Interactive Brokers (IBKR) Review: Is This The Best Brokerage Account?

The hottest global brokerage firm has firmly made their presence known in Singapore. Here’s what the value proposition is like for investors, and read on for who should be hopping on the IBKR bandwagon.

Listed on the NASDAQ since 2007, Interactive Brokers (IBKR) is a low-cost online brokerage firm that allows you to invest globally in a variety of asset classes. This includes stocks, options, futures, currencies, bonds and funds.  

With over 37% of Interactive Brokers accounts now coming from Asia, and as IBKR’s Singapore client base continues to grow, IBKR made the decision to open a Singapore office in July 2020. Despite being relatively new to set up camp in Singapore, IBKR is already a well-known brokerage and has been used by many investors in Singapore prior to this. 

Here’s what you’ll find in this review:  

• Overview
• Pros and cons of using IBKR
• What IBKR Pro vs IBKR Lite 
• Reasons to use IBKR
• Who should use IBKR
• Pricing, charges and fees involved 
• How do you open and fund your IBKR account?
• How to transfer from your brokerage account to IBKR
• Close alternatives to IBKR

Overview of Interactive Brokers (IBKR)

Known for their ultra competitive fees that make it easy for investors to execute trades, particularly in the US market, the only way is up for IBKR, especially as more people are now investing and trading. 

Product summary (based on IBKR Pro):

• What you can invest in: Stocks, options, futures, currencies, bonds and funds
• Minimum balance required: US$0
• Maintenance fee: None
• Fees for Singapore stocks: 0.08% of trade value (min. S$2.50 per order)
• Fees for US stocks (fixed pricing): US$0.035 per share (min. US$0.35 per order, max. 1.0% of trade value)
• Fees for HK stocks (fixed pricing): 0.05% of trade value (min. HK$18 per order)

Pros and cons of using IBKR

Here are the pros and cons of using IBKR for your investment and trading needs.

IBKR Lite vs IBKR Pro 

Here are the key differences between IBKR Lite and IBKR Pro and where they stand out.

IBKR Lite: For US residents and those under the Employee Track

IBKR Lite offers unlimited S$0 commissions on US-listed stocks and Exchange Traded Funds (ETFs) trades, with no account minimum required and no inactivity fees. You enjoy a simplified trading experience that comes along with free access to market data from primary exchanges.

Currently, IBKR Lite is only offered to direct US clients or clients of an Introducing Broker. If you are an employee of a company using Employee Track, then you can have an IBKR Lite account regardless of your location. 

More specifically, these are the people eligible for IBKR Lite:

1. US resident individuals, joint, IRA and trust accounts.
2. US Financial Advisors and Family and Friends Advisors. 
3. Broker clients of any residency (broker must opt into IBKR Lite for all their clients). 
4. Employee Track individuals, joint, IRA and trust clients of any residency.

This means that if you are an everyday investor — one who isn’t a US resident or an employee of a company that uses IBKR, you won’t be able to open an IBKR Lite account. 

IBKR Pro: For everyday investors in Singapore

IBKR Pro is marketed as an account for sophisticated investors and active traders. However, contrary to the name ‘Pro’, IBKR Pro is the account for an everyday investor here in Singapore. Or rather, a Singaporean investor's only choice when using IBKR, unless you are a US resident or fall under the Employee Track. 

As an IBKR Pro user, you enjoy all the offerings IBKR has available, including their advanced technology such as IBKR algorithms, APIs and tools that IBKR Lite users cannot access. 

Similar to IBKR Lite, IBKR Pro does not have a minimum account balance required.

To find out if you’re an IBKR Lite or IBKR Pro user, you just have to log in, and the IBKR Lite or IBKR Pro logo will be displayed on your browser. Chances are, if you're a retail investor in Singapore, you'll automatically be using IBKR Pro.

Reasons to choose Interactive Brokers (IBKR)

#1 Low trading cost that is hard to beat

IBKR makes trading affordable with charges that are competitive and amongst the lowest in the industry. These competitive fees do not only apply to stocks but also to other asset classes such as forex as well. 

Trading fees for the tiered account begin at 0.08% of trade value for Singapore stocks, 0.05% of trade value for Hong Kong stocks, and US$0.035 per share for US stocks.

For example, the cost to purchase a US stock is US$0.035 per share, with a minimum of US$0.35 per order. This is far lower than the trading commissions and a minimum of S$10 charged by other brokerages that offer similar custodian accounts. 

Other low-cost brokerages for you to consider include Webull, Tiger Brokers and moomoo.

#2 Invest globally in a multitude of products with a single account

Diversification is key to investing. Your ideal portfolio could be made up of assets such as stocks, bonds, funds and more. Through a single IBKR account, you can invest and trade globally in stocks, bonds, funds, options, futures, and currencies. 

Present in 135 markets, 34 countries, and in 27 currencies, IBKR has the global reach that is necessary for today’s economy, making it easy for investors to look beyond their own shores to invest in companies listed abroad. 

#3 No minimum balance required in the account

A major barrier for new investors is often the minimum capital required to get started. With IBKR, whether you’re using IBKR Pro or IBKR Lite, there’s no minimum balance and no minimum starting amount required, making it easy for all investors to start using an IBKR account. 

They've also removed the monthly minimum US$10 maintenance fee/inactivity fee (the biggest reason why some investors were hesitant to use IBKR previously), so even if you don't plan to make multiple trades each month, you can still use IBKR to enjoy low-cost trades.

#4 Tools to bring your trading to the next level

Optimise your trading strategy with various trading tools and more than 100 order types and algorithms to choose from. IBKR also offers trading APIs that allow you to do things like build custom trading applications, develop commercial trading software and automate your trading strategies. 

If you’d prefer to do your own learning and research, IBKR has a campus that can help you understand and utilise its offerings. Webinars, market commentary and analysis from professionals are also available.  

For whom is Interactive Brokers (IBKR) best for?

IBKR is best for those looking for an affordable and innovative online broker that provides access to stocks listed in multiple markets. With IBKR scrapping its minimum US$10 maintenance fee, it is now ideal for not just those that make multiple transactions a month but also investors looking for a cheap brokerage to make trades with.

For example, if you trade US stocks in small amounts, based on the minimum fee of USD$1 per order, you will need to make 10 orders in order to avoid paying any maintenance fee for the month.

What charges or fees should you look out for? 

Low fees do not mean no fees. Here are other fees that you could incur when you trade with IBKR.

Tiered vs Fixed pricing

There are two types of pricing structures offered by IBKR. 

Tiered pricing: With tiered pricing, your commission fee depends largely on your trading volume. It can also be affected by exchange, regulatory and clearing fees. 

Fixed pricing: With fixed pricing, you are charged a fixed rate per share that includes all exchange and regulatory fees. This share could be a fixed amount per share, such as US$0.005 per share for US stocks, or a set percentage of the trade value, such as 0.08% of the trade value for Singapore stocks. 

For Singapore stocks, fees are fixed at 0.08% of trade value, with a minimum of S$2.50 per order. 

With the affordable rates for the fixed pricing, tiered pricing could better suit those that trade frequently and with larger volumes. For example, US stock commission per share drops from US$0.0035 for trading less than 200,000 shares per month to US$0.0005 when you trade more than 100 million shares per month. 

How to open and fund your IBKR account?

Here are the steps that you’ll go through to create your IBKR account: 

• Step 1: Create a username and password, confirm your email address and select the country/region.
• Step 2: Verify your email account.
• Step 3: The application will require your personal information, income, tax residency information and more. To speed up your application, you can select the option to retrieve MyInfo from your SingPass account. This will share your personal details that will help to prefill your application.
• Step 4: Finish filling up the form.  
• Step 5: Fund your account to start trading. Do note that some products, such as leveraged products, require you to meet specific eligibility criteria in order to trade the product. 

To fund your account, you will have to transfer funds (or assets) via a method such as a bank wire. 

This can be done in multiple currencies, including SGD, USD, HKD, CNH and GBP. When the funds are in your account, you’re good to go! 

How to transfer stocks from TD Ameritrade to IBKR

With TD Ameritrade announcing that it would stop servicing retail investors starting from December 2023 onwards, you may be left wondering what to do with your shares.

If you don't plan on liquidating your shares, an alternative way is to transfer your assets in your TD Ameritrade account to another brokerage, including IBKR.

You can request for a transfer process via a process known as Automated Customer Account Transfer Service (ACATS). This process lets you transfer supported securities, cash, and options from your brokerage account (including TD Ameritrade) to IBKR in four to eight business days.

Here's how:

1. Once your IBKR account is approved, login into your account. Go to 'Transfer & Pay', followed by 'Position Transfers'
2. Select 'Incoming' and choose United States as the region
3. Select 'ACATS' as your transfer method
4. Supply your broker information. For example, select 'TD Ameritrade' and enter your TD Ameritrade account details
5. Provide transaction information; you'll be asked whether you want to transfer everything. Select 'Yes' if you're planning on transferring all your assets and follow the screen prompts. 
6. If you're making a partial transfer, select 'No' and click the 'Add Asset' button to add each position

Close alternatives to IBKR

Webull: One of the most popular US online brokers, Webull, has been making waves with its zero-commission promotion. However, this $0 commission applies to US exchange-listed stocks, ETFs and options trades only. There is also no platform fee, inactivity fee, and minimum deposit required. 

Tiger Brokers: A new broker that made an impact upon its launch, Tiger Brokers only entered the Singapore market in March 2020. Tiger Brokers charges 0.03% of the trade value (minimum S$1 per trade) for Singapore stocks. For US shares, Tiger Brokers charges US$0.0005 per share with a minimum of US$0.99 per order.

Besides the competitive pricing, Tiger Brokers runs promotions from time to time, including free shares, commission-free trades, stock vouchers and access to free market data for US stocks. You’re also encouraged to refer friends to earn yourself more rewards!

moomoo: Like Tiger Brokers, moomoo is also has one of the lowest fees. Currently, there's no commission fee for trading US shares until 12 April 2023, but there's a US$0.99 platform fee per order. Trading Singapore shares is also affordable, at 0.03% of the transaction amount, with a minimum of S$0.99 per order.

mooomoo's promotions are also second to none, offering free shares depending on the criteria you meet.

CMC Invest: CMC Invest is also one of the lowest 

Lastly, if you’re still unsure if IBKR is for you, check out this article for the best brokerage accounts in Singapore. 

Read these next:
Best Brokerage Accounts To Start Your Investment Journey In Singapore
moomoo Review: Low Cost Trades And A Free AAPL Share
Tiger Brokers Review: Low Commissions And Attractive Sign-Up Promotions
Investing In Exchange Traded Funds (ETFs): A Newbie’s Guide To Getting Started
Best Investment Sign-up Promotions In Singapore (2021)