Reduction to IBKR Currency Handling Fee Exemption Limits

[blink18]

Effective September 1, 2021, IBKR will decrease the threshold at which negative rates are applied to deposited funds for the following currencies: EUR, CHF, DKK and SEK.

CHF
0 ≤ 100,000
0 ≤ 50,000 starting 9/1/21
0.000%

> 100,000
> 50,000 starting 9/1/21
-1.044%


DKK
0 ≤ 700,000
0 ≤ 300,000 starting 9/1/21
0.000%

> 700,000
> 300,000 starting 9/1/21
-0.649%


EUR
0 ≤ 100,000
0 ≤ 50,000 starting 9/1/21
0.000%

> 100,000
> 50,000 starting 9/1/21
-0.732%


SEK
0 ≤ 850,000
0 ≤ 400,000 starting 9/1/21
0.000%

> 850,000
> 400,000 starting 9/1/21
-0.308%

https://www.interactivebrokers.hu/en/index.php?f=48078

 

[tradegoodstocks]

Also the limit for JPY is being reduced from 11,000,000 to 5,000,000.

I'm curious what is the actual cost to the brokers of zero percent deposits in negative interest rate currencies. Can't they use it as part of their capital reserves? I see IB issues 1% USD notes to certain customers, which is a higher spread to the risk-free rate than they would get with 0% cash in a currency with -0.6% risk-free rate. Also, they are lending EUR, etc., at margin rates of 0.75% - 1.5%, so it appears they would make a profit even with 0% deposits.

 

[blink18]

Does anyone know if IB treats EUR cash used as collateral for margin (futures), as free cash with negative interests?

 

[tradegoodstocks]

I know. The commodities segment of your account never receives positive deposit interest, but has the same limit as the equities segment in regards to the exemption from negative interest rates, independent from the equities segment.

In other words, the system is rigged against you for the most part.

Also, if you have multiple currencies in the account, to my knowledge you cannot directly control which currency is in which account segment. It's controlled by the automatic sweep algo, which has a priority order of currencies for the sweeps. IB has a very curious and unique setup with their what they call "integrated" accounts. It took me a while to study the intricacies.

 

[HobbyTrading]

Does anyone know if IB treats EUR cash used as collateral for margin (futures), as free cash with negative interests?

Yes that's free cash with negative interest rate if you cross the 100k/50k threshold.

 

[blink18]

ECB rate is now at 0%. Why is interest rate on positive cash balance at IB (over 50000 eur) still negative?

-0.159%
https://www.interactivebrokers.com/en/pricing/reference-benchmark-rates-int.php

-0.409%
https://www.interactivebrokers.com/en/accounts/fees/pricing-interest-rates.php

 

[HobbyTrading]

0.159%
https://www.interactivebrokers.com/en/pricing/reference-benchmark-rates-int.php

It is written as (0.159)%, which means -0.159%.

 

[blink18]

It is written as (0.159)%, which means -0.159%.

Thanks, I edited it.

Ok, so 0.25% is their fee/commission, but why is BM still negative?

 

[HobbyTrading]

Thanks, I edited it.

Ok, so 0.25% is their fee/commission, but why is BM still negative?

Financial institutions are always very quick in adjusting rates to their favor (i.e. when it goes down), and very slow in changing rates to the customers' favor (i.e. when it goes up).