FAQs: Account Migration from IB LLC to IBSJ

Overview:

This is an important document regarding the proposed transfer of your account from Interactive Brokers LLC (“IB LLC”) to Interactive Brokers Securities Japan, Inc. (“IBSJ”) that requires your attention. In the coming weeks, we will send you an invitation to transfer your account to IB LLC (“Invitation”). Please read the entirety of this document before deciding whether to accept or decline the Invitation.

Background:

This FAQ document summarizes some of the key changes to the regulatory framework which will be brought about by the Proposed Transfer (as described below) and provides answers to some general questions that you may have. If you require any further information, please contact us via the details provided in the Invitation.

This FAQ is split into four parts.

  • Part A sets out key information in relation to the Proposed Transfer.

  • Part B covers key legal and regulatory topics related to the Proposed Transfer.

  • Part C describes the product and account offerings available following the Proposed Transfer.

  • Part D aims to answer any other questions that you may have and provides some further and more practical information in relation to what will and will not be changing following the Proposed Transfer.

PART A – THE PROPOSED TRANSFER

1. What is the situation currently and why are things changing?

Interactive Brokers Securities Japan, Inc. (“IBSJ”) was granted authorization by the Kanto Local Finance Bureau to operate as a Japanese securities firm in October 2005. At that time, we attempted to leverage the strength of Interactive Brokers Group (and its ability to provide clients access to global markets) by offering an account structure that would allow clients to access markets worldwide as well as the Japanese market, all through a single domestic account. In the course of establishing this structure, we realized our goal to provide access to overseas markets from a single domestic account would entail a degree of complexity due to differences in settlement in non-JPY currencies and Japanese domestic regulations. Therefore, we implemented an account structure to offer overseas (non-Japanese domesticated) products through IBSJ’s affiliated broker-dealer based in the U.S., Interactive Brokers LLC (“IB LLC”), intermediated by IBSJ, while offering Japanese domestic products through an IBSJ account.

IBSJ is now modifying this approach and will begin providing access to Japanese and Global markets directly, through a single IBSJ account. As a result, IB LLC will no longer provide services to Japanese retail clients.

 

2. What “changes” will clients experience?

The business that you currently conduct with IB LLC will instead be conducted through IBSJ. In other words, the accounts, investments and services currently provided to you by IB LLC will instead be provided by IBSJ (for convenience we will refer to this as the “Proposed Transfer”).

 

3. When will the Proposed Transfer occur?

The Proposed Transfer is expected to begin shortly after 07 July 2025. We will share additional details about the timeline in the coming weeks and notify you again just before your account is transferred.

 

4. Who is IBSJ? What type of firm is it?

IBSJ is a Japanese online securities broker which is regulated by Kanto Local Finance Bureau under the

Registration No.187 for its financial business and regulated by Ministry of Economy, Trade and Industry (METI) / Ministry of Agriculture, Forestry and Fisheries (MAFF) for its commodity derivative business.

 

5. What are IBSJ’s legal details?

IBSJ is registered as a private company limited by shares and is listed in the Register of Companies maintained by Tokyo legal affairs bureau. Its registered address is Kasumigaseki Building 25F, 2-5 Kasumigaseki 3-Chose, Chiyoda-ku, Tokyo, 100-6025 Japan.

IBSJ’s website is available here.

 

6. Who will regulate IBSJ and where are their details?

As set out above, Kanto Local Finance Bureau (KLFB) is the competent financial business regulator for IBSJ while Ministry of Economy, Trade and Industry (METI) / Ministry of Agriculture, Forestry and Fisheries (MAFF) are the regulators for IBSJ’s commodity derivative business. IBSJ is also a member of Japan Securities Dealers Association (JSDA) and the Commodity Futures Association of Japan (CFAJ).

The details for the regulator and the self-regulatory organizations above are set out in the links below:

 

7. Where does IBSJ fit in the broader Interactive Brokers group?

IBSJ is a wholly-owned subsidiary that sits within the broader Interactive Brokers Group.

 

8. What does the Proposed Transfer mean for me? Will there be any material impacts?

It is very important that you read these FAQs carefully and make sure that you understand what the changes will be for you. Part C provides more details on the products IBSJ offers clients.

 

9. What do I have to do if I want to continue doing business with Interactive Brokers?

We will contact you in the coming weeks with an invitation to transfer your account to IBSJ. The Invitation will provide specific details on the actions you must take to successfully complete your account transfer and to continue doing business with Interactive Brokers.

To be clear, you do not have to agree to the Proposed Transfer. However, if you decide to decline or do nothing, IB LLC will not be able to keep servicing your account after the proposed account transfer period. After that, your IB LLC account may be restricted, and your account may be forced closed.

 

PART B – LEGAL AND REGULATORY CHANGES THAT YOU SHOULD BE AWARE OF

1. What terms and conditions will govern my relationship with IBSJ following the Proposed Transfer? Are these different to the ones that currently apply?

Trades that you conduct after the Proposed Transfer will be governed by the new Customer Agreement between you and IBSJ, which we will make available to you. Please see the response to Question A3 above in relation to the timing for the Proposed Transfer.

 

2. What conduct of business rules (including best execution) will apply to my relationship with IBSJ?

The U.S. conduct of business rules apply to IB LLC accounts. These rules are based on the regulations and rules set by the U.S. Securities and Exchange Commissions (“SEC”) and other U.S. regulators.

The IBSJ account will be subject to Japan conduct of business rules, which include regulations and rules set by Financial Service Agency (“FSA”), Japan Securities Dealers Association (“JSDA”) and the Commodity Futures Association of Japan (“CFAJ”).

 

3. How will investments that I custody with IBSJ be held from a legal/regulatory perspective? Are there any material differences that will apply to my agreement with IBSJ compared to those that apply to my existing agreement with IB LLC?

U.S. law and regulations regarding custody of securities and customer funds apply to your accounts with IB LLC. These include rules set by the U.S. Securities & Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”). The US custody rules require that any cash and fully-paid securities held by IB LLC on your behalf must be held segregated from the assets of IB LLC.

Going forward, Japan custody rules will apply to your agreement with IBSJ. Similar to the U.S. custody rules, the Japan conduct of business rules are based on the regulations on segregation of customers assets set by Financial Instruments and Exchange Act (further explain below in Question B4).

 

4. How am I protected against loss? Are there any material differences that will apply to my relationship with IBSJ compared to those that apply to my existing relationship with IB LLC?

IBSJ’s compensation scheme is different from the compensation scheme you have access to at IB LLC.

Currently, your eligible assets are protected from loss under the U.S. Securities Investor Protection Corporation at an amount of up to USD 500,000 (subject to a cash sublimit of USD 250,000).

After the Proposed Transfer, in the unlikely event of IBSJ’s failure, a certain amount of money is protected by the Japan Investor Protection Fund. The investor protection mechanism is as follows:

(1) Segregated custody by securities firms

When investors trade financial instruments (stocks or other securities), they entrust their assets such as money and financial instruments to a securities firm. If the securities firm keeps the assets entrusted by the customer separate from the securities firm's own assets, thecustomer's assets will be returned to the customer even if the securities firm fails.

This practice of keeping assets entrusted by customers separate from the securities firm's own assets is called segregated custody. This concept is central to investor protection, and segregated custody is required of all securities companies under the Financial Instruments and Exchange Law.

(2) Japan Investor Protection Fund

Under this segregated custody system, even if a securities firm files for bankruptcy protection, the assets entrusted by customers will be returned to them in full. However, for instances where the securities firm is unable to smoothly return the full amount for any reason, a compensation system is in place through the Japan Investor Protection Fund, which provides compensation up to 10 million yen per customer.

However, as explained in section (1) above, the Japan Investor Protection Fund regulation serves to prevent such a situation from occurring because the assets entrusted by customers will be returned to them if they are kept in the segregated custody of securities companies.

Please note that the Japan Investor Protection Fund (similar to the US rules) does not compensate for losses incurred by clients due to a drop in the market value of securities.

 

5. How do I make a complaint to IBSJ? Are there any material differences that will apply to my agreement with IBSJ compared to those that apply with IB LLC? What if my complaint relates to something that dates to when I was a customer of IB LLC?

The new Customer Agreement will set out how to file a complaint with IBSJ. The complaints handling procedures are materially similar to those that apply to your existing agreement with IB LLC. If the substance of your complaint relates to something that occurred prior to the Proposed Transfer, then you should address your complaint to IB LLC.

 

6. After the Proposed Transfer, will I still have access to the US regulators to file a complaint?

In case of a complaint, clients should follow the complaints procedure referred to in the Customer Agreement. Once your account is transferred to IBSJ, the US regulators will cease to have jurisdiction over any complaints you may have regarding IB LLC. Japan has a dispute resolution process in the form of the Financial Instruments Mediation Assistance Center (FINMAC), a non-profit organization, to resolve complaints and disputes between customers and IBSJ regarding covered issues. Please refer to the following link for the details of FINMAC. https://www.finmac.or.jp/english/

 

7. How will my personal data be processed and protected? Are there any material differences that will apply to my agreement with IBSJ compared to those that apply to my existing agreement with IB LLC in this context?

Your data will be processed and protected in accordance with the IBSJ Privacy Policy. which can be found here. There will be no material change to how your data is protected now.

 

PART C – PRODUCT AND ACCOUNT OFFERINGS

1. Will the range of products offered be the same?

The range of products offered by IBSJ will not be the same as what is currently offered at IB LLC. IBSJ will offer:

• Fully-paid trading in overseas (non-Japanese domesticated) stocks, ETFs and exchange listed bonds that can be offered in Japan;

• The Japanese domestic listed stocks and derivatives and some Japanese yen-denominated overseas derivatives that IBSJ has historically offered;

• Trading of CFD shares on Japanese, US, and global stocks; and

• Margin trading of most US-listed stocks, most Japan-listed stocks, and global derivatives.

All unsupported holdings in your IB LLC account need to be closed out before your account can transfer to IBSJ. If you hold any product other than those stated above, please take the time to close out such positions before the Proposed Transfer to allow for a smooth transfer of your account and to avoid any account restrictions.

In addition, IBSJ will provide the following programs:

• Stock Yield Enhancement Program (SYEP);

• Gaika+ (a program that pays you a portion of the proceeds from a daily swap of your non-Yen unencumbered cash into and out of yen every day); and

• Discount on your borrow rate based upon the size of your borrow (margin short) positions and the overall Net Asset Value (NAV) of your entire portfolio.

More information on these programs is provided below.

 

2. What currencies are supported at IBSJ?

IBSJ will support a limited number of deposit currencies. The following four deposit currencies, the "Allowed Deposit Currencies"' are JPY, EUR, USD and GBP.

Clients with multi-currency or margin accounts can make deposits in, and withdraw positive balances held in their account, of any Allowed Deposit Currencies.

Multi-currency cash accounts may hold long currency balances in all available IBKR global currencies, including currencies that are not Allowed Deposit Currencies. IBSJ will automatically flatten any short currency balances in multi-currency cash accounts by converting from a long currency balance available in the account. Margin accounts will not be impacted.

Margin accounts may hold long and short currency balances in all available IBKR global currencies, including currencies that are not Allowed Deposit Currencies. Short currency balances may potentially incur debit interest charges.

 

3. Will interest still be paid on my credit cash balances?

No. Japanese regulations do not allow Japanese brokers (such as IBSJ) to pay credit interest to their clients.

 

4. What is the Foreign Currency Benefit Program (Gaika+)?

IBSJ will offer a new benefit program to you, the Foreign Currency Benefit Program (Gaika+). If you choose to enroll, IBSJ will share with you a portion of the return from converting foreign currencies in your account to Japanese Yen (JPY), a conversion required by Japanese regulation to support non-JPY cash holdings in your account. This benefit will be calculated and paid daily based on the benefit-eligible, non-JPY currency balances in your account, and market exchange rates for JPY.

 

5. What is the IBSJ stock borrow fee rebate?

Selling securities short in your IBSJ account will subject you to stock borrow fees. If you have significant positive cash balances in your account from selling securities short, IBSJ will issue you a rebate on the associated stock borrow fees in your account, based upon the size of those balances.

 

6. Will the Stock Yield Enhancement Program (fully-paid stock lending) be available at IBSJ?

Yes, clients of IBSJ will also be able to enroll in IBSJ’s Stock Yield Enhancement Program under terms similar to the ones that IB LLC offers to you.

 

7. Are the margin requirements the same at IBSJ as they are at IB LLC?

No. The Japanese regulations that govern margin (that IBSJ must adhere to) have set higher margin requirements than what is required in the US. As a result, a margin account at IBSJ generally cannot take on as much leverage as a similar account at IB LLC could and initial and maintenance margin requirements at IBSJ will be higher.

 

8. What types of products can be traded on margin at IBSJ?

In accordance with Japanese regulations, IBSJ will only offer margin trading in the following products:

• Most listed US stocks

• Most listed Japanese stocks

• Global derivatives

Stocks listed on non-US or non-Japanese exchanges will not be tradeable on margin. Many of these stocks can still be traded as cash stocks or CFDs.

 

9. Can I continue to have a Portfolio Margin account at IBSJ?

No. Japanese regulations do not contain the concept of Portfolio Margin. As such, IBSJ cannot offer Portfolio Margin and its standard margin requirements will apply to all margin accounts.

 

10. What are short sale margin related currency conversions?

Japanese regulations require that only JPY be used as cash collateral to meet margin requirements for short sales of Japanese stocks. For US stock short sales, only JPY and USD are accepted as valid cash collateral.

If your account holds a short position and the margin is being covered by long currency balances other than JPY or USD, IBSJ will automatically convert these non-JPY/USD currencies into either JPY or USD to ensure your account remains compliant with the Japanese regulations regarding acceptable margin collateral currencies.

 

PART D – OTHER PRACTICAL QUESTIONS

1. Who should I contact before the Proposed Transfer takes place and after the Proposed Transfer if I have any general questions?

Generally speaking, you should contact IB LLC with any questions that you may have prior to the Proposed Transfer, and you should contact IBSJ with any questions that you may have after the Proposed Transfer takes place. Regardless of who you contact at Interactive Brokers, we will ensure your query is promptly dealt with and we will make best efforts to expediate any issues related to the account migration.

 

2. What happens if I accept the Invitation to transfer my account and I already have an account at IBSJ?

If your IB LLC account is a cash account, and you have an existing cash account with IBSJ, the assets in your IB LLC account will be transferred to your IBSJ upon the Proposed Transfer taking place. If you do not have an IBSJ account, we will create a new cash account for you.

If your IB LLC account is a margin account, and you have an existing cash account with IBSJ, it must be changed to a margin account in order to accept the assets from your IB LLC account. To do this, you will have to accept the additional agreements IBSJ requires to offer margin trading to your upgraded account. Once you complete the necessary steps, the assets in your IB LLC account will be transferred to your IBSJ account after the Proposed Transfer takes place.

If you do not have an IBSJ account, we will create a new margin account for you.

 

3. Will I have access to the same trading platform or be subject to any software changes following the transfer of my account?

The migration will have no impact upon the software you use to trade or administer your account. IB LLC and IBSJ clients offer the same technology for clients to manage their accounts.

 

4. Will all account balances be transferred at the same time?

All balances, with the exception of accruals (e.g., interest, dividends) will be transferred at the same time. Once accruals have been posted to cash, they will automatically be swept to the transferred account.

 

5. What will happen to my current account following the transfer of my account to IBSJ?

Once all accruals have been swept, your current IB LLC account will be closed and inaccessible for trading purposes. You will still be able to access this closed account via the Client Portal for purposes of viewing and printing archived activity and tax statements.

 

6. Will IBSJ’s commissions and fees change when my account is transferred?

No. IBSJ commissions and fees do not vary from the ones charged by IB LLC for your current account. However, since IBSJ is a Japanese securities broker, Japanese consumption tax will be added to all fees.

 

7. Will my trading permissions change when my account is transferred?

Your trading permissions will not change when your account is transferred for products that are supported by IBSJ. Unsupported trading permissions by IBSJ will not migrate to the IBSJ account.

 

8. Will open orders (e.g., Good-til-Canceled) be carried over when my account is migrated?

Open orders will not be carried over to the new account. You must resubmit any orders when your account is migrated.

 

9. Will I receive a single, combined annual activity statement at year end?

You will receive an annual statement for your existing IB LLC account which will cover the period starting 1 January 2025 through the date of transfer and a second annual statement for your new account at IBSJ which will cover the period starting from the migration date through the end of the year ending December 2025.

 

10. Will the current cost basis of positions be carried over when my account is migrated?

Yes, this migration will have no impact upon the cost basis of your positions.

 

11. Will the migrated account retain the same configuration as the current account?

The configuration of the account following migration will match that of the current account to the extent permissible by regulation. This includes attributes such as market data, additional users, and alerts.

 

12. Will my login credentials change?

No. Your username, password, and any 2-factor authentication process in place for your existing account will remain active following migration. If you have an existing IBSJ account, your account number will not change. If you do not have an IBSJ account and we create a new one for you, you will receive a new account ID.