Interactive Brokers Review

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Interactive Brokers (IBKR) is an institutional-grade Forex and CFD trading platform with over 43 years of experience offering financial services to customers worldwide. It offers a wide selection of markets, including stocks, futures, options, and spot FX, thus increasing trading opportunities to customers. Overall, Interactive Brokers has sophisticated trading platforms suitable for average and veteran traders, as new traders find it quite complicated.

Founded: 1978

Location: USA

Regulation: CFTC, FCA, ASIC, IIROC, MAS, SFC, CBI

Trading Instruments: Forex, Stocks, Options, Futures, Metals, Bonds, ETFs, Mutual Funds, Hedge Funds

Pros

• Competitive tight spreads
• Robust product catalog
• Innovative trading platforms
• Auto-trading features

Cons

• The broker interface is not user-friendly
• Not suitable for less active traders
• It is difficult for beginners to calculate all the additional fees

Thomas Peterffy founded Interactive Brokers Group Inc. in 1977 to create a financial technology that offers the best trading environment for investors. Forty-three years later, the company ranks among the world’s best financial assets firms, having consolidated over $9 billion in capital. Total trades per day add up to over 2.25 million as investors trade in over 135 markets globally. 

Interactive Brokers operates through multiple entities as an international broker and is therefore regulated according to the region’s requirements. Some of the top-tier regulators supervising Interactive Brokers include FCA, SCE, NYSE, and FINRA. 

The US-based broker has won many awards for its services, with the most recent one being an award from BARRON as the Best Online Broker of 2021. The broker continues to introduce more features to improve its performance and reach a wider customer base.

Regulation

The broker reaches 33+ countries worldwide. Therefore, regulations apply according to the regulating body in the specific territories. These supervisory bodies are: 

• UK – Financial Conduct Authority (FCA).
• USA — Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA). 
• Austria and Luxembourg — Commission de surveillance du Secteur Financier (CSSF).
• Canada — Investment Industry Regulatory Organization of Canada (IIROC).
• India — Securities and Exchange Board of India (BSE).
• Australia — Australian Securities and Investments Commission (ASIC).
• Japan — Financial Services Agency (FSA).
• Singapore — Monetary Authority of Singapore (MAS).
• Hong Kong — Hong Kong Securities and Futures Commission. 
• Northern & Western EU Countries (Including Spain and Italy) — Central Bank of Ireland (CBI).
• Central & Eastern EU — Central Bank of Hungary (MNB).

Account balance protection varies for clients based on their geographical location and the financial asset you’re trading. For example, residents of Australia, India, Hong Kong, Singapore, and Japan have no balance production in the company’s insolvency.

Account Types

Interactive Brokers has many different account types so that traders have an account that suits their level. Their main difference in all the accounts is in the account ownership. Some are owned individually by a group of people or by an institution. Let’s look at some of the accounts.

Private account

• Account owner — individual 
• Margin rate — starts from 0.75% (Cash, Reg T, and Portfolio Margins)
• Markets available — 135 
• Stock yield enhancement program — yes
• Fractional shares feature — yes
• Additional account managers — yes (with power of attorney)
• Trading platforms — mobile, desktop
• Advanced market analysis and trading tools

Joint account

• Account owner — two individuals
• Margin rate — starts from 0.75% (Cash, Reg T, and Portfolio Margins)
• Markets available — 135 
• Stock yield enhancement program — yes
• Fractional shares feature — yes
• Additional account managers — yes (with power of attorney)
• Trading platforms — mobile, desktop
• Advanced market analysis and trading tools

Retirement account

• Account owner — individual 
• Margin rate — starts from 0.75% (Cash, Reg T, and Portfolio Margins)
• Markets available — 135 
• Stock yield enhancement program — yes
• Fractional shares feature — yes
• Additional account managers — yes (with power of attorney)
• Trading platforms — mobile, desktop
• Advanced market analysis and trading tools

Trust account

• Account owner — a legal entity (account operated by a Trustee, with Grantors and Settlers)
• Margin rate — starts from 0.75% (Cash, Reg T, and Portfolio Margins)
• Markets available — 135 
• Stock yield enhancement program — yes
• Fractional shares feature — yes
• Additional account managers — yes (with power of attorney)
• Trading platforms — mobile, desktop
• Advanced market analysis and trading tools

Family account

• Account owner — at most, 15 individuals and an advisor
• Margin rate — starts from 0.75% (Cash, Reg T, and Portfolio Margins with accounts margined per client)
• Markets available — 135 
• Stock yield enhancement program — yes
• Fractional shares feature — yes
• Account managers — only the advisor can trade on the account 
• Trading platforms — mobile, desktop
• Advanced market analysis and trading tools

Institutional account

• Account owner — any institution (like a foundation, hedge funds, pension, etc.)
• Margin rate — not applicable
• Markets available — 135 
• Stock yield enhancement program — yes
• Fractional shares feature — yes
• Additional account managers — no
• Trading platforms — mobile, desktop
• Advanced market analysis and trading tools

US investors need to select either the IBKR LITE or IBKR PRO for their trading service plans other than the many account types. These two differ in commissions, account fees, and other trading features. 

How to open an IBKR account

Unlike most brokers, IBKR’s account opening process is somewhat complicated and can take up to an hour to complete and allow for at least two days for verification. 

During the process, you’ll enter your details and fill out several questionnaires. You’re likely to encounter a few error messages or conflicting information as you sign up. After the five sign-up steps, you’ll need to upload documents that verify your identity and residence.

Fees and Commissions

Compared to other brokers, IBKR’s overall fees are low. Here are some of the charges that apply when on the IBKR trading platform. 

Commissions

Commissions vary for every financial asset and are classified as tiered and fixed-rate commissions. They also differ depending on the client’s resident region. For example, the pricing is different for US and non-US clients. 

Tiered commissions decrease depending on the traded volume, regulations, clearing fees, and exchange fees. Fixed-rate pricing is set per share, and it includes all the exchange fees and other rules and clearing fees. 

Assets using the volume-tiered pricing structure include stocks, ETFs, warrants, FX and shares, CFDs, and options. Index and metal CFDs use a fixed-rate pricing structure, with commissions applying on all other order types. 

Margin rates 

IBKR blends the rates and charges interest on the margin loans. The rate differs per the amount and the tier levels. For example, in an amount of over $1M, the first $100,000 falls in the Tier I category, and the rates apply as such. The other $900,000 is charged with Tier II rates. 

You can estimate the interest charges on the margin rates using an auto-calculator on the IBKR website. 

Other fees

These are different from trading fees. They include:

• Research and news fees — it gives clients access to premium market news. IBKR uses these fees to cover admin costs and to pay vendors. 
• Withdrawal fees — IBKR offers one free withdrawal per month and then applies a charge on the subsequent withdrawals depending on the currency. 
• Deposit fee — IBKR charges a 1% fee on all deposits, except for clients in Mexico, who have one free deposit per month then charges on subsequent deposits. 
• Inactivity fee — inactive accounts incur a $20/month inactivity fee. US clients trading on IBKR LITE enjoy zero inactivity fees. 

Payment options

Deposit

IBKR accepts the following deposit methods: 

• Wire transfer
• All checks (If a check bounces, it incurs a fee of $25)
• Direct rollover (funds IRA accounts only)
• AUD BPay (Australia)
• Canadian electronic funds transfer for Canada only
• Automated clearing house (ACH) transfer
• Trustee-to-trustee (funds IRA accounts only)
• Online BPay check

You can fill in a deposit notification form from the’ transfer funds’ page, and your deposit request will start processing. 

Withdraw

You can make your withdrawal request through the following accepted withdrawal methods. 

• Wire transfer
• Check (US clients only)
• GIRO/ACH (withdraws CNH, HKD, and SGD only)
• SEPA (an initiative of IB)
• Canadian EFT transfer (Canadian clients only)
• NZD ACH (withdraws NZD only)
• BACS ( withdraws GBP only)

Accounts should be part of the secure login system to enjoy unlimited withdrawals. Otherwise, a limit of $50,000per day is imposed. For any withdrawal to be successful, the withdrawal method must hold the same name as the account owner. 

Available Markets

On the IBKR’s integrated account, you can trade global stocks and ETFs, options, spot currencies, futures/FOPs, bonds, mutual funds, US spot gold, and hedge funds. 

Stocks and ETFs

Trade 80+ global stocks at $0 commissions. IB SmartRouting offers low commissions on the stocks. Take advantage of fractional shares and build your financial portfolio, as well as earning profits from fully paid shares. 

Options

IBKR has 30+ options markets with commissions ranging from $0.15 to $0.65 on US options. Make use of advanced trading tools to trade in the options markets. 

Spot currencies

Trade 100+ currency pairs with tight spreads of 0.1 pips. Commissions range from 0.08 to 0.20 bps times the trade size, with real-time prices determined by 17 global FX dealers. 

Futures/FOPs

IBKR offers over 30 futures markets for trade with commissions per contract ranging from $0.25 to $0.85. Clients have access to future professional tools and different order types. 

IB spot gold & silver

Investors can trade the US spot gold while it’s paired with other assets in the market. Efficient pricing as small as 1 ounce makes the spot gold tradable. 

Bonds

IBKR has over 1 million bonds with transparent commissions and no inbuilt spreads. To trade your favorite bond with other IBKR clients, use the efficient bond search tool and locate it easily. 

Mutual funds

IBKR ranks top in providing mutual fund services online. You can access over 40,000 funds, with 7,000 charging zero transaction fees. The mutual fund search tool helps you locate your preferred fund easily. 

Hedge funds

The IBKR hedge funds marketplace allows discerning investors to invest in available hedge funds via the website. They can simply set a secure password and start contacting hedge funds.

Trading Platforms

IBKR offers sophisticated trading platforms equipped with advanced trading tools for easy trading. 

These trading platforms include:

Client portal

• Web-based platform
• In-depth market analysis tools
• Extended customizable charts
• Comprehensive quotes
• Pop-up notifications

Trader WorkStation (TWS)

• Web-based platform
• Comprehensive real-time news and financial information
• Continuous market monitoring
• Portfolio margining system for margin summaries
• Multiple watch lists for your favorite assets
• Signal alerts on significant market changes
• 100+ order types
• Risk management tools

IBKR mobile

• Mobile-based platform (Android)
• Advanced intuitive tools like order wheel and options spread grid
• Pre-authorized deposits
• 2-factor authentication for extra security
• Comprehensive quotes and research
• All 135 markets
• Convenient trading

IBKR API

• Build your trading platform
• Subscribe to market data and graphs
• Easily access your account in your API platform
• Use IB gateway for data access

Features

• IB SmartRouting executes orders electronically with the best prices available for options, stocks, and other combinations.
• iBot instantly accesses any information you need while trading on IBKR, like checking your balance, viewing charts, etc. 
• Reference data contains information about entities, exchanges, securities, derivatives, and schedules for use in all IBKR systems. 
• API & FIX CTCI allow clients to create and customize personal trading platforms.
• Market data feature contains historical data, real-time streaming data, and the best quotes in the market. 
• Fundamental data is company data accessible to clients to help them predict stock value.
• Robo-advisors consist of interactive advisors and portfolio managers who have undergone thorough betting to handle client accounts. 

Education

IBKR offers comprehensive education to its clients. Its investment in client education is massive. 

Some of the resources include:

• IBKR Campus — learners are taught the details of the trading tools available in IBKR and the financial markets. 
• Trader’s insight section allows traders to learn from over 70 experts as they read and watch their market analytics. Some of these experts include IBKR’s Steve Sosnik (Chief Strategist).
• Webinars — some of these are archived webinars in the library, while others contain the latest news on the market. Clients can watch and learn anytime. 
• Trading academy — the academy focuses on market products, tools, and trading platforms available on IBKR.
• IBKR Quant blog — it’s a wealth of knowledge for programming. Clients interested in using APIs to create their trading platform should visit this section. 
• Short videos — they offer demonstrations and a step-by-step guide for average traders to help navigate the IBKR trading platforms.
• Trader’s trading lab offers hands-on trading practice and resources, especially for trainers in finance and computers. 
• Trader’s dictionary — it’s a user’s guide and helps explain terms used in the site. 
• Trader’s calendar — it’s a calendar of events that are likely to influence market conditions, including International events and those organized by IBKR. 

Customer Support

IBKR’s support is on the phone, email, and the chat room. These three methods will get you answers from the IBKR representatives. However, you can find solutions to any problem you encounter from the community forum, FAQ segment, knowledge base, and manuals available on the platform. 

The responses from the phone and chat rooms take a short time, maybe a minute or so. Emails can take longer as you may be required to send over documents that explain your problems, and so on. Overall, the customer support system is okay.