IBKR Offering About 2.90% - 3.40% On Large Balances

L

Lightning

.
Messages
5,381
Interactive Brokers have increased their EUR deposit rates on the back of the ECB rate increase.

Their product is complex to say the least.
  • 0% on the first 10,000 EUR.
  • Gradual increase in the rate up to 100,000 EUR.
  • For example, a balance of 50,000 earns 1.178% (2.356%/2) because you are half way to 100,000 but the 1.178% only applies to the balance from 10,000-50,000.
  • Balances over 100,000 earn 2.356%.
  • The rate applies to IBRK Pro accounts. There seems to be no fees for this product (other than trading fees).
  • Protection is provided via 90% of the first 20k via the Irish Investor Protection Scheme.
  • Their website also mentions protection via SIPC up to 250,000 USD or equivalent. Is this only for USD cash ????
Might be of interest to someone with a large balance.
 
Last edited:
Long time lurker, first time poster

I'm struggling to wrap my head around the SIPC protection. The SIPC website does say: A non-U.S. citizen with an account at a brokerage firm that is a member of SIPC is treated the same as a resident or citizen of the United States with an account at a SIPC member brokerage firm.

But like the OP said, I don't understand if the amount needs to actually be held in dollars. And frankly, I don't understand a lot of the financial lingo on the SIPC website. It doesn't look like this is equivalent to the Deposit Guarantee Scheme in terms of security.

I wish I could have more confidence in this. I just received a big lump sum and it would be ideal for my needs right now
 
time to plan said:
What is their business model to make profit if they're paying our 2.356%? Just curious.
Click to expand...
Best case scenario: Overnight interbank lending currently 2.9%. Or place on deposit with ECB at 3%.

But they also need money themselves to finance their margin lending.
 


The website that you linked too says "SIPC protects cash held by the broker for customers in connection with the customers’ purchase or sale of securities whether the cash is in U.S. dollars or denominated in non-U.S. dollar currency".
 
Last edited:
Lightning said:
IBRK should make the protection clearer on their website.
Click to expand...

Financial Strength - Strength and Security | Interactive Brokers Ireland

Make sure your broker is secure and can endure market changes. Read more about Interactive Brokers Group’s strength and security facts.
www.interactivebrokers.ie
 
I've set this up. It's a bit of an unusual experience because it's not really designed as a savings account. From what I can see, I just load the cash onto the Pro account I've created and that's it. There's no "product" to select or anything.
 
Noodler, how do you know your pro account is accruing interest. I set up an account last year, logged €100- and never touched it. The balance has just sat there, no interest accrued.
 
So to double check: a balance of between €100k & up to €230k (i.e. $250k equivalent, by today's FX rate) earns 2.356% interest except the first €10k & all of that balance is protected, correct?
 
James5 said:
So to double check: a balance of between €100k & up to €230k (i.e. $250k equivalent, by today's FX rate) earns 2.356% interest except the first €10k & all of that balance is protected, correct?
Click to expand...
This is my interpretation of it, with the threshold being determined by the USD/EUR exchange rate at any given moment.
 
James5 said:
So to double check: a balance of between €100k & up to €230k (i.e. $250k equivalent, by today's FX rate) earns 2.356% interest except the first €10k & all of that balance is protected, correct?
Click to expand...

Possibly correct. But I don't think it is crystal clear that the SPIC protection definitely applies in this way to euro balances if the euro balance is held with a different custodian/bank. Could the euro balances be held in sub-custody outside of a US broker and therefore not subject to SPIC protection?
 

Interest Rates | Interactive Brokers Ireland

With an Interactive Brokers account you'll earn market rate interest on your uninvested cash balances.
www.interactivebrokers.ie

There's an interest rate calculator on the website where it will tell you how much you will be paid!




Risk Management - Strength and Security | Interactive Brokers Ireland

Conservative and prudent risk management ensures the safety of your assets at Interactive Brokers.
www.interactivebrokers.ie
 
Oh great…I’m delighted that “Conservative and Prudent Risk Management” are on my side.

I think I met their cousins once, “Sensible and Cautious Downside Protection”.
 
After much searching, I have found the following article with disappointing news:


In other words, euro deposits are not protected if you are are adding them to the account to avail of this interest rate and do not intend to trade. The extent to which you need to be trading is not defined. I'm out!
 
Is it because of rules on capital requirements that banks aren't able to do this, but the brokerage firms, which are not bound by the same regulations, are? Or is it just that the rise in interest rates has been so fast, and that there is uncertainty about how long the high rates will last, that causes the cautious banks (and State Savings) to not substantially increase their rates?
 
You must log in or register to reply here.
Menu
Log in
Register