This blog, and most of blogs, when talking about Interactive brokers fees system they always explain that there is : fixed and tiered. By doing some math and showing some examples, they show that tiered system is usually cheaper and thus recommend it.
Since I am new to this, I was trying to compare those examples to the fees I get myself and I saw that they do not match, in fact by looking at https://www.interactivebrokers.co.uk/en/index.php?f=1590 you can see that fixed fees are Half! of what all blog posts (even updated ones) say. They lowered from 0.1% to 0.05%.
Thus, right now, for most ETFs (in europe) using fixed fees tends to be cheaper. Unless you do very small buys around 3-5k.
Any thoughts about that? Am I missing something? Or blog posts should be updated yet again?
How did you get to the conclusion that fixed is cheaper than tiered ?
Edit : in addition, tiered fees are caped to 29EUR, which would be a 60K order size, and fixed is not capped so you’ll keep paying more the bigger your transaction.
Because that is the base fee from interactive brokers. Which is the same than fixed 0.05%.
However, with tiered there is many more fees that have to be applied to the trade. But this is a bit harder to show, since every exchange has a different fee. However I can make an example for you (which you can verify since I assume you have tiered fees).
Lets say I want to buy VWRL. Lets say I buy 10k of it at AEB exchange.
Things are worse with other exchanges, like swiss ones, that are quite more expensive.
Now lets do with 6000 euro:
Fixed is 3 euros.
Tiered: 3.85. (doing same calcs)
Now lets do with 3000 euro (where things might be better):
Fixed 3 euro.
Tiered: 2.35 euro.
Before, fixed fees were double. Thus, this might change many things for some people. I verified all fees by doing transaction previews and they all match what the fees page say.
Disclaimer: I am not saying they are better or worse, I am saying that conditions have changed with what the blog posts say and thus depending on the size of your purchases you might want to be using fixed since there is a range where they have become cheaper than before. Just that.
I see, I did skip through those additional fees indeed.
Went back to the page, and saw something you may have missed : the 0.05 fixed is valid only for
All Stock and ETF orders executed with IB SmartRoutingSM on venues in Belgium, France, Germany, Spain, Italy, Netherlands, Switzerland, United Kingdom
I’m not sure what it implies to use that kind of order, but you have to actively use that function to profit from those fees. Not sure also if this is a new feature or if it’s been there for a while.
When not using that, regular routing is still 0.1 for EU exchanges.
Yes, you are right. I really do not know how does that work to be honest, I believe we do not even have control on that.
However, for all the tests I did to buy Swiss, EU and US ETFs they were using the 0.05% fee rate (with the fix minimum fee displayed for SmartRoutingSM).
In the end, to answer the initial question : it’s quite possible that this is a recent feature that didn’t exist at the time of the articles / blog posts so I guess they might be out of date.
If you use client portal, your order is automatically routed via IB smart routing. To select routing manually, you can use their Trader Workstation. But as a private investor, you hardly care.
Depends. For example for European ETFs traded at Xetra trading pool Gettex2 has no fees, so 0.05% better than Xetra. So if your price is a bit better because of a narrower spread, but fees are higher, you might be better with a manual order routing.
For US shares there is a pool MEMX which gives you a rebate of 0.0034 USD per share for adding liquidity, while IB commission is 0.0035 USD per share. So if you want to put a limit order, you might want to send it to this exchange.
I’ve just opened my IBKR account. However, I noticed that trading US stocks is no longer free for Swiss residents or it was never free. IBKR told me that Lite is only for US residents. I have IBKR pro.
Why do people here keep saying that IBKR US stock trading is free? It’s not true or am I missing something? It’s either tiered or fixed. Anyone?
I always have this in my mind. I thought people said IB is not free, but trading US stocks and ETF is commission-free. I probably read it wrong or had it wrong in my head. Trading ETF is also not free?
Thanks! I will change my plan to “tiered” too. I looked it up and the fee schedule is not straightforward with complicated pricing model. I mostly trade ETF and US stocks.
It’s less than that, last time I traded I paid 3.80 USD to do: convert 25k from CHF to USD + trade 60k worth of stock (on ARCA).
Edit: honestly given the sum involved, it’s possible that IBKR lite is just psychologically “cheaper”, it also has worse execution iirc (and worse interest rate on cash balances).
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