Hi all,
I have this problem: my account has the base currency CHF, I deposit CHF, exchange it into USD and then want to buy VT for certain amount of USD. However, every time I try to buy I get the warning: available settled cash converted to base: XXXX CHF. Cash needed for this order and other pending orders: XXX CHF. As a result, I cannot buy VT for the full amount and it seems to me that there is another USD - CHF conversion before the purchase. Can anyone advise how to handle this?
I tell you what I do. I do not convert CHF to USD. I 'll let them do it.
Just wait for another business day or change to Margin account.
Does anyone have a margin account and can confirm that they are not affected by this weird/annoying behaviour?
I was hesitant to get a margin account just to avoid the possibility of making a mistake and having my portfolio liquidated, but this autofx stuff is really grinding my gears
Portfolio margin account here. No auto conversion except maybe once I had under ~ 5 USD/EUR that got auto converted to my base currency (CHF).
but why though… I think the autofx is great, I don’t have to care about exchanging first.
I just check how much USD i get for XY amount of CHF and then buy this amount of USD ETF.
Yes you sometimes get a few notifications, but never have I ever had the suspicion this is to my disadvantage.
Of course this only applies if you buy ETFs <6k in one go.
PS: I also have cash account, exactly because of the reasons you mentioned.
I have a margin account and normally I just buy what I want in the respective currency, get a negative balance in that currency and then I do the FX afterwards to have a zero balance in the foreign currency.
same here. I get this notifications that they did some conversion but it all ends well in general
Yep that’s why it doesn’t apply to me.
Do you know if you have to pay for a margin loan for the 2 days before the FX transaction settles?
I haven’t been charged as far as I remember. But even if they charged me, we’re talking about <0.04% at an interest rate of 7% for USD for 2 days.
I bought my first ETF today on Interactive brokers following the instructions from Mustachianpost’s blog post. I transferred CHF 1000 to the broker. I then converted 500 CHF into USD via currency exchange. I used it to buy 5 shares in the Vanguard Total World ETF. For another 100 CHF I bought 0.372 shares in the UBS SMIM ETF. According to my logic, I should now have 400 CHF left in my account, but they have somehow been automatically converted into USD.
I was wondering if I shouldn’t have converted the 500 CHF because IABK does it automatically for me when I buy ETFs?
I hope someone can clarify this for me.
Should be explained in the thread above.
I wrote in in another thread, same thing as happened to OP happened to me; 3 currencies (EUR, USD and one non-major currency that usually takes a day longer to settle), deposit in EUR, wanted to convert those and buy USD asset (t-bills).
I converted the EUR to USD as usual (settles within a few hours usually, in my experience), sized the order so that it would match the USD, and then got the same sequence of trades and conversions that can be seen in OPs screenshots. Similarly, my third currency was converted too instead of sticking with the USD, and I was left with a residual amount of USD in my account.
I guess the priority here is given to settled balances as opposed to unsettled, irrespective of whether that makes sense from the perspective of the trade (which was in USD).
Also, I don’t really understand the sequence of the buying and selling which happens within one second. I noticed the difference in conversion rate and amount, and I think this spread is what IBKR is pocketing for the service. It was 0,0001 in my case for EURUSD (I forgot what it was for the third currency).
I see the advantages of this service (specially if you want to get your trade done as quickly as possible, for whatever reason), but it is frustratingly intransparent. Moreover, there should be an opt-out option for people who don’t need it at all.
The second time, I used this service on purpose, and while the costs are what they are (I think, at least), I got to do the whole deposit → trade-sequece within a very short amount of time, without even bothering with manual conversion. Obviously, there was nothing left of my third currency in the account, so it was more transparent.
Switch to margin account and you won’t have it.
There are different reasons why people want to stick with a cash account, so this is not useful advice.
Same here. Does anybody know if that’s considered “you selling and buying currency” from the tax point of view?
Yes, not sure why it would matter tho 
Well, that means extra work when filing your taxes. Even if you don’t profit or lose from it, you still sell/buy (tax event).
there is no tax event? You don’t have to report every single transaction you do. Otherwise you’d need to start tracking your fx conversion when going on holiday as well 
Currency exchange are not taxable in Switzerland.