Interactive Brokers Central Europe: automatic currency conversion

Y

younggotti

Hi,

I currently have an IBIE account but I need to open a new account for another person.

At the end of the application procedure, I was said that the new account would be open under IBCE.

In IB's FAQS I read that IBCE accounts have many limitations with FX trading.

In particular:

Trading securities and derivatives in all the same markets you can now but if you trade outside of the Allowed Deposit Currencies (see #7) and the transaction results in a long cash balance we will auto-convert to your base currency. If the transaction results in a short cash balance there will be no further action by IBCE as you can borrow in all available IBKR global currencies.

So, if I trade stocks or derivatives and, as a consequence of my trades, I get a currency balance in a currency different from Allowed Deposit Currencies (EUR, USD, GBP, HUF, CZK, PLN), IB is going to automatically convert that currency balance into my base currency.

I would like to know if the 2USD minimum fee that IB charges on spot FX trades is also applied to such automatic currency conversions.

Thanks
 
younggotti said:
Hi,

I currently have an IBIE account but I need to open a new account for another person.

At the end of the application procedure, I was said that the new account would be open under IBCE.

In IB's FAQS I read that IBCE accounts have many limitations with FX trading.

In particular:

Trading securities and derivatives in all the same markets you can now but if you trade outside of the Allowed Deposit Currencies (see #7) and the transaction results in a long cash balance we will auto-convert to your base currency. If the transaction results in a short cash balance there will be no further action by IBCE as you can borrow in all available IBKR global currencies.

So, if I trade stocks or derivatives and, as a consequence of my trades, I get a currency balance in a currency different from Allowed Deposit Currencies (EUR, USD, GBP, HUF, CZK, PLN), IB is going to automatically convert that currency balance into my base currency.

I would like to know if the 2USD minimum fee that IB charges on spot FX trades is also applied to such automatic currency conversions.

Thanks
More...

No charge for those conversions.
 
def said:
No charge for those conversions.
More...

Many thanks for your feedback @def

I have other concerns with IBCE: politically and economically speaking, Hungary is very far from Lux or Ireland. Moreover, there is no active interest with IBCE, which is not an issue today but may be in the future (I mainly trade futures so I need to keep a large part of my portfolio in cash). For these reasons, I'm not sure I will go ahead with IBCE and I'm considering alternative brokers operating from more stable countries.

Why does the application procedure force me to open the account with IBCE? I live in Italy and my understanding was that western Europe clients would be routed to IBIE/IBLUX (as it happened with my previous IBUK account). Is this going to change in the near future?
Thanks again
 
younggotti said:
Many thanks for your feedback @def

I have other concerns with IBCE: politically and economically speaking, Hungary is very far from Lux or Ireland. Moreover, there is no active interest with IBCE, which is not an issue today but may be in the future (I mainly trade futures so I need to keep a large part of my portfolio in cash). For these reasons, I'm not sure I will go ahead with IBCE and I'm considering alternative brokers operating from more stable countries.

Why does the application procedure force me to open the account with IBCE? I live in Italy and my understanding was that western Europe clients would be routed to IBIE/IBLUX (as it happened with my previous IBUK account). Is this going to change in the near future?
Thanks again
More...

While I understand your concern over Hungary I can only offer that we had an office in Hungary for years, IBG LLC remains the financially strong and stable parent and historically we've always been risk adverse to where we build operations and put our money. Financial stability was surely part of the conversation and thought process on becoming regulated there as well.

I'm not exactly sure where/how the line was drawn on where client accounts will be held but we need to stick to agreements made at this juncture. I don't know if/when things will change in that regard but with IBG LLC as the parent, I wouldn't necessarily be concerns with the underlying political or economic situation in either country.
 
Thanks def.
IBG's support is obviously important, but there are many things a government could impose (e.g. restrictions on capital movements) that could affect customers regardless of the support of a foreign parent company.
We are clearly talking about tail risk and I am sure you have taken steps to minimize the risks (my understanding is that custodian banks, aside from HUF balances, are in more reputable jurisdictions), but I would not sleep well having my whole portfolio with IBCE. And I've read several forum posts from people with similar concerns.
Anyway thanks for your valuable feedback, I appreciate it.
 
younggotti said:
Thanks def.
IBG's support is obviously important, but there are many things a government could impose (e.g. restrictions on capital movements) that could affect customers regardless of the support of a foreign parent company.
We are clearly talking about tail risk and I am sure you have taken steps to minimize the risks (my understanding is that custodian banks, aside from HUF balances, are in more reputable jurisdictions), but I would not sleep well having my whole portfolio with IBCE. And I've read several forum posts from people with similar concerns.
Anyway thanks for your valuable feedback, I appreciate it.
More...

Appreciate your concern and it is well noted. I would never argue against diversification. I'm not in Europe and thus somewhat on the outside looking in so my thoughts are merely just my thoughts but from what I've seen and heard I've been impressed with the seriousness they take towards regulation, protecting clients and desire to be a financial center. Actions speak louder than words and hopefully over time these concepts remain true and confidence will grow.
 
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