Interactive brokers seems quite expensive, doesn't offer trading on swap, and has quite a few other downsides. I doubt that it's used by many serious institutional customers.
Your statement here is just empirically false.
> There are no hedge fund managers I respect who don’t run their personal accounts on IB.
This thread is about institutional customers rather than personal accounts.
I know at least one former hedge fund manager who ran a high 10 figure hedge fund whose personal account is not at IBKR. I respect him a lot.
> I see many hedge funds -especially smaller ones - going with IB as a prime solution.
Are they cost sensitive? The fact that you have hedge fund structure set up does not mean that you are cost sensitive.
What makes you think they are expensive? Trading US stocks is like $1 per trade and interest rates are benchmark + 1.5%.
I would agree with this, but I'm not sure that this is a meaningful universe for comparison.
It's also quite different from the original claim with which I disagreed.
> use a professional broker such as Interactive Brokers, which institutional clients use
I'm sure that there are some institutional customers who use IBKR, but it's probably not many and they're probably not very cost sensitive.
This is also why I added so many qualifiers to my disagreement. You can open an LLC and be an institutional customer in a certain sense, but it doesn't mean that you're cost sensitive and trying to cut your costs to the bare minimum.
I assume you mean "trading on margin". Swaps are custom contracts and not something average people are doing. IB definitely supports trading on margin and has one of the lowest rates around to do so.
IB is definitely the choice for someone who wants to have real market access and tools at their fingertips.
I meant swaps specifically. I know that they offer margin trading.
However you will be charged at least $10 per month regardless of transactions, unless you have >$100k with them.
Or were you saying specifically their swaps are expensive?
This is on top of the other downsides that I mentioned.
It would be fine if the financing terms were worse, but everything else was better as long as your total costs are lower.