Anyone with experience with Interactive Broker | General financial discussion | Discussion forum

Several months ago I was interested in their (high) interest rate on cash credit balances but decided not to pursue the matter.

As well, those rates for cash balances (currently 4.26% for C$ balances) require at least US$100,000 account equity:

* Positive settled cash balances held in the securities segment of accounts with NAV>100k earn the stated interest rate and those with NAV<100k earn a proportional rate.

If one has C$30,000 cash out of C$80,000 total account equity, the first C$13,000 earns zero and the remaining C$17,000 earns 2.531% and not the full 4.26%.

I can see why Coin decided not to look into it any further.

Another person reported that Interactive Brokers will only handle account transfers through the brokerage ATON system. That will be an issue if one wishes to transfer to or from a TFSA or RRSP at a non-investment dealer.

1) Although my wife and I have margin accounts, I have mostly used our TFSA and RRSP accounts to trade equities and occasionally convert currencies and so I never had to worry about tax liability. However, they report all forex currency conversions with the exchange rate and commission and so you should have required data to determine your gains / losses if you trade forex through them. For trading foreign currency stocks, they report just the buy and sale prices and commissions in the foreign currency (say USD). They don't report the closing USDCAD rate to you. You need to record that day's closing USDCAD rate yourself. Alternatively, you can use the Bank of Canada's average USDCAD rate for the year.

2) I'm not sure whether they charge for norbert's gambit now, but there was no charge a couple of years ago when I decided to convert two Canadian stocks (T.TO and TD.TO) to their USD counterparts (TU and TD). My intention was not to do this for the currency exchange (to avoid bank's higher spreads). I partially transferred my Questrade account to IBKR. I had TU and TD in my IBKR account and T.TO and TD.TO in my Questrade account and so I decided to convert T.TO and TD.TO to TU and TD respectively for better management. I don't think they will charge for norbert's gambit even now. But if your intention is to only convert currency, I suggest you directly use their trading platform or web portal. Their commission is super low (just $2.50 for trading $25K) and you get the realtime exchange rate. FWIW, they charged me CAD 2.70 to convert USD 25,009 to CAD. (Refer to the cons below)

3) I don't have any experience with their debit card.

IBKR Cons
1) Do not reimburse other brokerage's account transfer fees - However, they might do this on a case by case basis though especially if the account is sizable (say a million dollar plus account).
2) No TFSA contributions and withdrawals in foreign currency - If you want to contribute to your TFSA and then buy a US equity, and suppose you already have required USD funds in your bank account, then you need to first transfer USDs from your bank to your IBKR margin account, wait for the funds to be made available, covert in CAD, and then place a request to fund your TFSA with the CAD amount. (Alternatively, you need to convert USD to CAD at your bank, transfer to IBKR, wait for hold to release, and then convert to USD to buy the US equity. But then you have to accept bank's currency spread.)
3) ATON transfer in / out only - As already pointed out by Norman1, no paper transfers. A big headache if you want to transfer RRSP from IBKR to say open a GIC at a bank or credit union that doesn't have its own brokerage service. Basically you are limited to transfer account to another brokerage or to the top 5 - 6 Canadian banks that have brokerage services
4) Withdrawal hold of 60 (could be even more maybe 66) business days to another bank account - For example, if you bring in funds from your Tangerine account to IBKR and then decide to withdraw funds after the 5-day hold period, IBKR will allow you to withdraw to the same Tangerine account without any issues. But they won't allow to withdraw to ANY other bank account. You will have to keep the funds with them for those 60 or so business days before you can withdraw to another account. This is to discourage using IBKR only for the currency conversion. One can't bring in funds from say Tangerine CAD account, convert currency to USD and then withdraw to say Tangerine USD account immediately; they will have to wait for those stipulated number of days and only then can take the USD funds out.
5) No ceiling on commission - The commissions are too high if you want to trade a large number of shares, say of pink or small cap stocks. Without a ceiling, the commissions are significantly higher because they don't have ceiling (like $9.99 per trade by Questrade)

IBKR Pros
1) Low(est) commissions for stocks and options - For over 60% of my options transactions, I RECEIVED a small commission from IBKR (instead of paying them any commission). Contrast this to Questrade, so called the overall lowest commission brokerage in most online surveys, who charge $9.99 + $1 per contract + $24.95 per option that gets exercised or assigned.
2) Best execution rates - shouldn't matter much for an investor though unless you place large volume (number of shares) order
3) No account transfer fees - if you decide to transfer your margin / RRSP / TFSA account to another brokerage
4) Excellent currency conversion rates at lowest commission - Perfect for occasional currency conversations to trade around the BoC and FOMC meetings and rate announcements
5) Pays interest on parked funds - Yes, $100K required for the posted interest rate or else pro-rated rate. But I doubt most Canadian brokerages pay any interest.

Norman1 said

dickyran333 said
…For trading foreign currency stocks, they report just the buy and sale prices and commissions in the foreign currency (say USD). They don't report the closing USDCAD rate to you. You need to record that day's closing USDCAD rate yourself. Alternatively, you can use the Bank of Canada's average USDCAD rate for the year.
…

CRA was asked about the use of average exchange rates. CRA responded that one cannot generally use the average exchange rate for capital property transactions.

Details in separate thread CRA: Average exchange rate acceptable only in certain cases.  

I completely agree the BoC annual average exchange rate is NOT acceptable for capital transactions. It must be either the forex rate in play (noon or closing) on either transaction date or settlement date. CRA does not care which one as long as one is consistent each and every year. I use Transaction Date at COB (as obtained from the BoC site).

The annual average forex rate is only acceptable for recurring/periodic investment income such as dividends, distributions and interest.

Good luck Jon. Another pro of IBKR is their long (longest?) trading hours. One can trade between 4:30 am and 8:00 pm ET. It's quite useful for those who trade biotech and foreign equities where PRs often come out in wee hours. Another con is that their charting tool is pretty basic. You will be disappointed if you make your investment decisions primarily on technical analysis or already use a superior platform like Thinkorswim. (Well, you can continue to use your preferred charting software for decision making and then place trade through IBKR)

Thanks Norman and AltaRed for pointing out that the average exchange rates can't be used for trading. After I started investing in stocks, I used the day's closing rate for the initial few years. But then I became a bit lazy and started using the average exchange rate. I'll be mindful going forward.