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Interactive Brokers Canada Review: The Best Choice for Active Traders

Interactive Brokers Canada Review: The Best Choice for Active Traders

In Canada, self-directed investors have the good fortune of being able to choose from at least a dozen online brokers from which to trade stocks, mutual funds, and ETFs. Most of these brokers are Canadian-based, but at least one has its roots planted firmly south of the border. In this Interactive Brokers Canada Review, I’ll give you everything you need to know about this online trading giant and let you know how they compare to leading Canadian firms like Questrade.

What Is Interactive Brokers?

Interactive Brokers Canada is the Canadian version of the highly popular US discount brokerage of the same name. South of the border, Interactive Brokers, or IBKR for short, is a hit with active traders who love the low fees. While IB Canada lacks some of the US version’s top features, it still has plenty to offer active traders.

IBKR Account Types

You can open almost any type of investment account with Interactive Brokers, except RESPs and RRIFs. Non-registered accounts can be opened in a single name or jointly. Here is a list of what’s available:

  • Non-registered (Cash trading, CAD, and USD)
  • Margin trading accounts
  • RRSP
  • TFSA
  • Trust account (Formal and Informal)
  • Small Business account

Opening an Interactive Brokers Account

The account opening process at IBKR Canada isn’t exactly seamless. Before opening an account, you’ll want to collect the following information:

  1. A social Insurance Number (SIN)
  2. Your employer’s name, address, and phone number
  3. Your banking information, including account number, for funding purposes

If Interactive Brokers cannot confirm your identification electronically, you’ll need a commissioner of oaths or guarantor to sign off on your original ID and provide this confirmation in writing to IB Canada.

Along with the ID, you must provide proof of residency and a bank statement dated within the last 6 months that includes your full name and address.

Account Funding

Depending on how you plan to fund your account, you may need to provide additional information, i.e., wire transfer or electronic funds transfer info (EFT).

I couldn’t find any mention on the Interactive Brokers website of the expected turnaround time for opening an account, a fact that is slightly disconcerting.

Interactive Brokers Fees

IBKR Canada fees are reasonable, providing that you maintain a high balance in your account and qualify as an active trader. Otherwise, there are lower-cost options, which I’ll discuss in more detail later. First, let’s take a look at the various fees you can expect from Interactive Brokers:

Account Fees:

Cash Trading (non-registered):

  • No annual fee
  • No minimum balance requirement
  • Free US Dollar account
  • Inactivity fees ($10-$20/month)
  • $30 transfer out fee

TFSA:

  • No annual fee
  • No minimum balance requirement
  • Free US Dollar account
  • Inactivity fees ($10-$20/month)
  • One free withdrawal per month; additional withdrawals are $1/$2 (US/CAD)
  • $30 transfer out fee

RRSP:

  • $50 annual fee
  • No minimum balance requirement
  • Free US Dollar account
  • $30 transfer out fee

Interactive Brokers Canada Trading Fees

IBKR offers investors two pricing platforms: tiered and fixed. Let’s take a closer look at how each one works.

Interactive Brokers Canada Tiered Pricing

Under the tiered pricing model, the fees decrease as the volume of shares traded increases.

For example, a trading volume of up to 300,000 shares per month is priced at .008 cents/share, with a minimum commission of $1.00.

However, if you trade between 300,001 and 3,000,000 shares per month, the fee drops to .005 cents/share. Of course, the average investor will never trade anywhere near the volume required to qualify for the lower rate. Active traders, on the other hand, will benefit from tier-based pricing. The maximum trading fee is 0.5% of the trading value.

Interactive Brokers Canada Fixed Pricing

The fixed pricing model is fairly straightforward. A flat fee of $.01 per share is charged, with a minimum commission of $1.00 per trade up to a maximum fee of 0.5% of the trade value.

For example, if you traded 400 shares of XYZ Company, valued at $20/share, your commission fee would be $4.00 (400 shares X .01)

Interactive Brokers Canada Options Pricing

Standard Per Contract Commission: $1.25

Interactive Brokers Canada Foreign Exchange Fees

This is one of IBKRs biggest selling features. They offer some of the lowest foreign currency exchange fees globally, which is something professional traders will love. In addition to the low fees, they also provide trading access to more stock markets than any other discount broker in Canada. How many, you ask? Over 130 stock exchanges across 30+ countries and more than 20 foreign currencies.

Interactive Brokers Canada Trading Platform

Customers in the US have access to IBKR Lite, a basic version of the trading platform, for the average investor. However, IBKR Lite is not available here in Canada. Instead, all Canadian customers must use IKBR Pro. And while it’s a fully-featured trading platform with all the bells and whistles, it may be overkill for most investors.

Interactive Brokers Mobile App

As with most online trading platforms, Interactive Brokers Canada has a mobile app. But while it’s full of features, it’s clunky and confusing, with lower than average customer ratings on the app download stores. If you plan to do most of your trading via the mobile app, you may want to look elsewhere.

Interactive Brokers Canada vs. Questrade

Here at MapleMoney, our top choice for an online broker has been Questrade for a few years now. So, I’m interested to know how Interactive Brokers stacks up against what is arguable Canada’s best all-around discount brokerage.

Interactive Brokers gets the edge on pricing, with a minimum trading fee of $1.00, versus the Questrade minimum of $4.95. Questrade, on the other hand, offers commission-free ETFs, which is one of the reasons they are our top-rated brokerage. IBKR offers free ETFs in the US, but only for select ETF brands.

For pros, The IBKR trading platform offers a higher level of functionality than Questrade. However, because IBKR Lite is not available to its Canadian customers, the average investor will likely prefer the more intuitive, user-friendly Questrade platform. I would love to see Interactive Brokers introduce their Lite platform to Canadians soon.

Questrade gets the nod on customer service for two reasons. Their account opening process is simpler, and their customer support, with its online chat functionality, is highly responsive. To summarize, Questrade gets the nod for average investors, while Interactive Brokers deserves a close look from high net worth, active traders.

Interactive Brokers Canada vs. Wealthsimple Trade

Canada’s newest online broker, Wealthsimple Trade, has been garnering plenty of attention for its mobile-only trading platform and commission-free stocks and ETFs.

It compares favourably with IBKR when it comes to fees, but it lacks the pro features that most active traders covet. The trading platform is limited to mobile; there is no desktop version, and the research tools are minimal.

If what you’re looking for is basic trading functionality and the lowest fees possible, then Wealthsimple Trade is worth considering. If you need something more robust, then Interactive Brokers and Questrade are superior options.

Who Is Interactive Brokers Best Suited For?

There you have it, our Interactive Brokers review. As you can see, there’s a lot to like about IB Canada and a few things you might like to change. Active traders love the low trading fees and foreign exchange rates, access to many international markets, and the robust trading platform and market research tools.

Casual investors would benefit from access to IBKR Lite, an improved account opening process, and more responsive customer support. For these reasons, they may find a better fit with Wealthsimple Trade or Questrade.

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