IB Forex margin interest

Discussion in 'Forex Brokers' started by bpl1000, Jul 21, 2005.

  1. bpl1000


    On one of the other threads, someone had mentioned IB's forex margin interest is 2%.

    Can someone confirm this and maybe point the way on where this is described on IB's website? (I had trouble finding info on margin interest specifically for IB forex).

    Also, how does IB compare to others?

  2. Steve_IB

    Steve_IB Interactive Brokers

    I presume you mean margin rates? The best way to find it on our website is using the Search function.
    This is the page which details the margin rates:

    It's basically 2% (which is 50:1 leverage) for all currencies except for JPY and HKD which are 3% (33:1 leverage)

    If you mean interest rates, then you can also use the search button to find these.
  3. Steve,
    I have a IB account (new) with AUD base currecy, and when i try to trade EUR/USD, the margin required was almost 4%.
    example: Long for EUR/USD 50000, the margin required is about 3040 AUD. that is almost 4%.
    could you please take time to explaine, your post alwayse very helpful.
  4. gkishot


    As far as I understand margin & leverage are 2 different things.
    Leverage is investors money that he puts down in order to buy or sell much bigger positions depending on the leverage rate. Margin is brokers money which the investor borrowes from the broker and for that he is charged a margin interest. To refer by IB to leverage rates as margin rates brings in my opinion quite a confusion.
  5. Well..then there is positive and negative interest carry pairs, based on the leveraged amount of carry.....But that is paid monthly at IB!
  6. Steve_IB

    Steve_IB Interactive Brokers

    I can't comment without seeing the exact figures on your account. However, the margin requirement probably stems from the fact you have generated a USD balance, a negative EUR balance and a AUD balance. If you check the link I provided above then you'll be able to calculate it.
    Electric Savant,
    Interest accrues daily, so it doesn't make any difference to you that it is paid monthly.
  7. Steve IB,

    At my present dealer I get 50:1 leverage, this calculates to $243.30 usd of margin if I purchased 10,000 units of EUR/USD presently. Would you calculate this example at the max margin you allow at IB and post the amount of margin capital tied up, so that I may compare?

    Michael B.
  8. Steve_IB

    Steve_IB Interactive Brokers

    It's going to be the same.

    Assume your account has US$10,000
    Current rate is $1.2=Eur1
    You sell Eur10,000. Thus, you receive $12,000.

    Your account balances are now
    EUR= -10,000
    10,000/50 = EUR300, equivalent to $240 - your margin requirement.
  9. ok...thanks, now I gotta figure out what your interest payment is...sheesh who said fxmath is easy! I honestly do not kow how you software people keep all this straight and you have so many instruments from all over the world to keep updated. No wonder your platform updates are so frequent...I think you folks at IB are trying to do the impossible.