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Investing With Interactive Brokers (IBKR): Here’s What Investors In Singapore Need To Know

We can now enjoy Interactive Broker’s low brokerage fees for stocks listed in Singapore, U.S., Hong Kong, India, Australia and many others countries.

Listed on the NASDAQ in the US, Interactive Brokers (IBKR) is a pioneer of global electronic trading with over 40 years of track record. IBKR is best known for its low commission rates, innovative brokerage services and global presence providing access to over 135 markets in 33 countries.

Why Should I Use Interactive Brokers To Buy And Sell Stocks?

Officially coming to Singapore in 2020, Interactive Brokers reports that its client base continues to rapidly increase in the country. While investors in Singapore were always able to open an IBKR account to trade, we could not use its platform to buy and sell stocks and other securities listed in Singapore. Now, we can.

Its Singapore office can also provide a more dedicated on-the-ground support, and better service active traders and the wealth management community here. A local office typically also provides an avenue for brokerages to engage clients more closely with events and value-added services, which may be in store for clients of Interactive Brokers.

IBKR is not alone in trying to gain a foothold in Singapore, and perhaps, Asia Pacific. Other recent entrants to the Singapore brokerage scene also include popular Chinese brokerages Tiger Brokers and moomoo (by FUTU Holdings).

Read Also: Step-By-Step Guide To Stock Investing In Singapore

On the Interactive Brokers’ website, it states three main reasons for people to invest via Interactive Brokers.

#1 Low Cost

Known for charging very competitive brokerage commissions and financing rates, Interactive Brokers claims to offer the lowest commissions and states that if an exchange provides a rebate, Interactive Brokers will pass on some or all of the savings directly back to clients. Its commission rates are also transparently listed on its website.

For stocks and other securities listed in Singapore, there is a fixed brokerage commission of 0.08% of the trade value. There also does not appear to be a minimum brokerage fee which many other brokerages currently charge.

Interactive Brokers Singapore Brokerage FeesSource: Interactive Brokers

For ETFs listed in the US, it charges no transaction fees, and just US$0.005 per share.

Source: Interactive Brokers

Its transaction fees for other regions are also very competitive, and you can review the entire list transparently depicted on its website.

In addition, it also charges competitive margin financing interest rates and allows us to earn an extra income on our shares held with Interactive Brokers by lending them to traders who want to short the market.

From 1 July 2021, Interactive Brokers has also removed its $10 monthly inactivity fee. This fee was charged for not maintaining a minimum balance in your account or having insufficient transaction activity during a month. Prior to the removal of the inactivity fee, brokerage fees incurred from the transactions we make each month will offset this $10 fee. If we trade frequently and exceed $10 in brokerage costs each month, the inactivity fee will not apply. The other way to avoid the inactivity fee in the past was to have US$100,000 worth of investments in your account. Younger and newer investors will no longer be limited by this prohibitive amount.

This is great news for retail investors, as we no longer incur an added cost even if we do not invest often or are starting off small.

Read Also: Singapore Online Stock Brokerage Account Fees Comparison (2020 Edition)

#2 Global Access

Via our Interactive Brokers account, investors in Singapore can access stocks, options, futures, currencies, bonds and funds in more than 135 markets, across 33 countries and in 23 currencies.

This is no small feat as not many brokerages can offer such extensive access to so many markets via a single integrated platform. This makes it easy to review our investments in one app/platform without having to keep multiple accounts open.

Offering 23 currencies, investors in Singapore (and globally) can fund our accounts in multiple currencies and trade assets in multiple currencies, without incurring foreign exchange costs. Of course, if we fund our account in one currency and want to invest in another currency, we may incur some foreign currency exchange-related costs. However, this also tends to be quite competitive.

#3 Innovative Solutions With Its “Premier Technology”

Interactive Brokers offer technological solutions that cater to beginner investors as well as sophisticated traders and wealth managers. These include trading tools, reporting, as well as trading platforms and diverse types of orders and algos we can use for our trading/investing needs.

We can visit the Interactive Brokers website to find out more about these technologies and how they can help us.

Source: Interactive Brokers

Opening An Interactive Broker Account

The process to open our IBKR account was fairly quick and straightforward, especially if we use MyInfo. We can apply for an Interactive Brokers account within 10 minutes and can be completed entirely online, without needing to print anything or send in any hard copy documents – very convenient.

Read Also: Step-By-Step Guide To Opening A Stock Brokerage Account In Singapore

At the end of the application process, there was a notification that it will take a few days before the account application is approved. So, we cannot start trading immediately. This is similar to how most other online/digital brokerages would operate, and much more convenient to open an account with more traditional brokerages which may still require physical copies involved in the sign-up process.

How To Fund My Interactive Brokers Account In Singapore?

There are two ways to go about funding our Interactive Brokers account: 1) via a bank wire, which can take up to four business days (but usually takes much faster in our experience – as little as a few hours), and 2) by transferring securities we already own from another firm into our IBKR account.

Choosing to wire in money simply means we will receive the account information and need to log into our bank accounts to make the transfer to the account details provided by Interactive Brokers.

We can also choose to transfer multiple currencies, namely British Pounds, Chinese Yuan, Hong Kong Dollars, US Dollars and Singapore Dollars, into our accounts.

Interactive Brokers only offers a custodian account, which means that we will store our investments with Interactive Brokers rather than in our CDP Account after buying stocks. There’s virtually no charge for holding our investments this way. This is because there are no custodian account fees.

We can also choose the Basic FOP Transfer option, which allows us to transfer our securities kept in another custodian account in Singapore, or with another brokerage internationally, to Interactive Brokers, free-of-charge.

Buying And Selling Stocks On Interactive Brokers

As mentioned earlier, one of the main advantages of using Interactive Brokers is its industry-low trading commissions, which is 0.08% of the transaction cost for Singapore stocks, and can even be free if we invest in US-listed ETFs and US$0.005 for US-listed stocks.

Similar to other online brokerages in Singapore, we will not have live market data when investing via IBKR. However, we have the option to access live prices at a cost of $13.00 a month for SGX prices and $1.50 a month for NYSE prices. While this may benefit traders and wealth managers, it may not be sensible for retail investors to incur such fees.

If we do not want to pay a monthly fee, there is also the option of trading via the delayed prices or choosing to receive a “snapshot” of prices whenever we want to trade. The good thing is that costs are relatively low and fees for the first $1.00 of snapshots we request for each month are waived.

If we are trading the Singapore market, this gives us a runway of about 23 trades each month. On the US markets, this is close to triple that. For many retail investors, this should be more than sufficient.

Using Your Interactive Brokers Account

While waiting for our Interactive Brokers account application to complete, we can also explore some features offered by Interactive Brokers “Education” suite.

This gives us access to:

  • IBKR Campus – where we can learn about trading, financial markets and IBKR’s trading tools.
  • Traders’ Academy – where we can take free courses on Advisor  Tools, IBKR Portfolio & Risk Analysis, Investment Analysis, Taxes, IBKR Trading Tools and more. These courses are also provided by well-known providers such as IBKR themselves, and CME Group, State Street Global Advisors, Wisdom Tree and more.
  • Traders’ Insights – providing high-quality content and articles on the latest happenings in the financial markets
  • IBKR Quant Blog – providing content as well, on trading
  • Webinars – which allows investors and traders to understand interesting ideas and markets
  • Student Trading Lab – a free online resource for educators. Educators can use it to provide students paper trading account, with a full complement of trading tools and $1 million paper trading equity.
  • Short Videos – giving us insights, in video format, on trading methodologies and functions
  • Traders’ Glossary and Traders’ Calendar for more generic information on investment terms and upcoming events we need to know.

Read Also: Robo-Advisory In Singapore: What You Need To Know Before Investing

This article was first published on 21 July 2020 and updated with more information.