Interactive Brokers is an online discount brokerage firm founded in 1993. It is the largest retail broker as measured by Daily Average Revenue Trades (DARTs). The firm was founded by Thomas Peterffy, who is credited as the father of digital trading by Forbes.
Interactive Brokers Group has a market capitalization of $15 billion as of January 2017, after combining both private and public float.
Cost structure for passive investors
Interactive Brokers is a low cost operator in the brokerage industry. The firm is highly profitable despite its low commission structure due to its highly automated trading platform, active client base and low touch service.
Passive investors can take advantage of low trading cost and breadth of product offerings from Interactive Brokers, provided two caveats relevant for certain investors:
- For accounts with equity below $100,000, Interactive Brokers charges a $10/month minimum activity fee. This fee is reduced by the amount of commission generated for the month.
- Interactive Brokers charges a fee for real time market data subscriptions. This fee is passed-through from exchanges that actually sell the data product. Passive investors are not advised to subscribe to real time market data as it is unnecessary for the investment style.
Interfaces for trading
Interactive Brokers offers four different trading platforms: QuickTrade, WebTrader, Trader Workstation (TWS) and Mobile TWS. QuickTrade and Mobile TWS are the simplest and thus most suitable for passive investors.
You can create multiple portfolios by creating linked accounts. This can be done from your account page and creates a virtual type of account that shares the same user and password as your main one.
Approximately 300 Vanguard fund tickers can be purchased through Interactive Brokers. In total, more than 8,100 mutual funds from 130 fund families are accessible through Interactive Brokers as of January, 2017.
Although most funds are US based, several European domiciled funds are also available through Interactive Brokers. For a complete list of North American funds, see: Product listings from Interactive Brokers.
Interactive brokers charges $14.95 per Mutual Fund trade. The firm also offers more than 2,900 No Transaction Fee (NTF) funds where the broker is compensated with a 12b-1 fee rather than a trade execution fee.
Interactive Brokers provides access to thousands of ETFs from 13 different countries including Irish domiciled ETFs.
For the US market, the execution fee for an ETF is .0035/share with a minimum execution fee of 35 cents under its tiered pricing structure. Interactive Brokers offers commission free trading for several ETFs.
Product availability and international investing
The majority of Interactive Brokers clients are located outside of United States. Clients can trade in over 120 market centers in 26 different countries through its platform. Interactive Brokers has offices in the USA, Switzerland, Canada, Hong Kong, UK, Australia, Hungary, Russia, Japan, India, China and Estonia.[note 1]
The following table illustrates the breadth of Interactive Broker's products offering. Note that local regulatory restriction may affect a client's trading permissions in any specific market.
|Market country||Stock||ETF||Mutual funds||Bonds||Options||Futures||Future option||Single stock futures||Warrants||Structured products||Forex||Metals||Indices||CFDs|
|China - Shanghai-HK Connect||✓||✓|
In addition, Interactive Brokers allows the following currencies for account funding or withdrawal.
- For a complete list of countries available, see: Available countries from Interactive Brokers.
- "Interactive Brokers LLC". Retrieved March 6, 2021., Official website
- "About the Interactive Brokers Group". Interactive Brokers LLC. Retrieved March 6, 2021.
- "Interactive Brokers LLC Due Diligence Memo" (PDF). July 17, 2015. p. 5. Retrieved December 29, 2020.
- "Forbes Profile - Thomas Peterffy". Retrieved December 29, 2020.
- "Interactive Brokers LLC Due Diligence Memo" (PDF). July 17, 2015. p. 1. Retrieved December 29, 2020.
- Bogleheads® forum post: , Mindhacker. August 27, 2019
- "Investor relations presentation" (PDF). June 2015. Retrieved December 29, 2020. Slide 17.
- "Why Invest Online with IBKR?". Interactive Brokers Group. January 1, 2017. Retrieved November 26, 2017.
- "About the Interactive Brokers Group". Interactive Brokers Group. January 1, 2017. Retrieved November 26, 2017.
- "Interactive Brokers 2014 Annual Review, 10K Filing" (PDF). p. 36. Retrieved December 29, 2020.