Interactive Brokers Canada Review 2022
Interactive Brokers Review
- Simplicity for Average Canadian Investor
- Account Variety
- ETF Trading
- Monthly Fees
- High Volume Traders
- App Rating
- Customer Service
Interactive Brokers Review Summary:
Interactive Brokers Canada is the Canadian wing of the worldwide brokerage better known as IBKR. With over 2 million trades per day, the brokerage clearly must be doing something right.
Interactive Brokers Canada is a fan favorite for forex traders because of its extremely attractive exchange rates, fractional share options, cryptocurrency options, and for those who like a more hands off approach, they offer a pseudo-robo advisor as well.
While it’s competitive trading fees (as low as $0.005 per share)and wide access to the world’s trading markets have made it an international stalwart, it just doesn’t represent a good value for Canadian customers. Unfortunately, many of its most attractive features are not available in Canada.
Not being able to access the IBKR Lite package, combined with potential tax liabilities, and the excellent homegrown options that we have here in Canada, make this an easy stay away for us.
If you are Canadian and looking for some of the attractive options available on IBKR Lite, we recommend Qtrade, which has been rated the best broker in Canada in part due to its stellar customer service. If finding a low-fee brokerage is your number one priority, Questrade could be your best option for their low 1 cent fee on stock trades valued at $4.95-$9.95, plus free ETF and Mutual Fund purchases.
- low foreign currency exchange fees
- Access to stock exchanges outside of Canada and USA
- Geared toward advanced international day traders
- Tax liability possibilities for Canada
- Poor Mobile App
- Complex trading platform
- Poor customer service reputation
Interactive Brokers is for professional traders.CHECK OUT OUR MOST RECOMMENDED CANADIAN BROKERS
What is Interactive Brokers?
Interactive Brokers Canada is part of the parent company Interactive Brokers Group, Inc., which has been around for over 40 years and boasts a consolidated capital of over $10 billion. Its mission has always been to develop technology to help traders maximize their potential. Interestingly, way back in 1983 they were one of the pioneers of using technology to give their traders an upper hand.
They introduced the first handheld computers used for trading. Since then, they have remained committed to integrating technology to provide mobile and desktop trading platforms for their clients, among other technology-driven services.
Comparing Interactive Brokers to Our #1 Discount Broker: Qtrade
Free to buy and sell
There are two pricing structures: Fixed pricing for non-brokers, and high volume traders will be on a tiered pricing structure.
Excellent - consistently ranked #1 in Canada. Built for Canadian users exclusively.
Mediocre at best. Aimed at professional international stock traders. Good value if you need day trading platforms.
Foreign Exchange Capability
None (other than CAD to USD)
#1 in World
Has been at the top of Canadian brokerage ranking in this category for over a decade
Geared towards an international pro-day-trading audience
Mutual Fund Purchases
Offers thousands of non-US mutual funds with $0 fees, and most others at EUR 4.95
50 Free Trades (Worth $500)
Is Interactive Brokers Safe and Secure? It’s Complicated
Like other discount brokerages in the Great White North, Interactive Brokers Canada is regulated by the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF).
BUT – and this is a massive BUT – there is a very important question mark when it comes to using any US-based online brokerage as a Canadian resident. This question mark comes in the form of the interpretation of US Tax Law. It’s not that Interactive Brokers is in and of itself unsafe for Canadians to use from a tax standpoint, it’s that the USA has some unique tax rules when it comes to inheritance tax.
It gets complicated in a hurry, but the basic idea is that the USA taxes “US In Situs Assets” at the time a person passes away. The estate of any Canadian resident who owns over $60,000 worth of assets at the time of their death must file a tax return in the USA. IB is obviously located in the USA, so the question quickly becomes – do investments in my Interactive Brokers account fall under USA inheritance tax law, are they considered “US In Situs Assets”?
The answer is… *drumroll*… no one really knows.
It appears to boil down to if your investments are considered “domiciled” in the USA. That phrase is being debated by people smarter than myself each year in the USA. I know that my go-to resource for international personal finance is author Andrew Hallam, and he does not use IB for this exact reason.
Now if you’re a USA resident, or a USA Citizen, then you’re going to have to deal with US estate taxes anyway – so this drawback to going with IB is not really relevant. If you live in Canada however, I just don’t think saving a couple of bucks on non-ETF transactions are worth it.
So while your investments are likely as safe as possible from hackers or fraud, it’s perhaps the US taxman that you have to be most careful of.
Can I Buy Canadian Stocks and ETFs on Interactive Brokers?
Yes – you can definitely buy Canadian stocks on Interactive Brokers (IBKR).
You can also buy ETFs, mutual funds, options, and several other Canadian investments using the brokerage.
In fact, if you’re looking to purchase stocks from around the world (and not use a straight forward ETF to get international stock exposure), then International Brokers allows you to buy on 135 markets, in 33 countries, in 23 currencies.
Personally, I’ll stick to the Toronto Stock Exchange and international ETFs, but professional day traders rave about the flexibility that it offers.
Interactive Brokers 2022 Review: Fees in Canada
International Brokers operates brokers in over a hundred countries, so their fee structure is difficult for many Canadian investors to understand. It’s not nearly as straightforward as those from purely Canadian brokers.
When it comes to figuring out which Interactive Brokers Canada fees that you’ll pay, you first need to understand that there are fairly different pricing mechanisms depending what type of assets you’re buying or selling.
For stocks and ETFs there is a tiered rate (see below) or a fixed rate.
The fixed rate is a penny per share for Canadian stocks – with a $1 minimum. If you buy 1,000 shares, you’d pay ten bucks. If you buy 20 shares, that’ll cost you a loonie.
The tiered pricing model is really for professional traders making hundreds of trades or making really large trades.
Now if you’re buying and selling options with IBKR Canada, you’ll want to know to the following tiers:
Interactive Brokers Review: Platform and Tools
Like most online brokerage platforms, the web-based version of IBKR offers users a main client portal page. They have recently made some upgrades to their Client Portal homepage, which offers key account metrics at a glance, portfolio performance, tools and services, and access to quick trade functions.
If you want a bit more, they’ve got it. Detailed quotes, advanced charting, and access to investment news are also available on the Client Portal. Want to see more, but not ready to take the leap? You can try the free trial of the Portal if you’re not quite ready to commit.
As all traders in Canada will be using the regular version of IBKR, they will be using their platform called Trader Work Station (TWS). While this platform might be great for more experienced traders who trade in high volumes, it might not be so great for the average investor.
Within the Trader Work Station, there are two workspace options: TWS Mosaic and Classic.
TWS Mosaic is more of an all-in-one, comprehensive work space, making it easy to trade, get quotes, and use technical research tools in one spot. Users can also create and interact with watchlists and charts here.
TWS Classic offers users a quick way to place orders, and has a bit more to offer in terms of tools and algos.
Interactive Brokers Account Types: TFSA, RRSP, Non-Registered
Interactive Brokers Canada offers most account types, but the glaring omission of RESPs and RRIF options really hurts them in cross Canadian comparisons.
- Non-registered accounts (both CAD and USD)
- Joining Accounts
- Margin Accounts
- Informal Trust
- Formal Trust
IBKR Mobile App Review
The Good: The Interactive Brokers mobile app probably has more features than any other broker app out there. You can exchange forex, futures, and much more.
The Bad: The complaint about this broker has always been… the number of complaints. In fairness, they are trying to troubleshoot and answer questions from investors all over the world, so it isn’t exactly an apples-to-apples comparison with a Canada-only brokerage.
The Ugly: It is needlessly complex and the user experience continues to be a bit lacking. However, it seems as though they have been working hard to rectify the issues. Since our update, they have gone from a 1.6 on the Google Play store to a 3.2. The reviews still mention lots of bugs that need to be worked out before it can earn a better rating.
Frequently Asked Questions
Interactive Brokers Launches Cryptocurrency Trading in 2021
The brokerage is teaming up with the Paxos Trust Company (PayPal’s US crypto arm) to offer these new options (at typically low commissions compared to rivals).
Currently this feature is only available to US residents, but as stated in their press release that they intend to make the crypto venture available to international audiences in the near future.
Who Is Interactive Brokers Best For?
In earlier updates to our Interactive Brokers review we were a bit harsh, and for good reason. It does appear though, that the brokerage has made a conscious effort to improve their platform, app, and offer more competitive pricing, so we have got to give them credit for that.
The bottom line is that it is most suited to professional day traders & options traders, so if that’s you, Interactive Brokers makes a lot of sense. The low margin rates and currency exchange options make the brokerage an interesting option for those investors interested in using those semi-exotic tools.
That said, I have heard from numerous non-American investors from around the world, that they remain very scared of being caught in the USA taxation net – and consequently will be staying away from IBKR until proper US tax precedent has been established.
But for the average Canadian investor, it just isn’t all that attractive. The fact that we cannot access the benefits of IBKR Lite or Pro, have no RESP option, the US tax liability issue, and the consistent customer service complaints just put it at the bottom of our Best Canadian Discount Brokerage rankings. You can read our Qtrade review and see for yourself how big the difference is.