Interactive Brokers calculates an internal funding rate based on a combination of internationally recognized benchmarks on overnight deposits ex: Fed funds, LIBOR and real time market rates as traded, measured, in the interbank short-term currency swap markets, the world's largest and most liquid market.
IB's interest model starts with the fixing rates and incorporates the dynamic market pricing to produce a midpoint or "Benchmark". Around this benchmark, IB adds a spread to determine deposit and borrowing rates applicable to client balances in each currency. Spreads are tiered such that larger balances receive more favorable interest treatment by virtue of smaller spreads to the benchmark.
IB's benchmark for each currency is the reference rate around which our credit, debit, stock-loan, and other interest rate linked calculations are determined. IB uses a combination of internationally recognized interest rate fixings such as LIBOR, Fed Funds, etc and dynamic interbank rates determined from foreign exchange and money-markets to calculate an IB Reference Benchmark rate.
For more information about IB reference benchmark click here. For information regarding the various benchmark fixings that contribute to the IB Reference Benchmark rate click here. IB accrues interest on a daily basis and posts actual interest monthly on the third business day of the following month. When calculating rates, IB uses a blended rate based on the tiers below. Interest accrues and is payable on a daily basis, and IB posts actual interest monthly on the 3rd business day of the following month.
The tiers on which interest is based may change from time to time without prior notification to clients. Such adjustments are done periodically to adjust for changes in currency rates. For the purposes of crediting interest on either long settled cash balances or short stock collateral values, only accounts with Net Asset Value NAV exceeding USD , will be eligible to receive credit interest on long settled cash balances.
We pay interest to clients for credit balances, based upon rates available in the interbank deposit market. For those clients that hold large cash balances in multiple currencies, we offer the ability to take advantage of the Forex Swaps market to potentially earn higher rates.
This program is not designed for and would not benefit any client who holds a single-currency long balance. The mechanics behind this program involve the buying of a currency for settlement one day out and the selling of the same currency two days out, the difference in value between the two settlement dates being the interest earned. We automatically keep rolling the swaps until you no longer meet the minimum balance criteria, or you instruct us to halt the program.
The interest calculator is based on information that we believe to be accurate and correct, but neither Interactive Brokers LLC nor its affiliates warrant its accuracy or adequacy and it should not be relied upon as such.
Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this calculator. When calculating rates, keep in mind that IB uses a blended rate based on the tiers below. When determining the quoted spread, IB will use the set benchmark rate or a benchmark rate of 0 for all benchmark rates less than 0. Spreads are tiered such that larger balances receive more favorable interest treatment by virtue of smaller spreads to the benchmark Reference Benchmark Rates.
Reference Benchmark Rates IB's benchmark for each currency is the reference rate around which our credit, debit, stock-loan, and other interest rate linked calculations are determined. Interest Paid to You.
Higher Interest Rates for Large Cash Balances We pay interest to clients for credit balances, based upon rates available in the interbank deposit market.
Interest Rates Charged to You. Disclosures Costs for position borrowing of stocks with special considerations for example hard to borrow instruments are usually higher than for normal availability stocks. These additional costs will be passed on in the form of lower short stock credit interest. Please note that this may lead to a net debit short stock credit interest in the event that the costs to borrow exceed the interest earned. Prior Period Benchmark Rates.More...