What is Interactive Brokers?
Interactive Brokers (IBKR) has been around since 1978. The brokerage firm is headquartered in the US but operates in more than 200 countries and territories and is rapidly gaining popularity. It currently has around 3 million client accounts - a number that has grown by a staggering 29% in just one year. The company works with retail investors as well as hedge funds and financial advisors helping execute more than 2,700,000 trades every single day.
Its UK affiliate offers a range of options for individual investors, including the option to invest via a Stocks and Shares ISA as well as a Self-Invested Personal Pension (SIPP). The platform comes with a range of sophisticated tools for advanced investors and professional traders, however, it also offers free courses for beginner traders who want to improve their knowledge.
What are Interactive Brokers' key features?
- Invest in 150 markets across 34 countries
- Invest in 19,000+ mutual funds with no transaction fees
- Earn interest on uninvested cash balances above £8,000
- Earn interest for lending out your stocks with the Stock Yield Enhancement Program
- Stocks and Shares ISA and Junior ISA available
- SIPP option is available via an external SIPP administrator
- Toggle between pricing structures to choose the right fees for you
- Trade high-risk derivatives like CFDs, Options, and Futures
- Learn about trading with free courses via the IBKR Campus feature
- Use advanced trading software like IBKR Trade Workstation to research and trade assets
What products does Interactive Brokers offer?
Interactive Brokers offers a range of products and services to its UK customers. For example, you could invest via a Stocks and Shares ISA, Junior ISA, or SIPP. There are also individual, joint, and trust accounts available to retail investors.
Below, we take a deeper look at Interactive Brokers' Stocks and Shares ISA, Junior ISA, SIPP and individual account.
Interactive Brokers ISA options
With Interactive Brokers, you can open a Stocks and Shares ISA or a Junior Stocks and Shares ISA. You can't hold a Cash ISA with Interactive Brokers. The Interactive Brokers ISA isn't flexible, which means any money you've deposited and subsequently withdrawn in a particular tax year will count towards your £20,000 annual allowance.
There is a minimum monthly activity fee of £3 for the adult Stocks and Shares ISA and £1 for the Junior Stocks and Shares ISA. This means that if, for example, you make trades that generate £2 worth of commission in a particular month, you would be charged an additional £1, to ensure you hit the minimum monthly activity fee. But if your trades generate commission worth £3 or more, there won't be an additional activity fee.
Investors are allowed one free withdrawal per month (charged at £7 per withdrawal thereafter) and there are no other custody fees for the account. Each trade costs £3 for Western European Stocks but there are no added spreads or platform fees. There are also no account minimums. As such, IBKR can be a cheap way to hold investments via an ISA.
Interactive Brokers SIPP
Interactive Brokers doesn't actually have its own Self Invested Personal Pension product. However, you can go through an authorised SIPP Administrator to get your SIPP onboarded. Interactive Brokers currently works with the following SIPP Administrators:
- @sipp Limited
- Options UK
- Westerby Trustee Services Ltd
The contact details for the SIPP Administrators mentioned above are available via the Interactive Brokers website. But, it's up to you to do your own diligence and ensure their fees and features meet your needs before you proceed.
If you already have a SIPP Administrator, you can request that they apply for a SIPP Administrator Account for free so that you can be onboarded. Once you're all set up, you'll be able to open a subaccount and become a SIPP Beneficiary Client.
You'll then be able to invest in 150 markets across 34 countries. Some of the assets you'll be able to hold in your IBKR SIPP include:
- Stocks
- Options
- Futures
- Currencies
- Bonds
- Funds
Not all SIPP Administrators support the full catalogue of investments offered by Interactive Brokers. For example, Westerby Trustee Services won't support investments into FX, CFDs, Futures, or Options Trading. Your SIPP Administrator can limit the types of assets you can invest in, so it's worth checking that you're on the same page before you choose who to go with.
Interactive Brokers Individual Account
IBKR offers an individual and joint account option which works similarly to a general investment account. It allows one (or two) account holder(s) to invest and trade all available assets that you have been approved for. As with a SIPP and Stocks and Shares account, you could trade and invest in stocks, options, futures, currencies, bonds, and funds among others.
You can have a Cash or Margin account as well if you're approved for one. If you hold this type of account as a joint account with a friend or partner, you will both have access to all functions. Unlike the Stocks and Shares ISA, with this type of account, there are no minimum activity fees or inactivity fees.
What can you invest in with Interactive Brokers?
Interactive Brokers allows you to invest in a range of assets and derivatives according to your risk profile. When you fill out your application, IBKR will assess your risk profile and knowledge and may place limits on the types of products you're allowed to trade.
IBKR offers various trading and investment products such as stocks, options, futures, bonds, cryptocurrencies, and funds. CFDs are an option too, though IBKR points out that 62.5% of the retail investors that trade CFDs with IBKR end up losing money. As such, they come with a high risk of losing your money.
Exploring all the different assets on offer by IBKR would merit its own article, but below, we've summed up a selection of the options available to you to give you a taster.
Mutual Funds
Interactive Brokers offers around 48,000 mutual funds, with around 19,000 being available for free, meaning that any transaction fees have been waived. Those that are charged attract a fee of EUR4.95 (or equivalent) per trade. This is inclusive of third-party fees including regulatory and exchange fees. You can search all mutual funds via the website and filter based on your country, fund family, whether commission is charged and the fund type.
Fund types include:
- Alternatives
- Balanced
- Bond
- Commodity
- Equity
- Mixed Investments
- Money Market
- Stock
Stocks and ETFs
IBKR allows you to trade stocks in 90+ market centres. You can also invest in fractional shares which means you can invest in a company without buying a whole share. This is particularly valuable if you're funds are limited.
With Interactive Brokers, you pay £3 per trade for Western European Stocks and there are no added spreads or platform fees. However, it's particularly lucrative when it comes to trading US stocks and ETFs. Commissions for US stocks and ETFs range from USD$0.0005 to USD$0.0035 per share. There are more than 10,000 US Stocks and ETFs available on the platform, meaning you're spoiled for choice if you're interested in investing in the US market.
CFDs
With IBKR, you can trade a range of Contract for Differences (CFDs) if you are approved at the application stage. IBKR stresses that CFDs are complex instruments where you can lose your investment quickly as a result of leverage. In fact, 62.5% of IBKR investors lose money when they trade CFDs on the platform.
If you choose to trade CFDs via the platform, you'll be able to choose from:
- Share CFDs which use a volume-tiered pricing structure for commissions
- Index CFDs which use a fixed pricing structure for commissions
- Forex CFDs which use a volume tiered pricing structure comprising the monthly trade value as well as Spot Forex trades
- Metal CFDs which use a fixed pricing structure for commissions
You can find out more about the way CFD trading works via the IBKR website.
Options
IBKR allows you to trade options with low commissions and no added spreads, platform fees, or account minimums. You can trade Index and Stock options in exchanges around the world with costs as low as $0.15 per contract depending on the monthly volume of trades and market.
Interactive Brokers account fees summary
Below, we provide an overview of the types of fees that IBKR charges for holding various accounts. The "other charges" section provides a broad overview of the fixed fees we explored in the table above.
| Account type | Monthly fee | Other charges |
| IBKR ISA | £3 minimum activity charge | £3 per trade for UK and European stocks
Trades over £6,000 cost 0.05% of the trade value 0.03% FX conversion commission No custody fees |
| IBKR JISA | £1 minimum activity charge | £3 per trade for UK and European stocks
Trades over £6,000 cost 0.05% of the trade value 0.03% FX conversion commission No custody fees |
| IBKR SIPP | Offered via an external SIPP Administrator who may charge their own fees. | £3 per trade for Western European stocks (no added spreads)
Trades over £6,000 cost 0.05% of the trade value |
Interactive Brokers product fees summary
Interactive Brokers' fee structure can be a little complicated to get your head around at first. You can opt for its tiered pricing structure or its fixed pricing structure depending on your needs.
The exact rates you'll pay with the fixed structure and tiered structure depend on the market you're trading in. The table below shows a selection of the fees and charges you're likely to pay to trade various products within the UK market across the tiered and fixed fees options where both apply.
For individual investors, it's likely that the minimum fees will apply in the case of Stocks and ETF trading in most circumstances. You would need to make a trade of above £6,000 to pay more than £3 in fees for a single trade under the fixed fee structure, for example.
This is only a small selection of some of the products on offer, designed to give you an idea of the commission charges. There are many different products across the different markets and the fee structures vary, as such we strongly encourage you to consult the website before deciding whether IBKR is right for you based on the fees below.
| Product | Monthly amounts | Tiered Fees | Fixed Fees (IB Smart Routing) |
| Stocks or ETFs | Trade value of £40,000,000 and below | 0.05% of trade value + Third Party Fees
1% of Trade Value for Fractional Shares Minimum fee per order £1 (or £0.01 per fractional share) |
0.05% of Trade Value (No Third Party Fees)
Minimum fee per order £3 |
| Index Options | Contract volume of 1,000 and below |
£0.60 per contract + Third Party Fees |
£1.70 per contract (No Third Party Fees) |
| Index Options | Contract volume of 1,001 to 10,000 |
£0.45 per contract + Third Party Fees |
£1.70 per contract (No Third Party Fees) |
| Stock options | Contract volume of 8,000 and below |
£1 per contract + Third Party Fees |
£1.70 per contract (No Third Party Fees) |
| Stock options | Contract volume of 8,001 to 40,000 |
£0.70 per contract + Third Party Fees |
£1.70 per contract (No Third Party Fees) |
| Futures | Contract volume of 1,000 and below |
£0.65 per contract + Third Party Fees |
£1.70 per contract (No Third Party Fees) |
| Futures | Contract volume of 1,001 to 10,000 |
£0.45 per contract + Third Party Fees |
£1.70 per contract (No Third Party Fees) |
| Single stock futures | All |
Not applicable |
£1.70 per contract (No Third Party Fees) |
If you opt to trade within different markets, the monthly amounts and fee structure may differ. A full overview of the fees and charges is available via the Interactive Brokers website.
In some cases, you won't be able to choose between tiered and fixed options. CFDs, for example, are either tiered or fixed depending on the type of CFDs you want to trade. For example, Share CFDs use a tiered pricing structure where third-party fees are included. However, Index CFDs use a fixed pricing structure. Metals are typically on a tiered structure too, as are spot currencies.
What are the third party fees charged by IBKR?
The third party fees charged by IBKR depend on the type of product and market you're trading within. However, typically you can expect a combination of some or all of the following third party fees charged in addition to the tiered fee:
- Regulatory fees
- Exchange fees
- Clearing fees
- Pass-through fees
- Overnight position fees
How does the Interactive Brokers platform work?
If you're based outside of the United States, you'll be given an IBKR Pro account by default. You won't be able to use the IBKR Lite account which is aimed at retail and novice investors based in the US. The Lite account comes with $0 commissions on US stocks and ETF trades. There are also no inactivity fees and account minimums.
The IBKR Pro account is designed for "sophisticated investors or active traders". This comes with certain perks. For instance, you'll be able to use features like IB Smart Routing. Below, we outline some of the IBKR tools and features you'll be able to benefit from if you opt for an account with the platform.
Interactive Brokers investment apps and dashboards
Interactive Brokers have several dashboards and apps on offer for traders. You'll be able to choose between the following options:
- IBKR Desktop - A desktop app designed for beginners and intermediate traders providing a "first class" trading experience as well as research and analysis tools
- IBKR Trader Workstation - An advanced desktop app designed for seasoned investors with additional research and analysis tools
- IBKR Mobile - An app designed for experienced traders who want to trade on the go
- IBKR Global Trader - A mobile app for beginner and intermediate traders who want to trade stocks, ETFs, and options worldwide. A free demo account is available too
- IBKR Client Portal - A browser-based platform with the tools you need to view, trade and manage your account without having to download an app
Interactive Brokers Smart Routing
IB Smart Routing searches for the best available prices for various investments before executing orders. It can re-route part of your order based on current market conditions and save you money as a result.
The Stock Yield Enhancement Program
The Stock Yield Enhancement Program is available to IBKR clients based in the UK who have a margin account or who have a cash account with more than $50,000 (or equivalent) in equity. Stocks eligible for the program are those stocks that are fully held. This means they're not held on margin.
The program works by allowing you to earn income on your fully held shared by letting IBKR lend your shares to traders who want to short the market. IBKR borrows your shares from you in exchange for collateral. The sellers, in turn, pay interest for the privilege and you're paid a chunk of interest on the collateral value thereby earning additional income on your stocks.
IBKR Global Analyst
The IBKR Global Analyst tool is designed to help you compare prices and various financial metrics of global stocks all in the same currency. The goal is to help you identify new investment opportunities for yourself. The filters allow you to search stocks by region, industry, market cap and currency. You can also search specific companies and add them to your shortlist to compare them.
The screenshot below shows what the results page looks like to give you an idea of the kind of metrics you can compare against when you create your own shortlists.
How to open an Interactive Brokers account
You can open an Interactive Brokers account via the website or the app. According to the Interactive Brokers website, it "only takes a few minutes" to apply. However, that might be a little optimistic. If you're an individual applicant, you'll need to provide information including:
- Personal information
- Income and tax residency
- Trading experience and objectives information
- Bank account information
You'll start by creating a username and password and confirming your email. You'll then be able to complete the application with the above information. The good news is that if you're not able to finish it in one sitting, you'll be able to retrieve your incomplete application at a later date using the login details you created.
Once you've confirmed your email, you'll be prompted to select the type of account you want to open. Options for individuals include:
- Individual
- Stocks and Shares ISA
- Junior Stocks and Shares ISA
- Joint
- Retirement Account (only available to individual US tax residents)
For the purposes of this example application, we selected the Stocks and Shares ISA option.
The next stage is the "About you" section where you need to complete a form with your personal details such as your name, address, phone number. You also need to provide information like your:
- Marital status
- Employment status
- Number of dependents
- National Insurance number
- Tax residency
- Source of wealth
It requires a lot more information than other applications of its type. Selecting certain answers results in further questions popping up. For instance, if you select that you're employed or self-employed, you'll need to also provide your employer's name, country, and address.
Once you've completed this section successfully, you'll then need to move on to the Regulatory section where you'll need to provide information like your annual net income, net worth, and liquid net worth.
You'll also need to provide information about your investment objectives and your intended purpose of trading. Options include:
- Preservation of capital and income generation - this is considered a low risk tolerance option
- Growth - this is considered a lower risk tolerance option
- Hedging - this is considered a higher risk tolerance option
- Profits from active trading and speculation - this is considered a high risk tolerance option.
You'll then need to provide information on your experience with trading stocks and how many trades you plan on making per year.
At this stage, you can also select other products to trade as well. You may need to complete knowledge quizzes if you select higher risk products. There will be a couple of regulatory questions to answer too.
The choices you select and your answers to the knowledge quizzes will determine the types of products you'll be approved to trade on the basis of your risk tolerance and knowledge level.
Once all of this is done, you'll be asked to confirm your tax residency and sign a form confirming the information you provided is correct. There are also several agreements and disclosures you'll need to read and agree to before your account can be set up.
Following this, in some cases, you may need to verify your identity and your address by uploading documents such as a photo ID, for example. All in all, it's a longer process than usual and it probably takes closer to an hour to complete rather than "just a few minutes".
IBKR will then need to approve your account which usually takes around two working days assuming they don't need any further information from you. Once the account is all set up, you'll be able to fund your account and start trading.
Interactive Broker FAQs
What is the difference between a Margin account and Cash account on IBKR?
Depending on the type of account you have with Interactive Brokers, you may be able to select from the Cash account or Margin account. Most beginner traders holding limited funds and those holding certain accounts will only be eligible for the Cash option. For example, if you have an ISA with IBKR, you'll be limited to the Cash account.
A Cash account simply means that you're funding your investments with your own cash. We primarily focus on Cash accounts and their pricing in our review. Cash accounts allow you to trade most assets and instruments available via the platform.
One key exception is Forex trading which requires a Margin account. However, as IBKR stresses, this type of account is only for experienced investors who are open to high-risk trading. Margin trading means that you can lose more than what you've put in.
Are ready-made portfolios available in the UK?
Although IBKR does offer Smart Beta ready-made portfolios via its Interactive Advisors branch, it appears that these portfolios are currently only available to clients based in the United States. A disclaimer on the website states that the branch is "not registered in any jurisdiction outside the United States" and it's "not registered to provide investment management or advice in the United Kingdom".
As such, while you'll be able to "watch" the various Smart Beta portfolios via your IBKR dashboard in the UK, you won't get the option to trade them.
The screenshot below shows what the IBKR dashboard looks like. The Smart Beta portfolio below isn't available to UK traders so you can either "watch" it or set an alert. However, if you search for a portfolio that is available to UK traders, you'll have Buy and Sell options available as well.
How to switch between the fixed and tiered pricing structure on IBKR
IBKR allows you to switch between the fixed and tiered pricing structures and to set different pricing structures for different types of assets.
Once your account has been approved, you can use the login details to access the IBKR dashboard via desktop or via the app. To configure your pricing choices, head to "Account Settings", then navigate to the "Account Configuration" section and click "IBKR Pricing Plan".
You'll then be able to select your pricing structure for Stocks (including ETFs and Warrants), as well as for Futures & FOP's. You'll be able to choose between Tiered or Fixed for both. Once you've made your selection, save and click "Ok" to apply the changes.
Does Interactive Brokers pay interest on cash held in their accounts?
You can earn interest on uninvested cash held with Interactive Brokers. You can earn up to 4.49% on your balance depending on how much you hold. You won't earn anything on the first £8,000.
You'll then earn the full interest rate on any balances above USD100,000 or equivalent. For balances below that, you'll earn interest that is "proportional" to the size of your account. You can calculate the exact amount of interest you're likely to earn on your cash via the Interactive Brokers website.
What are Interactive Brokers pros and cons?
Below, we sum up the pros and cons of using Interactive Brokers.
Pros
- Some of the lowest fees on the market
- Invest in 150 markets across 34 countries
- Stocks and Shares ISA and JISA available
- No inactivity fees
- Award-winning investment service
- Great for professionals or experienced traders
Cons
- Complex fees structure
- SIPP only available through external SIPP Administrator
- Average Trustpilot reviews
- Certain services are only available to US residents
- Possibly too complex for beginners
Interactive Brokers customer reviews
Interactive Brokers is currently ranked "Average" based on more than 2,700 reviews, giving it a score of 3.3 out of 5.0 on independent review site Trustpilot. Approximately 44% of reviewers gave IBKR five stars while 24% gave it 1 star.
Customers who gave IBKR five stars were particularly happy with the level of customer service they received as well as the low fees. However reviewers who gave the platform 1 star complained about delays with opening their account as well as issues with the software.
IBKR has a 4.5 out of 5.0 rating on the App Store based on around 9,000 reviews and it scores 4.7 out of 5.0 based on more than 38,000 votes on the Google Play store.
Interactive Brokers alternatives
The right Interactive Brokers alternative will depend on your needs as an investor. One low cost option which also offers CFD trading is Trading 212. However, if you're looking for a beginner-friendly alternative with a wide range of assets, then Interactive Investor might be a good choice too.
Trading 212 vs Interactive Brokers
Trading 212 started out as a Forex trading app but now lets its users trade a range of assets such as shares, ETFs, CFDs, and crypto. Plus, there's a demo account option to help you practice trading CFDs before you commit. Like IBKR, it offers an ISA, however there is no option to invest via a SIPP. There is no platform charge for its ISA and trades placed in the same currency are free. As such, it might work out cheaper than Interactive Brokers where there is a minimum monthly activity fee of £3 for those with an ISA.
You can read more about Trading 212 in our independent review.
Interactive Investor vs Interactive Brokers
Interactive Investor (ii)* is a good option for beginner and intermediate investors looking to invest in shares, funds, trusts, and ETFs. It offers ISAs, SIPPs, and Trading Accounts and is a popular option in the UK. In fact, 25% of UK share trades happen on ii's platform. There are ready-made quick-start funds to help you get started if you do not wish to build your own portfolio.
Like Interactive Brokers, ii provides a wide range of investment choices, however, it doesn't cater to more experienced investors who may wish to trade options, CFDs, and futures, for example.
You can read more about Interactive Investor in our independent review.
Interactive Brokers: Should you use them?
Interactive Brokers could work well for confident investors but it is particularly suited to more advanced investors interested in investing in a wider variety of assets at lower costs. It's not a platform for the passive investor looking for ready-made funds. Rather, it might attract active traders looking to trade derivatives, or perhaps advanced investors looking to diversify their portfolios and use advanced tools to do so.
Passive investors looking for a more beginner-friendly platform may prefer options like Interactive Investor*, for example. It offers ready-made funds and its own SIPP, along with the opportunity to build portfolios. However, there won't be options to trade derivatives like CFDs which could make it a less attractive proposition to some.
If a link has an * beside it this means that it is an affiliated link. If you go via the link Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. But as you can clearly see this has in no way influenced this independent and balanced review of the product. The following link can be used if you do not wish to help Money to the Masses or take advantage of any exclusive offers – Interactive Investor