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Interactive Brokers (IBKR) is a very well-known and respected broker that offers services to clients around the world. It was solely awarded Barron’s best online brokerage title in 2021 after being tied for the top spot in 2019 and 2020.
From stocks to options to currencies to bonds, IBKR offers a low-cost way to trade just about any type of security under the sun. Clients are usually attracted to the platform by its low commissions and advanced platform features.
As an international company, Interactive Brokers is very well established and provides clients access to a wide range of research and educational material on markets around the globe. IBKR has been available to Canadians since 2000.
Before we dive in, let me introduce myself a little bit.
About Me: Why I Use IBKR
I am an investor who has been investing for half a decade. As a Canadian, the number of platforms available in the country continues to evolve with competition being as fierce as it’s ever been. Of note, Canadians saw the first zero commission platform being available to them through the introduction of Wealthsimple Trade.
Currently, I’m using the Interactive Brokers platform to conduct my trading. I have been on the platform for just over a year now, moving over from primarily using Questrade and Wealthsimple. While the two were good for learning about investing and executing simple trades, IBKR provided vastly more customization and allowed me to make trades quicker and more efficiently.
I also enjoy access to a wealth of research and analytical tools, which help inform my decision-making. In my opinion, no other platform comes close to the amount of information available through IBKR. I particularly like that they continuously innovate, a recent example being the launch of the IBKR GlobalAnalyst, which is definitely a time-saver for me.
One of the main reasons I prefer the IBKR platform is the low costs associated with trading. Overall, it has better suited my needs, particularly as I moved on to more sophisticated investment instruments.
Interactive Brokers offers clients two different commission options: fixed and tiered.
Using the fixed model, users pay a fee on each trade, which amounts to $0.005 per share ($1 minimum), up to 1% of trade value as a maximum for US markets (USD), and $0.01 per share ($1 minimum), up to 0.5% of trade value as a maximum for Canadian markets (CAD). This is lower compared to others like Wealthsimple which charge 1.5% in fees for CAD to USD (and vice versa) when purchasing and selling US-listed securities.
Under the tiered model, the commissions decrease as the volume of shares traded increases. It means the more you trade, the lower these per-share commissions get.
Investors who trade under 300,000 shares a month on US markets will be charged $0.0035 per share, with a minimum of $1 and up to 1% as a maximum (USD). Above 300,000 shares, the per-share price continues to decline across an additional 4 tiers, ranging up to > 100,000,000 shares traded per month.
On options, fixed fees for US markets are $0.65 USD per contract. Again, tiered options are available, ranging between $0.15 to $1 per contract depending on volume and type (USD). On currencies, IBKR offers some of the lowest fees on exchange rates and also gives you access to a wide range of currencies.
For individuals (i.e. non-advisors)
- Joint (two parties only)
- Registered, which includes the following sub-types:
- Regular Retirement Savings Plan (RRSP)
- Spousal Retirement Savings Plan
- Tax-Free Savings Accounts (TFSA)
- Informal Trust (same as an individual application for IB Canada)
- Formal Trust (start individual application, then select Trust)
- Family Account
For those who have power of attorney and want to trade for multiple people within one account. Non-registered individuals may manage multiple sub-account(s) for a maximum of 5 close family members only.
- Professional Advisor
For professionals who hold designations from security commissions who want to manage multiple accounts in one interface.
The IBKR Platform
I’ve seen many comments online mention the online and mobile platforms as one of the biggest negatives about IBKR. Realistically, the web and mobile applications are really catered towards professional traders, and as a result, are not as easy to use and navigate as other platforms. While day traders may find many of the available features helpful, those who are beginners may find them to be a bit overkill.
Despite my experience, I felt confused and lost when attempting to navigate through the complex interface. It took me multiple tries before figuring out how to execute a simple market order. However, with some time and patience, I was able to gradually figure out the platform and even began taking advantage of the more advanced features.
As seen below, your trading view can be customized allowing you to display the information most important to you on the dashboard. By moving things around, I was able to create an environment where I could access all the information that I felt was important.
Another complicated part that became easier over time was understanding the terminology and acronyms used. For example, IBKR gives access to a large list of advanced order types. Understanding acronyms like OCA (One cancels all), RPI (Relative/Pegged to Primary) and MKT PRT (Market with Protection) were difficult, but became a vital part of my trading strategy.
Opening an IBKR Account
The process of opening an account within the IBKR platform has been critiqued for a few reasons. It will ask for your social insurance number, employer information, and bank information (similar to any other brokerage). These steps are necessary for identification and AML purposes. However, if these are not sufficient, online commenters have stated that a commissioner of oaths or guarantor is necessary to sign off on your ID and provide this confirmation in writing to IBKR.
I myself found that the time it took to set up an account on the platform was slightly longer than with other brokerages. I personally did not experience this issue, but it is important to note that additional steps may be necessary with any brokerage, resulting in delays in the account opening process.
Interactive Brokers Lite
Leveraging the feedback regarding the complexity of the full IBKR platform, as well as the market trend of brokerages offering zero commission fees, the company created a “Lite” version that does not contain all the bells and whistles. According to their U.S. website, IBKR Lite clients can benefit from commission-free U.S. stock/ETF trades; the trade-off, however, is lower-quality order executions.
For most people aside from day traders, the difference in order executions isn’t likely to be very noticeable, and as a result, the Lite option would be perfect for beginner investors. Unfortunately, IBKR Lite is currently available only to clients in the United States.
IBKR vs. Wealthsimple Trade
In Canada, clients can choose from a variety of options when choosing an online brokerage. One particular option that has been very popular in recent years is Wealthsimple Trade, which I also used for a time. In the beginning, they didn’t have a web-based application, and trading was only available through their mobile app. The interface was sleek and very user-friendly. In addition, trading of Canadian stocks and ETFs was also commission-free on their platform.
However, there was a limited amount of stocks that could be traded. Many stocks that are available on other platforms are not tradable on Wealthsimple, and it often took weeks before newly IPO-ed companies were listed on the platform. In addition, trading U.S.-based equities were quite expensive, with a 1.5% currency exchange fee charged on both buying and selling, since you’re unable to keep USD in your Wealthsimple Trade account (i.e. you must convert to and from CAD each time you buy/sell U.S. equities). While trading Canadian securities was free, the costs of making trades of U.S.-based equities quickly added up for me.
IBKR and Wealthsimple Trade are very different types of platforms, with IBKR being more of a full-service platform while Wealthsimple Trade is specifically great for buying and selling stocks. The ability to access a wide range of stocks in both North America and abroad combined with low commissions are the main reasons users may gravitate to a platform like IBKR.
Overall, IBKR is one of the most versatile online brokerages available at the moment. While the platform obviously caters to higher-volume, higher-account-value traders, IBKR nevertheless has some very real advantages over other platforms for even the most beginner traders.
With such a large variety of securities available to be traded, there is surely something for everyone on the IBKR platform. There is no question that issues remain regarding the user experience on their web-based and mobile trading applications. However, these may be solved in the future if IBKR Lite is released in Canada.
There is a clear and noticeable effort to balance features between seasoned veterans and first-timers. Satisfying all user types will require some work, but overall the platform must be commended for moving toward becoming the go-to platform in Canada for all traders.
Summary of Features
- Low commissions and account fees
- Large number of tradable security types
- Robust suite of research tools
- Low margin rates, from 0.75% to 1.59%
- Access to 40,000+ funds worldwide & 7,700+ funds with no transaction fees
|Commissions: Stocks||Fixed: US Markets $0.005/share - Min $1, Max 1% of trade value (USD)
Canadian Markets $0.01/share - Min $1, Max 0.5% of trade value (CAD)
Tiered: US Markets - $0.0035 per share on first 300,000 shares (minimum of $0.35), down to $0.0005 for highest volume tier
Maximum of 1% of total trade value
|Commissions: Options||US Markets
Fixed: $0.65 per contract - Min $1 (USD)
Varies between $0.15 to $1 per contract depending on volume and type (USD)
|Commissions: ETFs||Set of no transaction fee US ETFs, all others follow Stocks pricing above.|
|Investment Types||Stocks, ETFs, Options, Futures, FOPs, Warrants, Structured Products, SSFs, Currencies, Metals, Indices, Fixed income, Mutual funds|
|Account Types||TFSA, RRSP, Spousal RRSP, Margin, Various Trust accounts|
|Account Currencies||Most major currencies|
|Fractional Shares||Allowed (Except in RRSP/TFSA)|
|Mobile App||IBKR Mobile is available on both iOS and Android. Application user interface is slightly complex, however it is intuitive once you get past the learning curve.|
|Desktop App||Interactivebrokers.ca has a variety of in-depth features for traders to access. These features can be a little complex for beginner traders but are nevertheless very useful for those who understand them.|
|Advanced Data Streams||A combination of commissions and amount of equity in your account is used to calculate how much real-time market data is available. The breakdown is available here.|
|Research Tools||Variety of research tools are available on the platform. Features such as scanning and back-testing can be done to analyze trades. In addition, news and other stock information is instantly available through partnerships with firms such as Morningstar. Continuously innovating, recently launched the IBKR GlobalAnalyst.|
|Consumer Protection (i.e. CIPF)||IIROC and CIPF|
- Low commissions and account fees, especially for high volume and high account balance individuals, fixed and tiered pricing options
- A large number of tradable security types (stocks, bonds, options, futures, warrants, currency, etc.)
- International presence gives clients access to worldwide markets
- Both mobile and web platforms (while feature-packed) were hard to navigate at first
- While the commissions are low, it may take a while to understand how much you will be paying on certain types of trades / the optimal structure for your trading volume
Other Trusted Trading Platforms
Robinhood is a zero-commission trading platform that boasts over 13 million users. The company allows users to trade stocks, ETFs, options, and cryptocurrencies such as bitcoin without any fees on their laptop or mobile device through a very easy-to-use app. The equivalent to Robinhood in Canada is Wealthsimple Trade.
Platforms such as Wealthsimple are emerging and providing an alternative to traditional investing and financial planning. Those that are very new to investing and don’t have the time to track individual stocks can benefit from both the diversification model as well as help from Wealthsimple’s advisors.
Webull is better than Robinhood because it offers more features. With Webull, you can trade on margin, short-sell stocks, and use a variety of order types. You can also use the app to research stocks, read news articles, and watch financial shows. Unfortunately, this stock trading app does not allow Canadian citizens to open accounts.
As Canada’s largest discount broker, Questrade has been a staple in the Canadian market for over two decades. Questrade fulfills many of my day-to-day needs, including low fees and excellent customer service. Just like other trading platforms offered by online brokerages and traditional banks, Questrade is regulated by the Investment Industry Regulatory Organization of Canada (IIROC) and is part of the Canadian Investor Protection Fund (CIPF).
TD Ameritrade offers an extensive selection of asset classes, market data and research tools, and educational material for self-directed investing. The platform is extremely intuitive and user-friendly. With no minimum deposit, TD Ameritrade is a great discount broker for beginner investors who don’t want to come up with a large sum to begin their investment journey.
Does Interactive Brokers Canada allow purchases of fractional shares?
IBKR Canada allows the purchase of fractional shares in all accounts except TFSA and RRSP. Fractional shares trade using the same commission structure as regular shares, and the function is available for most U.S. traded stocks.
What is the minimum deposit for Interactive Brokers Canada?
There is no required minimum deposit.
What are the margin rates for Interactive Brokers Canada?
Margin rates are based on a blended system with tiers based on dollar amounts.
Is Interactive Brokers safe in Canada?
Yes, Interactive Brokers is safe in Canada. The company is regulated by the IIROC and is a member of the CIPF. IBKR also has a strong track record of safety and security, with no customer losses ever reported.
How much does Interactive Brokers charge for withdrawal?
In order to make a withdrawal from your IBKR account, you will need to provide certain information, including your bank account number and the amount you wish to withdraw. The first cash withdrawal in any one month is free, but there will be a charge for each additional withdrawal. The charge will be deducted from the amount you withdraw. You can find more information on the IBKR website.