Interactive
Brokers

An independent review by our team of experts

Interactive Brokers Group, Inc. was founded by its Chairman, Thomas Peterffy. Over the last 43 years, it has grown as a securities firm with over $9 billion in equity capital.

Interactive Brokers conducts its broker/dealer business on over 135 market destinations worldwide.

In its broker dealer agency business, IBKR provides direct access trade execution and clearing services to institutional and professional traders for a wide variety of electronically traded products including stocks, options, futures, forex, fixed income and funds worldwide.

Interactive Brokers Group and its affiliates execute over 2,109,000 trades per day.

Interactive Brokers is headquartered in Greenwich, Connecticut and has over 1,850 employees in its offices in the USA, Switzerland, Canada, Hong Kong, UK, Australia, Hungary, Russia, Japan, India, China, Luxembourg, Singapore, Ireland and Estonia.

They are regulated by the SEC, FINRA, NYSE, FCA and other regulatory agencies around the world.

Interactive Brokers has two tiers of service:

IBKR Lite: Provides retail clients with $0 commissions on US listed stock and ETF trades, no account minimums and no inactivity fees.
IBKR Pro: Is the IBKR plan for sophisticated investors and active traders.

IBKR Pro clients access the IB SmartRouting^SM system, which provides $0.47 per 100 shares price improvement vs. the industry.

Both tiers of service have a $0 account minimum and offer fractional shares of stock. IBKR Lite has no account maintenance or inactivity fees.

IBKR Pro charges an inactivity fee, though it's possible to skirt that if you trade relatively frequently.

Key features of Interactive Brokers:

Option trades: No base commission - 65 cents per contract with $1 minimum. Volume discount available.
Account fees (annual, transfer, closing, inactivity):

IBKR Lite: None.
IBKR Pro: Accounts with less than $100,000 pay $10/month minus any trade commissions; accounts with less than $2,000 pay $20/month minus commissions.

Number of commission-free ETFs:

IBKR Lite: Unlimited commission-free trades on all available ETFs.
IBKR Pro: 96 commission-free ETFs.

Stock trading costs:

IBKR Lite: Unlimited free trades on U.S.-listed stocks and ETFs.
IBKR Pro: $0.005 per share; minimum $1 and maximum 1% of trade value; volume discount available.

Number of no-transaction-fee mutual funds: Over 8,300 no-transaction-fee mutual funds.
Tradable securities include: Stocks, fractional shares, bonds, mutual funds, ETFs, options, futures, forex and metals.
Trading platform: IBKR Lite and IBKR Pro customers get access to Client Portal trading platform and powerful Trader Workstation platform.
Additionally, you get access to extensive research offerings, both free and subscription-based along with 24-hour phone, email and chat support, available six days a week.

NOTE:

Not all of these instruments may be legally available due to foreign fund marketing rules and local licensing requirements to residents in certain countries. Professional advice should be sought if you are unsure regarding local compliance rules.
The service is more geared towards professional traders, investors, advisers and fund managers rather than retail clients.
The trading platform is mobile, web and desktop compatible. Offers research, news, updates, boasting algorithm and trading tools.
The platform allows easy viewing of holdings but not simplified viewing for retail investors.
International investors can open accounts online - pricing is competitive. Interactive Brokers claim that their charges are 87% lower than their competitors.
The platform charges a complex commissions structure, with trade costs dependent on your country of residence.
High volumes of trades are rewarded, but on average, the occasional trader is likely to pay $20 per month according to the site. However, their definition of ‘occasional’ is 8 trades per month - which is fairly high for the long-term passive investor!
We would highly recommend reading the 'expert verdict' section of this review to make an informed decision.

Additionally, here's a free guide that can help you achieve better results. In this guide, you'll learn:

Academic evidence only shared with a select few firms across the world
A real-life example of why you should never try to outguess the market
Why a fund's past performance is not enough to predict future returns
Why you need to focus on what you can control and why this leads to a better investment experience
Why you should accept the markets for what they are
What can impact behaviour and make people seek instant gratification

The Pros

> Open to international investors

> Investment selection

> Socially-responsible investing

> Many great research tools

> Low trading fees

The Cons

> Complex choice of instruments

> No advice

> Dealing commissions

> Inactivity fees

> Complicated account opening process

Expert assessment of Interactive Brokers

Given the trading charges are typically lower than DBS Vickers, Saxo or TD International, we think Interactive Brokers is one of the better low-cost trading and investment platforms available in the offshore market.

However, there are two points to consider:

Check your situation with an international accountant before trading. As an American firm, all securities are held in the USA, and you want to ensure withholding taxes or estate taxes don’t erode your returns.
The danger of a professional trading platform is that in signing up it's like being given tokens in a casino. There is huge temptation to trade based upon the information and special deals this platform gives you.

The evidence shows that the average individual investor under-performs the market by approximately 7.3% per year - largely as a result of behaviour such as trying to time the market or chase returns.

Trying to resist this temptation to do it yourself (and fall into the traps we are hardwired to make) can be hard, and our advice is to only go down this route if you are sure you know what you are doing (and are happy to live with the consequences).

If you want us to review your overall portfolio (worth approx. £500,000 or more), request a Second Opinion and we'll get you all the information you need to make an informed decision about whether your money is performing as well as it could be.

Interactive Brokers - Financial Services Guide

Interactive Brokers - Advisors Getting Started Guide

Interactive Brokers - Fully Disclosed Brokers Getting Started Guide

Interactive Brokers - TWS Guide

Interactive Brokers - Client Portal Guide

Interactive Brokers - WebTrader Users' Guide

Interactive Brokers - Client Risk Profile

Interactive Brokers - Performance Attribution White Paper

The information in this material is intended for the recipient’s background information and use only. It is provided in good faith and without any warranty or, representation as to accuracy or completeness. Information and opinions presented in this material have been obtained or derived from sources believed by AES to be reliable and AES has reasonable grounds to believe that all factual information herein is true as at the date of issue. It does not constitute investment advice, recommendation, or an offer of any services or products for sale and is not intended to provide a sufficient basis on which to make an investment decision. It is the responsibility of any persons wishing to make a purchase to inform themselves of and observe all applicable laws and regulations. Unauthorised reproduction or transmitting of this material is strictly prohibited. AES accepts no responsibility for loss arising from the use of the information contained herein.

‘AES’ refers to the AES Group’s separate but affiliated entities generally, rather than to one particular entity. These entities are AES Middle East Insurance Broker LLC registered with the UAE Ministry of Economy, United Arab Emirates, Licence no. 571368, and Commercial Registration no. 75162 and regulated by the UAE Central Bank license no. 189; AES Financial Services Limited, incorporated and registered in England and Wales with company number 06063185, authorised and regulated by the UK Financial Conduct Authority FRN: 464494; AES Financial Services (DIFC) Ltd, registered in the Dubai Financial Centre (DIFC) as a foreign company, license no.2128, and regulated by the Dubai Financial Services Authority (DFSA) Reference No F003476; AES International Limited, a private company incorporated and registered in the British Virgin Islands with company number 1839872; AES International Global Limited, a private company incorporated and registered in the British Virgin Islands with company number 1887885. Please visit our authorisations page for further information on regulation, redress and accessibility.

If you are outside the UK and we advise you or carry out other business, nearly all the rules, regulations and arrangements made under the UK regulatory regime (including the rules made by the FCA and the dispute resolution process provided by the UK Financial Ombudsman Service) will not apply to most aspects of the service you receive, such advice or business being provided from outside the UK. You should therefore clearly understand such rights and protection as are afforded in the jurisdiction where you receive advice. Local law, regulation and redress processes will apply in almost all cases, and will be different from that of the UK.

RISKS

Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investment, when redeemed, may be worth more or less than the capital invested. Past performance is not a guarantee of future results. There is no guarantee strategies will be successful. For further information, please click here.

Interactive
Brokers

An independent review by our team of experts

REVIEW SUMMARY