My MB Trading MBTrading Online Brokerage Review
MB Trading is an online discount stock and option broker that provides investors as well as traders with direct trading access to the NASDAQ, AMEX, NYSE, FOREX, futures, and options markets. MB Trading is also known for MBTX, its proprietary routing system. MB Trading provides users with instant trade executions at low commission rates of $4.95 per trade. Investors and traders can use various type of trading platform such as web based, desktop software and direct access trading platform. MB Trading also keeps improving on the technological front with frequent updates and new features for their MBT Desktop and MB Desktop Pro system. It also supports mobile trading app platform for smart phones, Iphone and Blackberry.
History & SIPC
MB Trading was founded in 1999. The current headquarter is based in El Segundo, California, USA. According to MB Trading’s website, MB trading was created because the management team sensed a growing frustration among active online traders of traditional web-based brokers. Several reasons include delays in trade executions, frequent system failures, and poor customer support for most brokerage services. To provide better service, MB Trading put together a company that offers high-end technology products encompassing low-cost commissions, fast executions, and unmatched customer service.
As a member of the Securities Investor Protection Corporation (SIPC), funds are available to meet customer claims up to $500,000 per account, including a maximum of $100,000 for cash portion. MB Trading uses Penson Financial Services Inc to hold its client assets. Penson Financial Services In is also a member of FINRA and SIPC and is well known as a clearing and executing company. To protect additional losses, Penson has purchased an additional insurance policy through a group of London Underwriters to supplement SIPC protection. This additional insurance policy will provide additional protection cash up to an aggregate of $600 million. This additional insurance policy is limited to a combined return to any customer from a Trustee, SIPC and London Underwriters of $150 million, including cash of up to $2.15 million.
The following is the commission structure of MB Trading Brokerage:
- Products: Stocks, ETF, CEF, Canadian stocks, futures, options, bonds, mutual funds
- Market Orders: $4.95 / trade
- Limit Orders: $4.95 / trade
- Mutual Funds: $12.95 for no-load funds
- Options: $0.95/contract
- Bonds: $12.95 / trade
- Forex: $2.95 per 100,000 USD traded
- Futures: $0.95/contract + exchange fee
- Pink Sheets & OTC BB: $8.95 per trade
- Minimum to Open: $1000; $2000 for margin account
- Inactivity Fee: $0.00
- IRA Maintenance Fee: $30 / year
- IRA Closing Fee: $20
- Nasdaq Level II: $10 per month or $0 (10 trades)
- Some Other Fees: DTC Out: $25.00. ACAT Out: $50.00.
- Maximum Margin Rate: Proprietary rate posted on their site.
Opening an account or Registration
Opening account is straight forward; you just need to fill the online application through MB Trading website. You can open various account types such as individual, joint, and Business. There is no support for Individual Retirement Accounts (IRA) either traditional or Roth. For individual account, they may require you to submit driver license copy either by fax or regular mail. You need to fill the web based application form online. Then, you will need to print and mail in or fax the application form. This manual process definitely a hassle compare to other online brokerage. If you fax your account, it will take 1-2 days to receive the welcoming email from MB Trading. Once you are done, you’ll need to wait for their approval. Then, you can setup how you want to fund your account.
As many typical online brokerages account, there are 4 different ways to fund your MB Trading account.
- Wire Transfer – usually can be done same business day
- Mailing a check will take 5 business days. For unverified account, check will subject to 10 days holding. You will need to write the 8 digit MB Trading account number in the memo field of the check. The check should be made payable to Penson Financial Services.
- Electronic Transfer (ACH transfer) will take up to 2-3 business days. To set up the ACH transfer, you will need to fill in the ACH form for approval. Once approved, you can do transfer from MB trading website.
- Transfer an account from other brokers .This will take more than 10 business days
For International or Foreign investor or non US resident, you will need to print the application and fill the form manually. There is no online support for this time. After filling the application form, you will need to mail in the form with your identification. You will need to submit W-8Ben and ID or Passport along with your application through regular mail or fax. The minimum balance to open an account is $5,000 for cash account. For International accounts that wish to trade uncovered puts, the security deposit will be an additional $10,000.
Both free and paid cash management services are offered for account holder, including checking account. Incoming and outgoing ACH are provided as well. There is also option for stock dividend reinvestment.
Minimum Deposits - MB Trading requires a
minimum deposit to open an account, it varies by account type. For a cash
account (stocks, options) the minimum is $1,000, margin accounts (stocks,
options, futures) need a $2,000 minimum deposit, and for an IRA account
(stocks, options) the minimum is only $500.
Trading Commissions and Fees
For stocks trades, MB Trading offers two different commissions’
structures for stocks similar to Interactive Brokers: a flat rate setup and a
tiered offering. Both commission structure and all subsequent fees are broken
Flat-fee trading stock commissions is also known as the MBTR plan. The MBTR plan offers both market and limit orders at any share price for $4.95 per trade up to 10,000 shares. If trader buys stock online, a 100 shares purchase of a $50 stock would cost $4.95 per trade, and a 5,000 shares purchase of a $100 stock would cost $4.95 as well. There are additional fees however for trading during pre (before 9:30 AM EST) and post (after 4:00 PM EST) market hours, if trading more than 10,000 shares, or if placing any of the following specialty order types: Discretionary, Reserve, or Pegged. This additional fee is $.005 per share on top of the base commission rate of $4.95.
The other trading commission is tiered stock commissions. This commission is known as the MBTX plan. This plan is designed for more active traders seeking better executions for their trades. Stock trades placed under this plan are $0.0075 per share with a $4.95 minimum per trade. It should also be noted that the same additional fee of $.005 per share is charged if trading during pre (before 9:30 AM EST) and post (after 4:00 PM EST) market hours, if trading more than 10,000 shares, or if placing any of the following specialty order types: Reserve, Discretionary, or Pegged. If trader trade stock or ETF or CEF, 100 shares purchase of a $50 stock would cost $4.95 per trade. While trading 5,000 shares, it will cost trader a commission fee of $37.50 per trade. This structure is definitely not suitable for low volume trading investor or passive investing strategy.
For Options Trades, MB Trading has a straightforward commissions plan for options trading. Unlike other online brokers, MB Trading does not charge a base fee per trade which is similar to Lightspeed Trading or Interactive Brokers. All options orders are charged simply $0.95 per contract with no minimum or maximum price. Currently, the broker does not allow any naked put or call options orders to be sold. There is a $0.001 per share fee to exercise options contracts.
When you are opening an account, please notice whether you are enabling options data during registration. If you don’t then the fee is not charged. Otherwise, MB trading will charge a $10 per month fee if a minimum of 10 options contracts are not traded in a given month.
For Mutual Funds, MB Trading charges $12.95 per trade for no load mutual funds trading. This can be done only by phone.
For Forex trades, MB Trading will charge $2.95 per 100,000 USD traded. For example, if forex trader trades 300,000 USD, the commission for this Forex trade will cost $8.85.
For Future trades, MB Trading will charge $0.95 per contract plus any exchange fee. For example, if trade trades 1 contract of Mini Gold, it will cost $1.77 which includes $0.95 for 1 contract and $0.82 of exchange fee.
For International Trades, MB Trading offers international trading support for numerous countries. This trading is of US equities only. Please check MB Trading website for more information.
Advantages and Disadvantages of MB Trading
Pros of MB Trading
- Offers a flat-rate commissions for market and limit orders (up to 10,000 shares)
- Offers various trading platforms for both web and desktop serve all investor types;
- There is no ticket fee for options traders
- New and unique trading tools features are offered from time to time
- Offers a unique MBT World for investors and traders
- Offers various education tools & research for new investor as well as social networking with others
- There is no inactivity fee
- Also offers after market hour trading or extended hours trading for extra fees
Cons of MB Trading
- Improved website still feels outdated
- There is a $10 per month fee charged for options accounts if 10 options contracts are not traded.
- There is additional surcharge of $0.005 per share for extended hours
- There is a special charge for trading with shares over the 10,000, AND orders executed using the Reserve, Discretionary, or Pegged
- There is a $30 annual fee for IRAs
- There is a $0.01 per share fee to exercise options contracts
Other customer’s complaints from research:
- Long hold on new funding for new account
- Issue with forex trading such as delay in executing trade
- There is an issue with MT4 platform stability. The platform can be down for minutes or hours or full day.
- From time to time, order execution is very slow. There is a delay >20 sec during normal hours with no news.
- Forex commission rate is rather high
MB Trading does offer great investing for its
investor or trader customers. It is suitable for casual or passive and active
investors. It also provides a competitive flat fee commission rate of $4.95 per
trade. MB Trading does provide most professional and active traders with low
commissions and powerful, versatile trading software. Most of the trading tools
have a steep learning curve to get use to it and, together with few educational
and research materials; it makes MB Trading an ideal choice for a brokerage for active traders. A beginner trader may
get overwhelm with this learning curve and should try other beginner friendly
brokerages such as Zecco, Fidelity, Schwab, TD Ameritrade, Scottrade, etc.
I don’t recommend using MB Trading for IRA since it does charge #30 per year for IRA account. Another good thing is MB Trading doesn't have penny stock fee. It also offers extended hours trading for $0.005 per share. This could be a deal-breaker for many people and most online brokerage firms don't charge this fee.
MB Trading also offers MBT LightWave Trading Platform. MBT lightwave Trading is a complete trading platform that allows users to analyze, view and execute trades in the same program. MBT LightWave manages user's stock, Forex, futures and options trades from one central site, providing with proprietary Pressure Charts that have been used by over 160,000 people in their trading, as well as Price Charts for more advanced trade analysis.
Disclosure: I have no affliation with MB Trading. I just use their trading platform for trading. Please do your own research for additional details.
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