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Canadian Online Discount Broker – Interactive Brokers

Canadian Discount Brokerage - Interactive Brokers

Contact Information

Phone: 1-877-745-4222

Email: newaccounts@interactivebrokers.com

Website:http://www.interactivebrokers.ca/en/main.php

Headquarters:

1800 McGill College Avenue,
Suite 2106,
Montreal, QC H3A 3J6

Customer Service Hours of Operation:
Mon to Fri 5 a.m. to 2:30 p.m. PT

Interactive Brokers – Review of Pricing

Interactive Brokers Canada is the Canadian arm of Interactive Brokers, an American discount brokerage firm. While several of the other Canadian discount brokerage firms are affiliated with or are a part of a major bank, Interactive Brokers is not bank-owned and is more geared towards active traders than “investors”.

As of December 2014, Interactive Brokers Canada offers Registered Retirement Savings Plan (RRSP) accounts and Tax-Free Savings Accounts (TFSAs). This is a significant development for Interactive Brokers Canada as these account types have been long sought after by many Canadian clients.  For the moment, the RRSP and TFSA accounts are only available in Canadian dollars.  Additionally, there is a quarterly maintenance fee of $12.50 for RRSP accounts.  There are certain restrictions on the RRSP accounts that are not common at other providers, such as no support for the HBP or LLP.  Be sure to read the full list on their website for the most up-to-date details.

With a heavy focus on active traders and on trading, this discount broker has platforms and pricing that cater to very active investor or trader. They have two pricing options for traders: the “flat rate” or the “cost plus”.  The “flat rate” option charges $0.01/share with a minimum charge of $1.00 per trade for commissions + exchange, ECN and specialist fees (typically a few more cents); with the flat rate option the maximum charge you pay is actually 0.5% of the trade value (plus exchange, ECN & specialist fees).  The “cost plus” option is pricing based on the volume of shares you trade per month.  For example, the “lowest” threshold of volume they have is 300 000 shares or less in which they charge, on a per share basis, $0.0035 for US stocks, ETFs & Warrants or $0.008 for Canadian stocks. For the “cost plus” some extra charges are levied that approximate the ECN and exchange fees, so you will have to do some math to figure out the exact final charge you will pay if you decide to go this route.

One of the biggest drivers of your cost using this option is whether your orders add liquidity or remove it from the market. A handy way to think of this is using market orders vs limit orders (or more precisely buying/selling at the best market price – which removes liquidity or placing an order outside of best market price – which adds liquidity).  When approximating the cost, it’s best to use the “remove” liquidity function for your calculations. With this approximation in mind, the extra fees associated with the “cost plus” work out to $0.006 per share for US traded stocks at the lowest level of share volume.

If it sounds a little complicated, it is for most beginner traders.  If you’ve made it this far though, you might be surprised to find out that you can actually get paid for adding liquidity – translation: for certain order types (limit orders) stock exchanges will actually pay you instead of charge you.  The links below take you to Interactive Brokers’ pricing plan info where you can find out more.

The Bottom Line

If you are an active trader, Interactive Brokers’ pricing structure can certainly keep your trading costs in check. One important thing to consider is the typical order sizes that you trade with and your typical trading volumes on a monthly basis, as there are slightly different pricing plans suited to each category.  The required account minimums are also important to take note of.  Now that there are registered accounts, Interactive Brokers just became incredibly more competitive with many of the other Canadian discount brokerages on price and functionality.

 

Account Types OfferedFunding Requirements and FeesRegistered Account Types and Fees
TFSAMinimum Opening Balance$10 000TFSAAnnual Charge$0
RRSPMinimum Account Balance$2000 (Margin) $25000 (Day Trading)Transfer OutN/A
RESPMinimum Balance for Best or Discounted CommissionNot RequiredWithdrawalsFirst withdrawal free/month
CashMinimum Commission per Equity Trade$1.00US Dollar Account
Margin ShortMaximum Commission per Equity Trade***0.5% of trade valueRRSPAnnual Charge$50
Margin OptionsMinimum Trades per Quarter for Best Commission RateNot RequiredTransfer Out$50 (per withdrawal)
CIPF MemberInactivity or Maintenance Fees$10/month - commissions or $20/month - commissionsUS Dollar Account
Conditions for Inactivity/Maintenance Fees$10/month fee applies if < $10 in commissions generated in month and accounts net liquidation value >= 100,000
$20/month fee applies if balance is <$2000
RESPAnnual ChargeNot Applicable
Transfer OutNot Applicable
US Dollar AccountNot Applicable
Last updated: Mar. 8, 2016

Interactive Brokers Website Links:

Here are some useful links to important information on Interactive Broker’s website.

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