Interactive Brokers (IBKR) is one of the world’s leading online trading platforms, catering to both institutional and individual traders. IBKR offers a wide range of trading platforms and tools, including the advanced Trader Workstation (TWS), the new IBKR Desktop platform, and the mobile IBKR GlobalTrader app.
IBKR provides access to a vast array of global markets and financial instruments, including stocks, ETFs, options, futures, forex, cryptocurrencies, and more. It offers very competitive commission and margin rates, with a tiered pricing structure for active traders and a commission-free IBKR Lite plan for casual investors.
Trading Platforms
IBKR Desktop
IBKR Desktop is Interactive Brokers’ new next-generation desktop trading platform for Windows and Mac. It provides global access to trade stocks, options, and futures on over 150 markets. Key features of IBKR Desktop include MultiSort, which enables sorting data using multiple factors simultaneously, and Option Lattice, a graphical options chain display highlighting potential outliers. Interactive Brokers plans to continuously update IBKR Desktop with more products and advanced tools. IBKR Desktop is available for individual, joint, and IRA non-professional advisors, as well as various institutional clients.
Mobile and Web Platforms
Interactive Brokers’ award-winning platforms are available on mobile, web, and desktop, with over 200 free and premium research and news providers. The company has launched the IMPACT Mobile Trading Platform for socially conscious investors. While the mobile app (IBKR GlobalTrader) is user-friendly, it lacks some features, whereas the desktop platform is excellent with advanced features but lacks price alerts.
Trading Tools and Research
IBKR has a robust suite of trading tools and research amenities, including advanced charting, screening tools, portfolio analysis, and educational resources. The company’s platforms can be complex for beginners, but efforts have been made to improve usability with the new IBKR Desktop and GlobalTrader offerings. IBKR’s mobile trading apps, including IBKR Mobile, GlobalTrader, and Impact, offer robust charting with over 90 indicators and 80 drawing tools. The desktop platform, Trader Workstation (TWS), is the flagship platform and offers advanced screening, backtesting, and portfolio analysis tools.
Investment Options
Global Access to Markets
Clients can invest globally in stocks, options, futures, currencies, bonds, and funds from a single platform, accessing 150 markets across 34 countries and 27 currencies. This global reach provides investors with a diverse range of investment opportunities across various asset classes and regions.
Extended Trading Hours
Interactive Brokers has extended trading hours for US Treasury Bonds, allowing clients to trade for 22 hours each day. Additionally, the company has expanded overnight trading hours to over 10,000 US stocks and ETFs, providing investors with greater flexibility and access to the markets.
Cryptocurrency Trading
Interactive Brokers has introduced cryptocurrency trading for Registered Investment Advisors (RIAs) in the US, enabling them to offer cryptocurrency investment options to their clients.
Global Contracts for Difference (CFDs)
Interactive Brokers has launched Global Contracts for Difference (CFDs) in Japan, offering leverage to Japanese investors. CFDs allow traders to speculate on the price movements of various underlying assets without owning them outright.
Mutual Funds and Investment Products
- Interactive Brokers offers over 48,000 mutual funds globally, with over 11,000 in the U.S. and over 4,000 ticket charge-free.
- The platform provides a wide range of investment products, including stocks/ETFs, options, futures/FOPs, event contracts, spot currencies, US spot gold, bonds, mutual funds, and hedge funds.
Options Trading Capabilities
- Interactive Brokers offers competitive options trading commissions, ranging from $0.15 to $0.65 per US options contract.
- Investors can trade options globally on 30+ market centers.
- The platform provides access to professional trading platforms and advanced options trading tools, such as:
- Write/Rollover Options tool
- OptionTrader
- Options Analytics
- Options Portfolio
- Options Strategy Builder
- Options Strategy Lab
Interactive Brokers has been recognized as the best for professional options traders, global options traders, and advanced options traders.
Pricing and Fees
Commission Structures
Interactive Brokers offers two commission plans for U.S. stocks and ETFs: IBKR Lite with no commissions, and IBKR Pro with tiered or fixed commission schedules ranging from $0.0035 to $0.65 per share. Options trading fees on IBKR Lite are $0.65 per contract, while IBKR Pro has tiered pricing from $0.25 to $0.65 per contract, plus exchange and regulatory fees. Futures and options on futures have tiered pricing from $0.85 to $0.25 per contract, plus exchange and regulatory fees. Cryptocurrency trading commissions are tiered from 0.18% to 0.12% of trade value, with a minimum of $1.75 per order.
Margin Rates
Margin rates for IBKR Lite are 7.83%, while IBKR Pro has tiered rates from 6.83% to 5.83%, declining as account size increases. Commissions at Interactive Brokers start at $0 for US exchange-listed stocks and ETFs, and margin rates range from 5.83% to 6.83% as of April 2, 2024.
Order Execution
IBKR Lite generates revenue through payment for order flow, which can result in slightly lower-quality order executions compared to IBKR Pro. IBKR Pro does not accept payment for order flow, providing higher-quality order execution.
Other Fees
Mutual fund trades are $14.95 or 1.5% of trade value, whichever is less. Interactive Brokers is not a good choice for trading penny stocks due to the per-share commission.
Account Minimums and Pricing
IBKR Pro offers per-share pricing starting at $0.0005 per share, with volume discounts available, and both IBKR Lite and IBKR Pro have a $0 account minimum.
Interest Rates and Income Programs
Interactive Brokers allows investors to earn high interest rates of up to 4.83% on cash balances and offers a Stock Yield Enhancement program to earn extra income on lendable shares.
Additional Features and Services
Educational Resources
Interactive Brokers provides a wide range of educational resources to help traders and investors enhance their knowledge and skills. The company offers over 65 free online courses through its Traders’ Academy, covering topics such as trading, stocks, options, futures, and more. Additionally, IBKR has developed the IBKR Desktop Trading Course, a free 10-lesson course available through IBKR Campus.
Regulatory Compliance and Security
Interactive Brokers is regulated by top-tier authorities like the SEC and FCA, ensuring compliance with strict regulatory standards. The parent company is listed on the NASDAQ exchange, further enhancing transparency and accountability. However, IBKR has faced some regulatory issues in the past, including a $3.5 million penalty from FINRA in 2023 related to supervision and execution practices.
Account Types and Global Access
IBKR offers a wide range of account types, including individual, joint, and IRA accounts for non-professional advisors, as well as various institutional accounts. The platform provides global access and trading capabilities, allowing investors to trade in over 150 markets across 34 countries and 27 currencies.
Financial Strength and Ratings
Interactive Brokers has a strong financial position, with $14.6 billion in equity capital and $10.2 billion in excess regulatory capital. The company is rated ‘A- Outlook Stable’ by Standard & Poor’s, indicating a stable and reliable financial standing.
Customer Service and Support
IBKR’s customer service has an average connection time of 1-2 minutes, with an average Net Promoter Score of 4.2/10 and Professionalism Score of 3.7/10. While the company offers various support channels, the ratings suggest room for improvement in customer service quality.
Prime Brokerage and Outsourced Trading
Interactive Brokers has introduced High Touch Prime Brokerage and Global Outsourced Trading, exclusive services to help select US hedge funds manage and grow their businesses. These offerings cater to the specific needs of institutional clients and provide specialized support.
Securities Lending and European Operations
IBKR has launched a Securities Lending Dashboard to help clients assess short-selling activity, and has consolidated its European brokerage operations into Ireland. These initiatives aim to enhance transparency and streamline operations for European clients.
Fractional Shares Trading
Interactive Brokers has expanded fractional shares trading to European stocks and ETFs, providing investors with greater flexibility and accessibility to invest in their desired securities.
Conclusion
Interactive Brokers stands out as a comprehensive and powerful trading platform catering to a wide range of investors and traders. With its extensive global market access, advanced trading tools, and competitive pricing, it offers a compelling proposition for those seeking a sophisticated trading experience. From beginner investors to professional traders, IBKR’s diverse offerings and robust educational resources make it a versatile choice.
While the platform’s complexity and customer service ratings suggest room for improvement, Interactive Brokers’ strong financial position, regulatory compliance, and continuous innovation demonstrate its commitment to providing a reliable and evolving trading ecosystem. As the world of finance evolves, Interactive Brokers remains well-positioned to adapt and cater to the ever-changing needs of traders worldwide.
