Interactive Brokers has asked the European clients to migrate their accounts to its subsidiary in Hungary. Interactive Brokers Headquarters is in Connecticut and the new subsidiary is called the Interactive Brokerage Central Europe Zrt (IBCE).
The brokerage is sending emails to its clients across Eastern Europe seeking their approval on the migration. They want them to move their accounts from the UK-regulated broker to Interactive Brokers (UK) Limited (IBUK) to Hungary’s subsidiary.
The multinational broker detailed that the upcoming Brexit transition period expiry forced the move.
According to the email, clients’ relationship with IBUK utilized the financial services passport. The passport allows the provision of services across Europe.
UBUK’s passport rights will expire at the end of the year; therefore, IBRK plans to do business with its clients through the European entity as of 1 January 2021.
The broker is willing to migrate clients from IBUK and European services by its US affiliate Interactive Brokers LLC (IBLLC) to the Hungarian subsidiary. That’s according to its FAQs page.
Though the broker has set a date for the transfer, it earlier mentioned that the migration might occur earlier in mid-December – which has passed.
Retaining European Clients
The brokerage established the Hungarian subsidiary and opened the Budapest office earlier this month.
However, it’s not clear if the brokerage sent such emails to all its clients in the European Union (EU) or only traders in East Europe. It’s also good to note that the brokerage has a physical presence in Luxembourg too.
The broker proposed its plan to transfer client accounts from IBUK to IBCE. Client accounts include all positions such as securities, cash, and contracts.
The intention is that once clients transfer accounts, IBCE will provide all investments and services. For convenience, they will refer to it as “Proposed Transfer.”
If clients migrate their accounts, they will lose the compensation scheme the UK financial market regulator offers. But the accounts will come under the purview of the Central Bank of Hungary.