104, and that lead into questions around what was I doing wrong.

            I am not sure what these guys know. They probably know something. But I am not so sure they 2 could fight their way out of a wet paper sack on the phone calls I was on.

            My advice for anyone, is that if you have a job, you should make it a goal to understand all the aspects of your job. You get passes for a jr member, and or new hires, but make it a goal to learn. Every time you run into a situation, a word, a rule, or anything in your job you do not understand… make it a task/goal to understand everything about that.

        3. Lucky,
          The only consistency with ML is that there is no consistency. The higher I climbed in the ranks of service tiers, the worse the ‘service’ got. Can’t go any higher than I am now and their reps usually are not at all helpful and if you call 3 of them, you’ll likely get at least 5 conflicting answers to the most basic questions.

          There is a form that you can sign and you will be given less hassle when trading certain illiquids. It has to be signed/renewed on a yearly basis – last I knew. You’ll still occasionally be banned from buying IPO stuff until days after it’s available for purchase at many other brokers and occasionally you’ll be allowed to hold something you already own but not be allowed to buy any additional shares. Sounds like you are already familiar with some or all of this.

          They really don’t care if you take your $ and leave, they really don’t. It makes no sense. I thought they were the best folks ever, up until about 2 years ago when MAJOR changes began to happen. My understanding is that they are being repeatedly sued by increasing numbers of investors who can’t own up to their own stupidity and therefore, want ML to compensate them for their ignorance. I only stayed for the free trades, but since that is now a moot point, there is little holding my accounts there.

          BTW, I echo what Justin says. Low priced has nothing to do with the actual $ amount of the security. It has to do with where it is bought (OTC, non NYSE boards, etc), the lack of IG ratings, and the $ amount of the offering. If I recall correctly, low priced was defined by a lack of IG ratings and a sub $300mm offering size at IPO… But ML may have changed that set of definitions. I’m just relaying what I have gathered from numerous Platinum rep calls over the last year or so.

          1. A4I,
            I was holding NRT for a while and followed it for years. I knew the seasonal ups and downs and somewhat the market for this stock. I felt comfortable with the trust having low overhead costs, long term existence (40 / 50 yrs )
            and majority owned by a church in New York state. TD let me buy it and yes trade it. I was contacted on SA by another reader who implied it was a perfect for buy and sell trades being low cost and low volume.
            As I saw the value destruction happening in gas commodities, the regulation in Germany, Nord 2 and LING tankers I got out.
            It had a lot of the indicators of what you say ML would flag a account for, yet TD let me own and trade it.
            On the other hand I have owned well known companies, with large trading volumes that I was taken to the cleaners on. I have also received letters asking me to join class action lawsuits by ambulance chasers. If there was no overt crime, I figure I only have myself to blame.

            1. It has one big indicator. An NYSE listing.
              It trades on the NYSE, which has strict disclosure requirements. Those preferreds do not.
              No broker would ever block an NYSE listed security that was compliant with filings.

              1. But see that is where they are screwing up..IPWLK does have strict reporting standards. They are issued right along with AES the holding company. They are screwing up and thinking this to be a small stand alone issue when it is not.

          2. A4I – I have concluded that being in the “platinum” group, by whatever it is known at your brokerage, gets you one thing: your calls are answered faster. The people you get are no better; they can’t or won’t do any more for you; and good f%#*$@! luck getting them to change a decision, much less a policy.

            I have gone through hour-long calls through 4-5 layers of personnel, to no avail. I don’t have time for that. Walter Wriston famously said many years ago that capital goes to where it is treated best. While he had much bigger things in mind I apply the same concept to where I do my brokerage business. I will be closing out Schwab as soon as my time permits and I will be moving some of my Vanguard holdings to greener pastures.

    2. Mr Lucky,
      Take a look at Consumer Reports on line about ML. Take the complaints with a grain of salt, but two takeaways I got was people complained how difficult Merrill made it to move a account. One person mentioned getting sent the wrong paperwork 3 times and another said they took past the 60 days allowed to transfer a 401K then sent a check instead of direct transfer to new broker so they ended up paying taxes.
      The other thing I noticed, was it seemed if a dividend came in after the account was moved they didn’t tell the former customer until they sent them a monthly statement there was still money in the account and by then they might of even charged a maintenance fee.
      What I got from this was probably have a new account funded and set up with new broker and then if possible move the assets that don’t have payments coming up so they don’t get left behind.
      I am just speculating, not having had this experience before, maybe a few other people could tell us their experiences.

    3. This strikes me as strange. Merrill always had “protections” in place to limit the buying of gray market or low price issues…..but you were selling!
      Can’t explain that…..

      1. Retired Broker. That was one of the many questions I had for them they could not explain as well. I asked, “So I am allowed to buy these, but I can’t sell what I have purchased? So why let me buy in the first place then? Again no answers other than, “I’ll check into that.” All they could tell me was that auditors have flagged the “sell,” and not the buy.

        1. Oh, no they flagged the buy as well, and are probably self-disclosing it to the SRO (FINRA) as a newly discovered compliance risk related to suitability risk based on your account profile.
          For whatever reason, you are tripping up the suitability screens. Did you fill them out correctly as to income, investing length, sophistication, portfolio goal? If you filled it out as conservative investing goal with low risk, those illiquid preferreds are going to light up the compliance screens like a Christmas tree.

          1. I suspect Justin is correct here. Mr. Lucky, I don’t know if ML has this like Fidelity does – but I would go online and pull up your account risk profile and ensure your portfolio goal / objective is set to Most Aggressive. Also make sure your investing sophistication is extensive.

            Some of these flags are set based on your answers

          2. Also, the Reps couch their answers in different terms based on your investing profile.
            There is a huge difference between a retired grandmother and a retired grandmother who ran a quant hedge fund..

    4. ML, thanks for sharing your experience with Merrill and the ongoing dilemma of trying to sell ‘low price’ equities in your account. I think it might be worth while for everyone to contact their brokerage preemptively and ask them to identify any holding that would be subject to such an audit and what the proper procedure would be for selling it.

    5. Lucky,
      I just queried Merrill about some of the issues you mentioned. Got multiple loads of HS from them. They rep said auditing doesn’t freeze anything. They are only concerned with free ride trades or people who don’t periodically check in with Merrill and update their phone numbers and email addresses. He said if your website access does get disabled, you just call them and they turn it back on after discussing the issue. I explained that’s not how it apparently goes, based on what you said. He said your information was largely false. He said they won’t restrict your account for trading illiquid securities or for buying higher risk low volume securities. I called BS on much of what he said. Bottom line for him was that if you have trouble selling something online, just call in. But don’t blame the auditing. Uggh…

  59. Fidelity and the Partial Call on OXLCO : Does anyone know what proper procedure SHOULD be for allotment of called shares on this one? Fidelity allotted for call only 1/3 of the amount of shares I owned prior to the announcement of the call on 2/11. I had none of the shares I bot after 2/11 called. The call notice (http://ir.oxfordlanecapital.com/file/Index?KeyFile=402748408) says, “The Shares will be redeemed from each holder of the Shares pro rata based upon the number of outstanding Shares held by such holder.” It does NOT state anything about it being based on the amount of shares owned at any time prior to the call date, so I am thinking Fidelity may have handled this incorrectly… Naturally, they stonewall and say they did it right, period, and will not give me even a name of someone in charge or documentation of why they think this is right. Is anyone here in the same boat either at Fidelity or elsewhere where shares you bot AFTER 2/11 have (or have not) been called as per the 1/3 ratio? I have a call in to IR at Oxford to see what they say.

    1. There is a record date for when the call is effective. (I don’t know what it is since I wasn’t involved) So I’d think fido handled this correctly.

      1. mcg – My point was that there is no record date mentioned in the press release, so why would a shareholder believe there is one at any date right up to the call date? Granted my comparison is for a whole call, not a partial, but today, OCSLL was called. I received proceeds including accrued for shares bot even just 3 days ago…. Why should OXLCO have been treated differently and if for a legitimate reason, how was a shareholder supposed to know based on the documentation announcing the call or any other official document I could find??? Oh, BTW, two calls to IR @ OXLC today went unreturned…. or should I say 2 calls to supposed “IR.”

        1. aThey don’t have to mention it in the press release. The only thing that matters is the “notice of redemption” that the company issues to the depository and agent. the press release is a courtesy notification, not an official document with all the terms and conditions.

          The partial redemption mechanism involves a record date which establishes which shares should be segregated

    2. 1/3 of my shares with Fido were segregated upon call and I don’t think they were tradeable. I’m thinking the shares you bought were part of the 2/3 which were not called, because I don’t think the 1/3 portion were liquid. You get to keep 2/3 of your original holdings and all of the shares you bought after 2/11.

      Am I answering your question?

      1. Bruce – Thanks for the effort, but no. I got 13.5% of the shares I owned called when the pro-rata call was 33%. Statistically, that’s not possible… It does have something to do having no percentage of the shares bot after 2/11 being subject to call according to Fidelity. I am trying to determine whether or not that’s the proper way or if it’s a mistake on Fidelity’s part and if it’s proper, I’m seeking documentation as to why it should be proper as there’s no direction as such in OXLC’s press release regarding the partial call.

  60. Just a heads up that Schwab will no longer let you trade CBKPP (CoBank – Series F). I own 100 shares that were recently purchased through Schwab and tried to enter an order today and it was not accepted. They told me that only qualified institutional buyers would be able to trade going forward. They told me that I’d still be able to hold it in my account.

  61. I snagged some uepeo this morning at 103.35. I think that’s good for a 110 callable.
    But I wondered, vanguard seems to be sometimes letting me place orders without having the cash already in the account. Does anyone know the limitations of this benefit? Td doesn’t let me do that.

    1. Irish, Yes they do up to a certain amount…I dont know the number or percentage because I havent pushed it. I have had 50k out there before. But you have to know ahead of time what you are willing to flip ahead of time, or push cash into account to cover before market close…And dont sell an issue you just bought yesterday as those funds havent cleared. You will get a nasty email, and potential loss of privelage.
      TD, you need to set up a margin account to buy with no cash.

  62. I just wanted to report back that Fidelity accepted my shares of IPWLO and a few of my Canadian holdings from Schwab. I’ll probably proceed with transferring the rest of my illiquid and Canadian holdings to Fidelity. Just so everyone is aware, I believe there is a $50 commission per trade for Canadians with Fidelity. I’m planning to hold my Canadians so I can live with this. I can’t live with the incorrect tax classification thought at Schwab.

    It costs $25 to transfer out of Schwab. Fidelity tell me that they don’t charge to transfer out.

    1. Tex – thanks for the report. Were there any Canadian issues that Fido would not take and if so which one?

      1. I did a smaller batch in to Fido initially. They took everything. I’m planning to do the rest soon. I’ll report back if they reject anything. Based on my conversations with them (take that for what it’s worth), it sounds like they’ll take everything I’ve got.

  63. I just received my Corrected 1099 from Schwab. They changed SLMNP to qualified, but left ALP-Q and EBBNF as non-qualified. I am not really sure how EBBNF should be classified, but it seems like ALP-Q should be qualified. I’ll next see what documentation I can find in the prospectus and send that to them.

    1. My corrected 1099 is now showing IPWLO as qualified. The Canadians are still all jacked up and wrong. I spoke with client advocacy late last week and they were adamant that IPWLO and SLMNP were non-qualified. Investing is hard enough without having to battle this.

  64. I’m not sure if this was already posted but I received a corrected 1099 from Schwab today and SLMNP has been changed from non-QDI to QDI. Yay!

    1. Great news and thanks for the heads up! Just looked at my Feb 21 corrected 1099 and SLMNP was changed to QDI 🙂

      Unfortunately they also “corrected” Enbridge EBBNF to non-qual lol 🙁 Hopefully TNT will set them straight on that.

      Kudos to TNT, Tex and others who have been fighting the good fight on this!

  65. Vanguard agreed to correct NiSource to qualified.

    Schwab just phoned. While I received no confirmation, its issues are being evaluated/discussed. I was promised tomorrow a definitive on the CAN QDI issues.

    1. Thanks for the update TNT! You’re doing God’s work. I’ll keep my fingers crossed that you get a good outcome.

      I was dealing with Schwab’s client advocacy team last week and getting absolutely nowhere. They weren’t open to any of the points I was making. Even when I brought up the fact that the common stock dividends were qualified but the preferred was non-qualified, they shrugged it off. It was incredibly frustrating.

      If there’s any way I can help, please let me know.

    2. TNT – I have four Vanguard accounts holding NiSource and today I got corrected 1099s for all, switching NiSource to QDI.

      Here’s hoping Schwab can figure it out for the Canadian preferred.

  66. I’m going to attempt to transfer some of my OTC holdings out of Schwab due to the QDI classification issues. I’m trying to figure out which broker would be a better alternative for Canadian OTC/illiquid preferreds (SLMNP, IPWLO, etc.). Has anyone had experience holding any of these type of issues through Fidelity? If so, how has the tax reporting been?

    I already have a Fidelity account so that’s why I’m asking about them. I’d be open to others though.

    – TD wouldn’t seem to make sense since Schwab is in the process of acquiriing
    – Vanguard would seem to be off the table since they seem to have an aversion to OTC issues

    I think that leaves me with Ally, Etrade, Interactive Brokers and Fidelity to consider.

    1. Tex – do let us know what you find out.

      But scratch IBKR off the list for OTC as they don’t do OTC. But often an issue that trades OTC can be bought as a bond using a CUSIP. You have to try them one at a time.

    2. Tex, Ally would sell your left elbow if it had a ticker symbol. But they do not allow Canadian reset trades, and all pink sheet buys have to be under 10k per order. But you can call in a bigger order or do multiple sub 10k orders

    3. Fidelity doesn’t allow online trades for floating rate issues. They’re one of the best for what you can do there so you might consider opening two accounts.
      I still have an Etrade account which I don’t trade as much, mostly holds. Nothing wrong with them, maybe a little klunky to navigate their website if you’re used to something else.
      I briefly had an Ally account. Too many glitches with preferred stock trades. Since that’s what I do, I closed the account.

      1. Martin, they are clumsy at best, but outside of not allowing resets or the 10k limit they do a good job of trading anything. And they are somehow good on IPOs. Several times I had to buy there before VG or TD had access yet.
        But very wonky at times. More than once I showed a $0.00 balance and values disappear. I quit worrying as it always straightened out. I called once on it and they said they had back ups that had everything and it was fine. They were proved correct more than once, ha.

        1. I wonder about RBC Dain Rauscher, since they have a Canadian parent. Don’t know if they have online trading, though; everyone must these days?

  67. Schwab Qualified CAN Dividend Issue.

    Spoke today briefly with Orlando management, which third partied in cost basis team. Cost basis team was adamant that Schwab is correct. The Schwab system characterizes dividends through three means: 1. expected status, 2. received status, 3. corporate notification of status.

    The “Paid/Adjusted in 2020 for 2019” reflects Schwabs’ system initially recorded the dividends as qualified. Then corporate notices were received which altered the status to non-qualified.

    I told my Schwab representative, I did not believe the cost basis department had received any such documents. The lady representing cost basis became quite defensive.

    My representative tomorrow will reach out to each of the corporations which I have securities “paid-adjusted” to ask for definitive confirmation that the underlying corporation actually sent to Schwab a notice to change from qualified to non-qualified.

    I hold a few but not the totality mentioned here on the ILL site. Perhaps, all affected parties asking for confirmation from Schwab on the corporation’s notification to change the status of the dividends would be prudent.

    I have incurred damages with Schwab on a totally different matter and negotiations are ongoing. Schwab’s current offer to reimburse, while not what I would wish, I will probably accept. The emotion toil and time is overwhelming dealing with Schwab’s errors. And, they are reimbursing my accounting and legal fees.

    The only reason I was able to get these folks on the phone over the CAN dividend issue is this ongoing matter with Schwab.

    I hope this helps and I will post the results from Schwab when it provides me the documentation.

      1. Justin – the company in question is a REIT and for that reason I agree that the QDI issue is a question mark. Would be the same for a Canadian partnership.

        But Canadian preferred issues are almost 100% corporations, and in those cases it is not a matter of dispute. Schwab may not get it (yet) but in the case of a corporate issuer there is no legitimate question on QDI treatment of common or preferred dividends.

  68. Schwab has mischaracterized DCP’s preferred distributions again this year. DCP is a MLP. Having a MLP preferred distribution characterized as a non-qualified dividend means double taxation of the distribution as it is correctly reported on the K-1 and incorrectly reported on the 1099-div..

    Last year they characterized a DCP-B distribution as a non-qualified dividend on the 1099-div. It took multiple calls to get to a Schwab representative to take this issue seriously. I called DCP investor relations and their legal department so maybe they advised Schwab of their error. Finally Schwab contacted me and confirmed the DCP-B distribution was not a non-qualified dividend, it took them till April 5th to issue a corrected 1099-div.

    This year Schwab has issued a 1099-div with the first quarter DCP-C distribution as a non-qualified dividend while the remaining three quarters distributions are correctly characterized as MLP distributions.

    I am sure this will take multiple calls to get corrected, again.

      1. Ugh–I hate this. I have been with eTrade for 25 years and hate to see that relationship disturbed.

        1. Tim, you may find it beneficial. Morgan Stanley actually underwrites issues, and you may be able to actually get in on the good ones at issue price IPO. I have a friend who has them. He actually got to buy for example all the SR-A he wanted at $25. If memory serves we were getting our first shot at $25.50.

          1. Grid–hope that is the case–I worked for Morgan Stanley in a previous life–not a good experience, but it was many, many years ago.

      2. Ameritrade and Etrade both bite the dust soon after the race to zero commission. Was that the final straw?

        1. and more website problems at Fidelity. support staff budget cuts for the same reason?
          I couldn’t submit trade tickets this morning.

          1. Martin–just submitted the same order 4 times and each time it didn’t take the order and logged me out of the account.

    1. Schwab seems to have more of a problem on characterizing distributions than other brokerages and they seem to dig their heels in on their mistakes.

      I hear a lot of good things about Schwab but this problem needs a long term fix. Not one issue at a time, one investor at a time.

      Nice to know I opened a branch office in Thailand.

    2. My belief is that an MLP distribution is properly non-QDI as there is not normal taxation at the MPL level – it is a pass-through, tax-preferenced investment vehicle like a REIT so the income is taxed as ordinary income for an individual investor.

      1. Distributions from an MLP should not be reported as non-QDI. The dividends are not ordinary income. The distributions are tax free until they are in excess of your tax basis.

  69. I talked to someone in Schwab’s tax team today about EBBNF, SLMNP and ALP-Q being shown as non-qualified on my 1099. The person I talked to said these would only be changed if they receive instructions from the companies to change the classification. He said that EBBNF was originally shown as qualified but they received notice from Enbridge that the dividends should be non-qualified. Could that be right?
    He didn’t seem very familiar with the issue so I will probably try to talk to someone different after I get my corrected 1099 and see if anything is changed..

    1. No, he’s wrong. There are a bunch of people on this board who are raising this issue with Schwab. I find it very difficult to believe that Schwab has received instructions from the issuer to treat the dividends as non-qualified, rather it is a system glitch of some type. Waiting for response to all the information sent in relative to a list of Canadian preferreds qualifying for QDI tax treatment.

  70. My 1099 from Vanguard did not report the NiSource NIPRB dividend as qualified. I have owned it since 11-2018. I called them and they acknowledged the error and agreed to issue a correction. For what it is worth, you may want to check your VG 1099 for a similar issue.

  71. Best brokerage for fixed income investor for execution & cash/dividend management? Currently I have E*trade/Fidelity/Schwab accounts and all of them have something useful but none of them are complete.

    I like E*trade for their income estimator but OTC trades still cost $4.95. Also their link to full banking very useful.

    I like Fidelity for their gov’t cash sweep and free OTC trades. But it has a $50 foreign transaction fee for OTC.

    Is there somewhere better I need to try?

  72. I have accounts at both Vanguard and Etrade and both are IRAs so how they handle QDI is not an issue for me. But for my purposes day to day usability is most important, and I find that Etrade has a faster website (Vanguard webpages always seem to load very slowly) and a much better interface. For example, on the Order page on Etrade, the Bid/Ask is displayed next to each order. On Vanguard it is not, so I have to click on each individual stock on my Order page to get that info and wait for that page to load. Additionally, the stock info and charts on Vanguard is limited and basic. Both standard Etrade and Power Etrade platforms provide much more useful info. Vanguard is in dire need of an update to their platform. That said, Vanguard offers a sweep into their VMFXX money market which typically pays at the high end of the MM range (currently 1.5%) Etrade cannot sweep into a MM so I have to make a manual trade of excess cash into the MM (I am however able to use VMFXX at Etrade) which doesn’t settle until the end of the day. So in order to have cash available for trades I have to keep some cash in their non-interest bearing sweep account.
    This last issue is why I still keep my largest account with Vanguard.

    1. 2Chinooks- I’ve heard Vanguard has the least convenient UI.
      On VMFXX, Fidelity has a 1.5% gov’t sweep SPAXX and is the main reason I migrated retirement accounts to Fidelity. E *trade, I have to just bucket things back and forth between the premium banking account which has a ~1.5 interest only for taxable accounts.

      I’ve also noticed execution prices are slightly better than Fidelity.

  73. For anyone who will be contacting Schwab about QDI classification of Canadians and OTC traded illiquids, I thought the following may be helpful to cite in your discussions/correspondence. Please see the following excerpts from IRS Publication 17 (https://www.irs.gov/publications/p17#en_US_2018_publink1000171596).
    ===============================================================
    “Qualified Dividends

    Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. They should be shown in box 1b of the Form 1099-DIV you receive.
    The maximum rate of tax on qualified dividends is the following.
    • 0% on any amount that otherwise would be taxed at a 10% or 15% rate.
    • 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 37%.
    • 20% on any amount that otherwise would be taxed at a 37% rate.

    To qualify for the maximum rate, all of the following requirements must be met.
    • The dividends must have been paid by a U.S. corporation or a qualified foreign corporation. (See Qualified foreign corporation , later.)
    • The dividends aren’t of the type listed later under Dividends that aren’t qualified dividends , later.
    • You meet the holding period (discussed next).

    Qualified foreign corporation.

    A foreign corporation is a qualified foreign corporation if it meets any of the following conditions.
    1. The corporation is incorporated in a U.S. possession.
    2. The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Department of the Treasury determines is satisfactory for this purpose and that includes an exchange of information program. For a list of those treaties, see Table 8-1.
    3. The corporation doesn’t meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. See Readily tradable stock , later.
    Readily tradable stock.

    Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement 3 under Qualified foreign corporation , earlier, if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. For a list of the exchanges that meet these requirements, see http://www.sec.gov/divisions/marketreg/mrexchanges.shtml.”

    Table 8-1 lists Canada as a country that the US has a treaty with.
    ===============================================================
    “Dividends that aren’t qualified dividends.

    The following dividends aren’t qualified dividends. They aren’t qualified dividends even if they are shown in box 1b of Form 1099-DIV.
    • Capital gain distributions.
    • Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U.S. building and loan associations, U.S. savings and loan associations, federal savings and loan associations, and similar financial institutions. (Report these amounts as interest income.)
    • Dividends from a corporation that is a tax-exempt organization or farmer’s cooperative during the corporation’s tax year in which the dividends were paid or during the corporation’s previous tax year.
    • Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation.
    • Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property.
    • Payments in lieu of dividends, but only if you know or have reason to know the payments aren’t qualified dividends.
    • Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments aren’t qualified dividends.”
    ===============================================================
    To summarize, if you received a dividend from a Canadian preferred stock that is traded OTC (pink or grey), this company should appear to be considered a qualified foreign corporation due to the US/Canada tax treaty. The OTC aspect should be irrelevant due to the US/Canada treaty. If you received a dividend from an illiquid utility stock that is traded OTC (pink or grey), the dividend should be qualified since it is paid by a U.S. corporation.

    Just a word of warning about changing the qualified treatment on your tax return. As most of you already know, your 1099 gets reported to the IRS and they can very easily and automatically compare the 1099 to your 1040 and see that you changed the dividend income to qualified. This can result in a notice or audit. You could receive a notice saying you own additional tax as well as penalties and interest. Is dealing with an IRS notice or audit something that anyone really wants? Would you have to hire representation (attorney/CPA) and how much would that cost?

    I think it makes sense to fight this pretty hard with Schwab and try to get them to issue amended 1099s. At a minimum, they should have to explain how they are arriving at their conclusions that these dividends are non-qualified.

    1. Also, see below for the Internal Revenue Code that defines qualified dividend income. This would be cited as IRC Sec. 1(h)(11). Here is a link: https://irc.bloombergtax.com/public/uscode/doc/irc/section_1

      (11)Dividends taxed as net capital gain
      (A)In general
      For purposes of this subsection, the term “net capital gain” means net capital gain (determined without regard to this paragraph) increased by qualified dividend income.

      (B)Qualified dividend income
      For purposes of this paragraph—
      (i)In general
      The term “qualified dividend income” means dividends received during the taxable year from—
      (I)domestic corporations, and
      (II)qualified foreign corporations.
      (ii)Certain dividends excluded
      Such term shall not include—
      (I)any dividend from a corporation which for the taxable year of the corporation in which the distribution is made, or the preceding taxable year, is a corporation exempt from tax under section 501 or 521,
      (II)any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.), and
      (III)any dividend described in section 404(k).
      (iii)Coordination with section 246(c)Such term shall not include any dividend on any share of stock—
      (I)with respect to which the holding period requirements of section 246(c) are not met (determined by substituting in section 246(c) “60 days” for “45 days” each place it appears and by substituting “121-day period” for “91-day period”), or
      (II)to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property.

      (C)Qualified foreign corporations
      (i)In general
      Except as otherwise provided in this paragraph, the term “qualified foreign corporation” means any foreign corporation if—
      (I)such corporation is incorporated in a possession of the United States, or
      (II)such corporation is eligible for benefits of a comprehensive income tax treaty with the United States which the Secretary determines is satisfactory for purposes of this paragraph and which includes an exchange of information program.
      (ii)Dividends on stock readily tradable on United States securities market
      A foreign corporation not otherwise treated as a qualified foreign corporation under clause (i) shall be so treated with respect to any dividend paid by such corporation if the stock with respect to which such dividend is paid is readily tradable on an established securities market in the United States.

      (iii)Exclusion of dividends of certain foreign corporations
      Such term shall not include—
      (I)any foreign corporation which for the taxable year of the corporation in which the dividend was paid, or the preceding taxable year, is a passive foreign investment company (as defined in section 1297), and
      (II)any corporation which first becomes a surrogate foreign corporation (as defined in section 7874(a)(2)(B)) after the date of the enactment of this subclause, other than a foreign corporation which is treated as a domestic corporation under section 7874(b).
      (iv)Coordination with foreign tax credit limitation
      Rules similar to the rules of section 904(b)(2)(B) shall apply with respect to the dividend rate differential under this paragraph.

      (D)Special rules
      (i)Amounts taken into account as investment income
      Qualified dividend income shall not include any amount which the taxpayer takes into account as investment income under section 163(d)(4)(B).

      (ii)Extraordinary dividends
      If a taxpayer to whom this section applies receives, with respect to any share of stock, qualified dividend income from 1 or more dividends which are extraordinary dividends (within the meaning of section 1059(c)), any loss on the sale or exchange of such share shall, to the extent of such dividends, be treated as long-term capital loss.

      (iii)Treatment of dividends from regulated investment companies and real estate investment trusts
      A dividend received from a regulated investment company or a real estate investment trust shall be subject to the limitations prescribed in sections 854 and 857.

    2. I emailed Schwab’s CEO previously about another issue I was having. Here is his email address: walt.bettinger@schwab.com. I received a manager in the client advocacy group a couple days later.

      Here is the contact for a manager at Schwab’s client advocacy team in case anyone would like to reach out and try to get clarification on how they are determining QDI status on illiquids and Canadians. It would be great if you could report back on what you learn:

      I may be reached Monday-Friday at 1-800-468-3774, extension 48768, between the hours of 11:30 AM and 8:00 PM Eastern or; via email me at clientadvocacyteam@schwab.com.

      Sincerely,

      Dawnn Lone
      Resolution Manager | Client Advocacy Team
      1-800-468-3774 / Fax 1-800-977-0122
      211 Main St
      Mail Stop: PHXPEAK
      San Francisco, CA 94105

    3. Bob, you are a 100% correct getting it corrected at the source is the most prudent manner. But if they dont I would correct the error. One could send a note along.
      Your concern is warranted though, but a clarification notice could be sent. Its not the end of the world.
      Each year, the IRS sends millions of notices and letters to taxpayers for a variety of reasons. Here are ten things to know in case one shows up in your mailbox.
      Don’t panic. You often only need to respond to take care of a notice.
      https://www.irs.gov/newsroom/ten-things-to-know-about-irs-notices-and-letters
      One has the legal right to claim a legal deduction. Remember it works the opposite way also. Brokerage mistakes dont absolve tax payer from their tax obligations either.

  74. Brokers and Cdn preferred based on 2019 1099s and current order entry…

    Vanguard gets the QDI right on the few issues I hold there but will not allow new orders.

    TDA gets the QDI right on the few issues I hold there and will accept new orders on the 3 OTC tickers I tried. 1 without commission and 2 with commission of 6.95.

    Schwab gets the QDI wrong on each of the small number of issues I hold there. They accepted orders on the 3 OTC tickers attempted with zero commission.

    IBKR says they will be releasing the 1099s on Tuesday the 18th. You can buy any issue you like using TSX tickers and orders are executed on the TSX. No OTC orders allowed. CA$1.00 commission per 100 shares traded.

    1. Thank you Bob,
      I haven’t held anything at any broker other than my 401K at TD. I opened a account with Schwab but never funded it. My wife has her 401k at work with T Rowe Price and she received a bonus that is held with Morgan Stanley.
      I have contemplated matching her investment at MS and starting a diversification plan as she is 100% in her company stock

      What has been your experience with IBKR?
      Both Canadian and Australian markets seem heavily weighted to mining / commodities stocks. But with the recent wild fires in Australia, I think building stocks will benefit from the reconstruction.