TD Ameritrade CLOSES down all NZ accounts

[Toukshare]

Thanks everyone for contributing.

I am currently doing my own research as well, and am very tempted by Firstrade offering. It specifically says on a review website that New Zealand is included in their list of accepted foreign jurisdictions, with no US social security number of Tax ID required (just like what I had with TD Ameritrade every time they asked to fill in the W-8BEN).
I typically do a few trades every week (stock-only, long or short) and make very little on each trade, so $0 on stock and options trade is very attractive.
They seem to do the basics: stocks (long and short), ETFs and options, extended hour trading, NYSE and NASDAQ. They don't do futures, future options and forex, but neither do I.
So in other words, a basic platform that is very cheap.

[Relaxed]

I'm going to keep looking for a week or so, there is no rush. so if I find anything else I'll post it here.

Interactive Brokers keeps coming to the top if the lists I am finding, although I agree. it 's not free like TDA is. but it is cheap (especially compared to ASB)
Having said that, nothing is actually free, but I always put limit orders on and then I always get my price or better.

anyway, Investopedia has some great reviews of all these brokers
https://www.investopedia.com/interac...review-4587904
https://www.investopedia.com/firstrade-review-4587898
https://www.investopedia.com/tradest...review-4587927

[SBQ]

and this NZ review is good reading

https://www.moneyhub.co.nz/interacti...html#pros_cons

There are no real IB disadvantages as the complexities are there for good reasons ; so the investor is not mislead. The NZ offerings like Sharesies / Hatch / etc are not really transparent in terms of order flow and execution of trades. Furthermore being NZ based, FIF kicks in so easily where as in the US, brokers there are not bound by CRS and will not disclose client information to international tax depts around the world. It is not likely the US will join the CRS that most countries around the world have adopted. But like all tax matters, in NZ financial advisors and online reviews rarely mention the tax implication such as the US estate death tax on holdings by foreign residents.

I have just sent a note to the FMA asking...

"Will you please give TD Ameritrade any exemptions required to allow NZ residents to hold and operate a TDA account?"

This is a waste of time and the FMA has made no exceptions. The regulation for a foreign based broker to comply with the FMA would be quite extensive. I strongly suspect the 3 brokers mentioned above that do serve NZ clients, are doing so illegally in the eyes of the FMA. They have a large team of lawyers where America is a nation that does not typically bend over changing rules to suit regulations in another country. It's an issue of sovereignty so if the FMA were to really rob the financial freedom of NZ residents, they would have to do so through the IRD way; but the reality is IRD has limited powers in terms of forcing foreign banks to divulge client information.

Personally the writing is on the wall when the FMA came out and wealthy investors will structure their investments accordingly. Such as a guy like Larry Page (ex-Google founder) would have a well establish trust that will remain away from the hands of IRD, and being a US citizen, his trust's first tax obligation would be to the IRS (not to mention FACTA would still apply).

I would be interested to hear from others that are in the process of having their account closed and looking to open up an account with any of the 3 above.

[Relaxed]

This is a waste of time and the FMA has made no exceptions.

I agree but being an optimist I thought it can't hurt to point out that TDA complies with all US regulations and ask that the FMA recognise this.

[JBmurc]

Yes PLUS500 lifted margins on CFD/Forex 10% margin now needed from 1% ... all because I live in NZ !!!

[FTG]

Yes PLUS500 lifted margins on CFD/Forex 10% margin now needed from 1% ... all because I live in NZ !!!

Perhaps another small sign that the "mine operators know that the methane levels in the mine are quietly but steadily increasing".

By the way folks, increases on margin requirements is ubiquitous; certainly not just occurring in NZ at the moment.


Globally, leveraged investment levels are now at ATH's, and alarmingly that goes for BOTH Instos and retail. Call/put ratios on US equities are also at unprecedented levels.

For me the now environment & quiet chatter feels & sounds very similar to 2007. But this time it's on steroids!

The US insto's in the know are still feasting while the party is raging, but they are also desperately trying to further bomb blast protect their Balance Sheets. One would think all the learnings from GFC would mean something. But alas not really, "smoke & mirrors" still prevail, and the same fundamental rules of sound economic & money management are being broken. The question that is quietly being asked amongst the "big boys" is "who is really holding the can"? I wouldn't be surprised at all if FMA reg's could just be a convenient excuse for an operator like TD A (read Charles Schwab) to close down NZ domiciled investor accounts. The accounts probably won't be profitable for them anyway, especially when considering the elevated risk of losing equity and with NZ being a tiny & far removed jurisdiction.

Minimising operating expenditure for traders is an understandable priority, so naturally there is a persistent drive to keep brokerage as low as possible.
However I would suggest, especially during these extraordinary times, an even higher priority should be the preservation of your capital. If & when the bubble bursts, and all the other traders (but not us of course!) are on the wrong side of the trade, massive unwinding of positions occurs. A HUGE deleveraging event.

Then, believe me, brokerage rates one is being charged is the absolute last thing on one's mind!

There has been mention of IB. IB has done very well over the last decade. IB has grown the business exponentially. IB is a now big global player.
But a good litmus test question to ask yourself, as with any brokerage/intermediary (esp' one based overseas) you may have a relationship with, is if IB (and/or their counterparties) "got into some difficulty" , can you afford to lose the funds (and if leveraged, even more!) you have invested?

[Relaxed]

There has been mention of IB. IB has done very well over the last decade. IB has grown the business exponentially. IB is a now big global player.
But a good litmus test question to ask yourself, as with any brokerage/intermediary (esp' one based overseas) you may have a relationship with, is if IB (and their counter-parties) "got into some difficulty" , can you afford to lose the funds (and if leveraged, even more!) you have invested?

from the moneyhub review linked above - will need to check the actual wording.

What happens to my funds if Interactive Brokers goes bust?

Client money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of clients of Interactive Brokers. By properly segregating the client's assets, if no money or stock is borrowed and no futures positions are held by the client, then the client's assets are available to be returned to the client in the event of a default by or bankruptcy of the broker.

[SBQ]

Perhaps another small sign that the "mine operators know that the methane levels in the mine are quietly but steadily increasing".

By the way folks, increases on margin requirements is ubiquitous; certainly not just occurring in NZ at the moment.


Globally, leveraged investment levels are now at ATH's, and alarmingly that goes for BOTH Instos and retail. Call/put ratios on US equities are also at unprecedented levels.

For me the now environment & quiet chatter feels & sounds very similar to 2007. But this time it's on steroids!

The US insto's in the know are still feasting while the party is raging, but they are also desperately trying to further bomb blast protect their Balance Sheets. One would think all the learnings from GFC would mean something. But alas not really, "smoke & mirrors" still prevail, and the same fundamental rules of sound economic & money management are being broken. The question that is quietly being asked amongst the "big boys" is "who is really holding the can"? I wouldn't be surprised at all if FMA reg's could just be a convenient excuse for an operator like TD A (read Charles Schwab) to close down NZ domiciled investor accounts. The accounts probably won't be profitable for them anyway, especially when considering the elevated risk of losing equity and with NZ being a tiny & far removed jurisdiction.

Minimising operating expenditure for traders is an understandable priority, so naturally there is a persistent drive to keep brokerage as low as possible.
However I would suggest, especially during these extraordinary times, an even higher priority should be the preservation of your capital. If & when the bubble bursts, and all the other traders (but not us of course!) are on the wrong side of the trade, massive unwinding of positions occurs. A HUGE deleveraging event.

Then, believe me, brokerage rates one is being charged is the absolute last thing on one's mind!

There has been mention of IB. IB has done very well over the last decade. IB has grown the business exponentially. IB is a now big global player.
But a good litmus test question to ask yourself, as with any brokerage/intermediary (esp' one based overseas) you may have a relationship with, is if IB (and their counter-parties) "got into some difficulty" , can you afford to lose the funds (and if leveraged, even more!) you have invested?

There's a saying, "One's loss is another's gain" and that's what exactly has happened with IB. I saw this happen after 911 when brokerage firms had stopped opening new accounts by foreigners in the area of anti-$-laundering laws that fund terrorism. IB saw a niche market and simply had scooped up. All what TDAm / Schwab will do is turn these customers away to their competitors. Some of these clients are HNW individuals, otherwise how else would IB grow to much? I'm quite certain it was not in TDAm doing to close off NZ clients (as they are doing it for those living in other countries); this was a move by Charles Schwab where New Zealand was not on their list of countries they accepted.

The FMA has exasperated this problem. It's only a matter of time how long will the 3 brokerage firms I mentioned above will hold out? Remember, these brokers are ignoring the requests by the FMA by allowing NZ accounts holders access to their services (services specifically what the FMA does not want - in the area of options / derivatives and FX).

IB is the largest of the 3 by a long shot and it's important to stress that we are not talking about cryptocurrency exchanges that go bust and all the funds vaporise. The FMA is clear in scaring NZ residents not to hold funds abroad citing of this kind of risk - but fails to make the distinction that major brokerage firms like IB is not remotely in the same category as Binance crypto-exchange (which does not have a physical presence in any country, no HQ, and therefore no jurisdiction for a customer to make claims on). We are talking major brokerage firms operating in the US that have FDIC cash depository insurance + SIPC asset protection up to $150M per account in the case where the brokerage firm goes bust. This is simply protection that even all the banks in NZ don't even offer. So it's very clear the FMA has a different agenda by using scare mongering tactics without fully advising the 'real' situation. It's more to do with the fact that once the funds are abroad, there is little that the FMA and IRD can do about it when trying to investigate those account holders. Namely because the US is not part of the CRS.

In terms of whether investors lose money from day trading or not, that is more to do with 'investor beware'. If a person chooses to lose $ at the casino, that's their own fault. The well knowledged investor knows about capital preservation and if you follow along the likes of famous investors like Warren Buffet, there should be little risk of losing significant amounts of money. And speaking about Mr Buffet, he's a major fan of low cost index ETFs for the common investor. But what we have in NZ, is to use a NZ based brokerage account ; you will be paying high levels of management fees and admin costs and monthly fees... you name it, which all goes against Buffet's view that you will lose out on future compound returns (ie annual FIF & RWT).

[FTG]

Client money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of clients of Interactive Brokers. By properly segregating the client's assets, if no money or stock is borrowed and no futures positions are held by the client, then the client's assets are available to be returned to the client in the event of a default by or bankruptcy of the broker.

Yes, in orderly market conditions, that'swhat's meant to happen. Just be aware though that during "unwinding of leverage" events, a lot of the boats fall with the tide. The system also gets totally clogged up with investigation, inquiry, finger-pointing, ducking & diving etc. Every man for himself really. Hence, even the non-leveraged folk can wait years to get some monies back.

The MF Global/Man Financial saga a decade ago is an example of what can & does go wrong.

[SBQ]

Yes, in orderly market conditions, that'swhat's meant to happen. Just be aware though that during "unwinding of leverage" events, a lot of the boats fall with the tide. The system also gets totally clogged up with investigation, inquiry, finger-pointing, ducking & diving etc. Every man for himself really. Hence, even the non-leveraged folk can wait years to get some monies back.

The MF Global/Man Financial saga a decade ago is an example of what can & does go wrong.

Again, I highly doubt this is the case. When you look at what happened during the GFC, how many of client $ from brokerage firms that went bust were lost? Lehman Bros? Wachovia Bank? If I recall correctly some 50 banking companies (mostly all small community banks) in America went bust but all those that had FDIC insurance protection did not have clients losing their $. You didn't see a bank run like we are seeing in Afghanistan. But in terms of brokerage firms, SIPC goes the extra coverage in protecting the assets (the share investments). We need to ask what do NZ brokerage firms offer in terms of investment protection in the case of broker insolvency? Keep in mind, with SIPC you are not insuring against market volatility so at the peak of the crisis, most of the stocks are at lowest levels, including managed funds, etc. If there's an element of fraud in a managed fund that causes the fund price to crash - well that's the fault of the investment firm and not the broker (a la investor beware). There are countless of cases in NZ where investors have lost their shirt (ie Hanover Finance) and though they may not be under a regulatory of what the FMA would like to say, the fact is there's a big difference between losing the investment by owning the shares (or bonds) of a company vs losing the assets held by the brokerage firm that goes bust. We can easily compare how many people have lost their money in crypto-exchanges around the word but that would be a horse of a different colour.