EFP and T-bills in with a EUR account in IB

M

MrBean

I have a IB account in EUR denomination with a cash balance of 30K EUR plus 15K USD, which I use for day trading. I would like to sell EFP or buy T-bills for the entire cash balance to accrue interest while still retaining margin for daytrading.

How do I hedge the currency risk involved in selling EFP or buying T-bills? From this respect, is there any difference in going the EFP or the T-bill way?

Thank you.
 
not worth the effort. interest income has dissapeared and it wont come back anytime soon. do what I did. buy too big to fail bank bonds and collect 10% annualized(I bought C 2014 bonds)
 
Kicking, do you mind elaborate a bit? True, the overnight interest rate on the euro is much higher. However IB doesn't give interest on the first 10k in cash. Since my cash is 15K in USD and the rest in EUR, I believe I'm not receiving interest on the first 10k USD (0.27%) and on the first 10k EUR (3.6%). Is this correct? If so, is there a way around this? I was thinking EFP but then I have to hedge a currency risk.

Daal: I never traded bonds on IB, don't corporate bonds have a minimum size of 1M? On what exchange do you trade them?
 
Quote from MrBean:


Daal: I never traded bonds on IB, don't corporate bonds have a minimum size of 1M? On what exchange do you trade them?
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type C on IB TWS. choose 'citigroup' 'bonds'
choose 2014 sep bonds. buy them below 80, around 75 should be good enough. get ready to lose 75% of your money in the unthinkable scenario where C is allowed to fail, collect 5% a year in coupon plus 5% in capital gains till 2014 otherwise, you will have no liquidity
MS debt also looks good but I didnt had the nerve to buy it because they are more likely to fail
 
Thanks. Sounds like a good deal if you are willing to hold to maturity. There is an EFP that gives 5.8% interest. Doesn't seem bad to me. You still have the currency risk if your base currency is not USD.
 
Quote from MrBean:

Thanks. Sounds like a good deal if you are willing to hold to maturity. There is an EFP that gives 5.8% interest. Doesn't seem bad to me. You still have the currency risk if your base currency is not USD.
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you can hedge your currency risk through Oanda. if I were you I wouldn't hedge, the EUR is in a world of trouble
 
Quote from MrBean:

Thanks. Sounds like a good deal if you are willing to hold to maturity. There is an EFP that gives 5.8% interest. Doesn't seem bad to me. You still have the currency risk if your base currency is not USD.
More...

Sorry I forgot, yes you are not getting interest on the first 10K of your dollar balance, that's the problem of holding several currencies at IB. It'sa bit of a ripoff .
An EFP that gives 5.8% interest ? How ?
 
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