IB--Funding account and trading Aussie stocks?

K

kowboy

I'd like to know if you trade from the US in an account funded in US dollars, and you trade Australian stocks through IB, does IB convert your US dollars on the purchase amount to Au dollars when the trade is made? Or is the purchase amount shown in US dollars?

What actually happens to make the trade work? Does IB convert at time of trade? Or does IB loan you the Au dollars to make the trade?

How this is actualy accomplished is important because I'd like to hold Au stocks long term without being hedged for currency risk and without borrowing Au dollars from IB.

Is it possible to fund an IB account with US dollars and have the entire account converted to Au dollars indefinately and without borrowing from IB to do the conversion.

Thank you. Mike
 
Quote from kowboy:

I'd like to know if you trade from the US in an account funded in US dollars, and you trade Australian stocks through IB, does IB convert your US dollars on the purchase amount to Au dollars when the trade is made? Or is the purchase amount shown in US dollars?

What actually happens to make the trade work? Does IB convert at time of trade? Or does IB loan you the Au dollars to make the trade?

How this is actualy accomplished is important because I'd like to hold Au stocks long term without being hedged for currency risk and without borrowing Au dollars from IB.

Is it possible to fund an IB account with US dollars and have the entire account converted to Au dollars indefinately and without borrowing from IB to do the conversion.

Thank you. Mike
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The info below provides the basics. In your case, since you don't want a loan and will hold long term, use IDEALPRO to convert to AUD if/when you desire.


http://individuals.interactivebrokers.com/en/general/education/highlights.php?p=a

The IB Universal Account allows you to trade multiple products around the world from a single account. You can trade stocks, options, futures, Forex, and bonds all from the same Trader Workstation screen, and your transaction history and positions are all reported on a single statement.

Trading around the world can be simple, because you are not required to open accounts in multiple currencies. Deposit a single currency in an account and when you want to trade a product denominated in another currency, a loan is created which is secured by your deposited currency. If you wish to eliminate the loan, you may do so at any time by trading currencies through our IB IDEAL network or depositing money in another currency. You will find that our currency exchange rates are much better than retail banks or exchange rates offered by the credit card companies.

For each account a single base currency designation must be made that determines an account's statement and margin requirement translation currency. However, deposits and withdrawals may be made in any non-base currency in AUD, CAD, CHF, EUR, GBP, HKD, JPY, MXN, SEK or USD.
 
Def thank you very much for your reply. Your help would be much appreciated in walking through a typical illustrative trade and correcting my understanding.

I have an IB account funded in US dollars. I subscribe to the Au stock exchange data. I purchase 1000 shares of Anz.ax on the Asx Australin exchange, which is trading for $ 21.70 Aud, for $21,700 Aud total purchase amount. IB loans the account the $21,700 Aud to make the purchase.

What interest rate does IB charge the account for loaning the $21,700 Aud to make the purchase and how is this computed, prorated daily? What is an approximate current interest rate charged by IB for borrowing the $21,700 Aud?

Do other fees apply which are not aparrent?

On the TWS page where the Anz.ax postion is shown, can this page default be set to report in Aud? And leave the other pages with US stocks reporting in US dollars as the default? How does this work?

Then later on, should I no longer want IB to loan the account the $21,700 Aud, Ideal Pro would be used to purchase a similar amount of Aud using Usd from the account. Would IB automatically debit the account the $21,700 Aud which I just purchased and automatically eliminate the preexisting loan?

I need to understand each of these steps.

Thank you for your asssistance. Mike
 
sorry been swamped and haven't had a chance to look at this. very briefly.

interest rates/details you can find here:

http://individuals.interactivebrokers.com/en/accounts/fees/interest.php?ib_entity=llc


you can not set different pages to report in different currencies but the account window will break down the values by currency.

for the loan, yes, you can eliminate it any time by purchasing (or selling) the currency.

I suggest you do a test in the paper trader, look at the account windows and get a feel for it. It's actually very straight forward.
 
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