If you are starting to take trading more seriously or have a large portfolio, you must look at Interactive Brokers.
I will take a look at this discount broker that has made it across the border from the US to make its services available to Canadians.
It makes my list as one of the best trading platforms in Canada and the top choice for professional traders.
Check out this Interactive Brokers Canada review to see if it will be a good fit for you.
Online Broker / Trading Platform
An excellent online broker for the serious traders out there. If you trade options, buy and sell heavy volumes, and want access to global markets, IB is a good trading platform for you.
- Excellent for advanced traders or those with large portfolios
- Very low foreign currency conversion fees
- Multiple regulations in several countries
- Trader education package for professional traders
- Complicated process to open an account
- Complex desktop trading platform
- Customer response is not ideal
What is Interactive Brokers Canada?
Interactive Brokers Canada is the Canadian expansion of the US brokerage Interactive Brokers and was founded in 1978. Reputed for its competitive trading fees and commissions, the company operates in several countries, including the US, Hong Kong, Japan, India, the UK, Switzerland, Estonia, Russia, China, Liechtenstein, and Canada.
In Canada, it is a member of the Industry Regulatory Organization of Canada (IIROC) and the Canadian Investors Protection Fund (CIPF).
Interactive Brokers Canada allows you to capitalize on its proprietary ‘SmartRouting’ technology to search for and avail the best market prices, connecting to 125 markets in 31 countries.
Interactive Brokers Canada began in December 2000 and provides Canadians with direct and high-speed access to trade in markets around the world.
Features and Benefits of Interactive Brokers Canada
In this section of my Interactive Brokers Canada review, I will discuss the platform’s features and benefits so you know what to expect from it.
Interactive Brokers Canada Pricing and Fees
Interactive Brokers Canada has a bit more complicated pricing system than other discount brokers. There are two pricing structures you can go for if you are using Interactive Brokers:
- Tiered Pricing
- Fixed Pricing
The tiered pricing structure is the low broker commission that the platform charges you. The platform decreases the commission depending on the volume, exchange, regulatory, and clearing fees. If you get a rebate from the currency exchange, Interactive Brokers pass some or all of the savings back to you.
Trade volume per month is tiered to make trade commissions substantially lower for high-volume trades (note these are for Canadian stocks in CAD):
- Up to 300,000 shares per month and $0.008 per share
- 300,001 – 3,000,000 shares per month $0.005 per share
- 3,000,001 – 20,000,000 shares per month and $0.004 per share
- 20,000,001 – 100,000,000 shares per month $0.003 per share
The higher the number of shares you trade per month, the lower your fee becomes per share. However, most retail traders will never even come close to 300,000 shares per month.
Interactive Brokers Canada’s fixed charges see a fixed low commission per share or a set percentage value of the total trade amount. The fixed rate comes inclusive of all exchange and regulatory fees. The transaction fees are passed through on stock sales for US stocks, exchange-traded funds (ETFs), and warrants.
For its fixed rate, the charges are $0.01 per share with a minimum of $1 per order or maximum of 0.5% of trade value.
Example: If you buy 200 shares of a company worth $50 CAD for a total cost of $10,000, you will be charged the tiered rate of $0.008 * 200 + $0.01 * 20 = (1.6 + 0.2) = $1.80 – This is super cheap!
You can see the full fee schedule for Interactive Brokers Canada here, which includes USD rates, which are even cheaper.
Accounts Offered by Interactive Brokers Canada
You can open several types of accounts with Interactive Brokers Canada that can cater to a variety of financial goals you may have:
- Tax-Free Savings Account (TFSA)
- Retirement Savings Plan (RRSP)
- Individual Account – Owned and used by one individual
- Joint Account – Owned and used by two individuals
- Trust – Account held by a Trustee as a separate legal entity for the client’s benefit
- Individual Retirement Account – IRA is only available to US clients
- UGMA/UTMA – Account for minors only available to US clients
- Friends and Family Account – An account for a client group of up to 15 people
- Family Office Account – Account for an individual who is a Family Office Manager
- Small Business Account – Account for small corporations and businesses
- Advisor Account – Account for individuals who manage both client administration and money
- Money Manager Account – Account for individuals hired on behalf of another advisor
The type of account you open with the platform can vary depending on your investing goals.
Here’s an in-depth look at the range of investment products available through Interactive Brokers Canada:
- Stocks: As with most brokerage platforms, you can trade a wide range of individual stocks listed on various exchanges. Whether you’re interested in Canadian, U.S., or international stocks, Interactive Brokers Canada offers access to a global selection.
- Options: IB Canada provides a robust options trading platform. This includes the ability to trade both calls and puts, along with various strategies such as spreads and straddles.
- Futures: Futures contracts allow you to speculate on the future price of commodities, indices, or financial instruments. Interactive Brokers Canada offers access to futures markets.
- Forex (Foreign Exchange): The forex market is the largest and most liquid financial market globally. Interactive Brokers Canada provides access to forex trading, allowing you to trade major and minor currency pairs.
- Bonds: Fixed-income investors can trade bonds. This includes government bonds, corporate bonds, and other fixed-income securities.
- ETFs (Exchange-Traded Funds): ETFs are popular investment vehicles that provide exposure to various asset classes and sectors.
- Mutual Funds: IB Canada offers access to mutual funds, providing investors with a diversified way to invest in a portfolio of assets.
- Cryptocurrencies: While not as extensive as some specialized cryptocurrency exchanges, IB Canada does offer access to select cryptocurrencies, allowing traders to participate in this emerging asset class.
Interactive Brokers Canada Platform Ease of Use
Interactive Brokers Canada is a particularly useful platform when it comes to more professional traders. If you are a casual investor, IBKR Lite is simpler.
Unfortunately, IBKR Lite is not available to Canadians. You have to stick with the IBKR Pro.
The platform offered by Interactive Brokers is called the Trader Workstation (TWS), and it supports trading of any kind of equity you can imagine, including global assets. TWS is a sophisticated desktop trading platform that might go over the heads of any casual investors, but it can be ideal for professional investors.
Simply put, if you are not an experienced trader, it is a steep learning curve to use TWS.
Interactive Brokers Canada Research
While using the TWS is no easy task, investors and traders who can commit to learning how the platform works can have a wealth of research tools available to them. TWS provides you with access to several advanced research tools that seasoned traders love, like back-testing and scanning.
Its research highlights multiple screeners give you comprehensive back-testing functionality and tools for portfolio analysis. Traders who want to perform specific research will enjoy the dozens of third-party providers that Interactive Brokers Canada works with, including Morningstar.
If you choose to use third-party research tools, you will have to pay a monthly fee for their services integrated into TWS.
Despite all the advanced tools, TWS does make the process quite complicated if you want to perform more straightforward research compared to other platforms.
Interactive Brokers Canada Customer Service
Interactive Brokers Canada has a multilingual support desk that operates from various offices around the world. Most of them are available with over 15 different phone lines for clients across various countries to get support.
Interactive Brokers also offers Ask iBot for addressing more straightforward concerns or queries that might not require a person’s help.
Many customers have complained about the horrible customer support from the platform. The platform is more suitable for the needs of professional traders who are well-versed in its policies.
Casual or beginner traders might find it challenging to adjust to the platform, and its customer support is known for not answering for days.
Here are some real-life examples of user experience with the platform. I scoured the internet for hours to find reviews of people who are or have actively been using Interactive Brokers Canada for their trading activities. I found mostly positive reviews, while some users were disappointed. Here’s what people have to say about this discount brokerage.
The Not So Good
Security and Regulation
Here’s a detailed overview of the security measures and regulatory framework in place:
- Account Protection: Interactive Brokers Canada provides multiple layers of security for your accounts. This includes two-factor authentication (2FA), encryption of sensitive data, and secure login procedures.
- Segregation of Client Funds: The platform follows strict protocols for segregating client funds from its operational capital. This ensures that your funds remain separate and protected even in the event of the broker’s financial difficulties.
- Regulatory Oversight: Interactive Brokers Canada operates under the oversight of regulatory bodies such as the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investors Protection Fund (CIPF). These organizations ensure that the broker complies with industry regulations and safeguards clients’ interests.
- Compliance with Global Standards: Beyond Canadian regulations, Interactive Brokers is recognized globally for its adherence to financial industry standards. It operates in multiple countries and complies with various international regulations.
- Data Protection: Interactive Brokers Canada is committed to protecting your personal and financial data. It employs advanced data security measures to prevent unauthorized access or breaches.
- Regular Audits: The broker undergoes regular audits and financial assessments to maintain transparency and demonstrate its financial stability.
Alternatives to Interactive Brokers Canada
When I think of alternatives to Interactive Brokers Canada, Questrade, Qtrade, and Wealthsimple Trade come to mind. Here’s a comparison of Interactive Brokers Canada with these Canadian discount brokers.
Interactive Brokers Canada vs. Questrade
Questrade is one of the most popular discount broker products in Canada. It offers some of the lowest trading fees among online brokers in Canada except for Interactive Brokers.
Questrade has a $1,000 minimum account balance before you can start investing. Interactive Brokers does not have a minimum account balance required before you can start trading with the platform.
However, Questrade offers more intuitive trading solutions for investors. It is suitable for both beginner-level and professional investors.
In the hands of a professional trader, Interactive Brokers Canada might have an edge due to its sophisticated research tools.
Find my full Interactive Brokers vs Questrade comparison here.
You can also check out a more comprehensive review of Questrade here.
Interactive Brokers Canada vs. Qtrade
Qtrade, not to be confused with Questrade, is another discount broker product available to Canadians. Qtrade is a product suitable for Canadian investors who want to focus on Canadian and US markets.
It’s been around since 2000, has no mutual fund fees, and has low trading fees. It also requires no minimum deposit while offering several types of accounts you can open.
Read my full Qtrade review here.
Interactive Brokers Canada vs. Wealthsimple Trade
Wealthsimple Trade is the trading platform offered by Wealthsimple, Canada’s most popular robo-advisor product. Only available as a smartphone app, the platform allows you to buy and sell ETFs and stocks without paying commissions. It has no minimum account balance requirement like Interactive Brokers.
It does not support a lot of account types. It became the first zero-commission platform to trade ETFs and stocks in Canada when it launched. While a similar offering is available with Interactive Brokers, IBKR Lite is not available in Canada as of writing.
You can check out my Wealthsimple Trade review to get a better look at the platform.
Interactive Brokers is a respectable name in the industry if you are looking for the best values on trades. It offers you access to several sophisticated research tools and metrics to help you make well-informed trading decisions. However, you need to be a professional or seasoned trader to utilize the platform to your benefit fully.
If you cannot figure out how to use the platform, you might find it useless to help you. For casual investors, I would recommend using a more straightforward platform.
I would like to conclude my Interactive Brokers Canada review by saying that it gets a Wealth Awesome thumbs up for veteran traders. Check out my full list of the best trading platforms in Canada here.