Brokers Review

Interactive Brokers Review for European Investors in 2021

Interactive Brokers (IB) is one of the largest brokerages in the world that has existed since 1977. They execute almost two million trades per day, offer platforms for desktop and mobile, and provide access to a gigantic range of markets, including stocks, ETFs, futures, options, and much more at very low fees, all from a single investment account.

European investors on community-sites like Reddit often recommend Interactive Brokers as a trustworthy broker. As someone who has done research on and tested numerous trading platforms over the years, I’m going to share my own review of Interactive Brokers and explain why I think it’s a great choice for experienced investors but perhaps not so much for complete novices.

I’ll try to give you the full rundown so you can decide for yourself if IB is worth your time, money, and trust or not.

4.8 / 5
TOTAL SCORE
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Interactive Brokers Review: One-Minute Summary

Interactive Brokers’ website

Interactive Brokers is among the best brokerages you can get in Europe, but it’s not necessarily right for everyone. IB’s main benefits are allowing investors to trade thousands of real or derived products on their diverse web and mobile platforms, with 20 available currencies and access to 135 exchanges across the globe. One the other hand, this might just be too much for new investors.

Fees on IB are incredibly low for accounts worth more than $100k, but smaller investors falling under this threshold are subject to an obsolete monthly maintenance charge. However, investors who are looking for a first-rate quality broker with a great reputation, long history, and worldwide availability, Interactive Brokers is a clear winner.

Based on my experience, here are the key points to keep in mind about Interactive Brokers:

  1. Interactive Brokers is one of the world’s largest online brokers that can be used to invest and trade across a gigantic range markets with very low fees.
  2. The company has been around for more than 40 years, has survived multiple global recessions, is listed on NASDAQ, has public financials, and boasts a yearly revenue of nearly $2 billion.
  3. European investors can apply for an account on Interactive Brokers, although some restrictions may apply. They accept applications from most nationalities (see full list below).
  4. Interactive Brokers is regulated by 11 top-tier financial authorities across the globe, including four European ones, the UK’s FCA, CSSF in Luxembourg, the CBI in Ireland, and Hungary’s MNB.
  5. Getting used to IB’s trading platforms requires patience as these are not immediately intuitive. Hobby investors use the Client Portal and IBKR Mobile, while pros may opt for the Trader Workstation.

That’s my review of Interactive Brokers in a nutshell. If you want to know IB in depth, keep on reading.

Interactive Brokers main features

🗺️ Country of originUSA
📜 RegulationUSA (SEC, FINRA, NYSE), Canada (IIROC), UK (FCA), Luxembourg (CSSF), Ireland (CBI), Hungary (MNB), Australia (ASIC), SFC (Hong Kong), India (BSE), Japan (FSA), Singapore (MAS)
💶 Europe availabilityAlbania, Andorra, Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Italy, Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Moldova, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Ukraina, United Kingdom
🛍️ Products Stocks, ETFs, bonds, forex, commodities, futures, crypto (ETNs), copy trading, robo portfolios
🛡️ Asset protectionVaries
💰 Inactivity fee Yes, depending on activity
💰 Withdrawal fee $0
💰 Deposit fee$0
💳 Funding optionsBank transfer
💱 Deposit currencies20, including EUR, GBP, USD, CZK, DKK, HUF, NOK, PLN, RUB, SEK, CHF
This data was obtained from IB’s site on 07/01/2021 and is believed to be accurate, but is not guaranteed

What is Interactive Brokers?

Interactive Brokers is an American online stock broker headquartered in Greenwich, Connecticut. Founded in 1977, the broker is one of the oldest platforms around. The platform is now home to over 981,000 investors from over 200 countries.

With an IB account, you’ll be able to trade almost any type of product, from stocks and ETFs, to leveraged instruments like futures and options. All together, you’ll be able to trade on 135 worldwide exchanges in 33 countries.

Interactive Brokers pros and cons

From the viewpoint of a European investor, Interactive Brokers has a lot to offer. Naturally, it has its shortcomings as well.

Pros

  • Available in most of Europe
  • Trusted broker with 40+ years in the industry
  • Regulated across the globe
  • Low trading fees
  • Extremely broad range of available investment products
  • Access to all major worldwide exchanges

Cons

  • Platforms can be confusing
  • Fees for small or inactive users (see below)
  • No commission-free trading for Europeans

Supported countries

Interactive Brokers is available throughout most of Europe. Here is a complete list of eligible European countries:

  • Aland Islands
  • Albania
  • Andorra
  • Austria
  • Belgium
  • Bulgaria
  • Channel Islands and Jersey
  • Croatia
  • Cyprus
  • Czech Republic
  • Denmark
  • Estonia
  • Faeroe Islands
  • Finland
  • France
  • Germany
  • Gibraltar
  • Greece
  • Greenland
  • Hungary
  • Iceland
  • Ireland
  • Isle of Man
  • Italy
  • Latvia
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Malta
  • Netherlands
  • Norway
  • Republic of Moldova
  • Romania
  • San Marino
  • Serbia
  • Slovakia
  • Slovenia
  • Spain
  • Sweden
  • Switzerland
  • The former Yugoslav Republic of Macedonia
  • Ukraine
  • United Kingdom

How to open an account with Interactive Brokers in Europe

Opening an account with Interactive Brokers is relatively easy, but a time-consuming process. You will be asked a series of questions which take around 30 minutes to complete. Below I have listed the three main steps required to get started on IB:

Step 1: Start the application

Jump over to Interactive Brokers’ website and hit “Open Account” to start the application. You’ll need to select a memorable username, as you’ll be using it later on to log in together with your password. Confirm your email address by clicking the link that was sent to your inbox.

Step 2: Provide information

Now comes a lengthy 4-step know-your-customer process involving several questions. Your questionnaire may look a little different from mine depending on your residency and the type of account you’re opening.

On the first screen, you will need to share the following details:

  • Customer/account type: individual (only you) or Joint (shared account, e.g. with your spouse or someone else).
  • Contact information: full name, address, phone number, etc.
  • Personal information: date of birth, tax residency, tax number, etc.
  • Source of wealth: declare in percentages the origin of your funds

Under “Base currency”, you can choose between multiple currencies, including EUR, GBP, CHF, and so on. Selecting a standard currency for your profile under this step will not prevent you from funding your account with different currencies one later on.

How to open an Interactive Brokers account in Europe – About You

The next screen is called “Regulatory”. Here you first need to choose which type of account you want to open. You can select between the Cash or Margin account.

  • The Cash account is probably the type of account most new investors will open. With a cash account you can only invest money that you actually have available.
  • The Margin account, on the other hand, will enable you to invest with borrowed funds, or let your cash balance go into occasional overdraft. In that way, it’s more flexible and suitable if you plan to do both investing and trading. If you want access to leveraged products, you will most likely need a margin account. The annual interest rate charged is only around 1.5% for USD and EUR.

But don’t worry too much, as you can also change your account type later on. You can read up on the differences between cash and margin accounts here.

How to open an Interactive Brokers account in Europe – Regulatory

IB will then ask you some questions about your financial situation and trading experience, including

  • Net worth and income
  • Investment experience
  • Overall objectives

You have to the different types of products you would want to invest in. You also need to declare how many years of experience you have with each instrument. For buy-and-hold investors, selecting stocks and bonds will be enough.

In the final steps, IB will ask you to read and accept a series of agreements and terms in order to open your account.

You also need to provide proof of your residency and identity.

At this stage, you also have the option to fund your IB account.

Submit your application and wait for approval.

Step 3: Fund your IB account

If everything went well, your application should be approved within two weeks time. The only step left now is to active your account. To do this, you need make a bank transfer from an account held in your name.

Click on the burger-menu in the top-left corner and select “Transfer and pay” and “Transfer funds”. Follow the instructions on the screen closely. You will be required to select a currency and amount.

Click “Create deposit” and copy the payment details. Remember to include the message shown under “Payment reference” when initiating the transer. Usually there’s an area called “Reference” or “Text” in you bank’s interface where you can do this.

Fees

While most European brokers are moving towards commission-free equity trading, Interactive Brokers maintains a more conservative pricing system. One could speculate this is because they prefer to deal with larger accounts. That said, the fee structure on Interactive Brokers can be complicated to understand. I’ll try to break it down as simple as possible, but make sure to verify the numbers yourself on IB’s website.

Fixed vs tiered pricing

IB has two pricing plans for international users: “Fixed” and “Tiered”. The fixed per-share plan is simpler to understand, but the tiered plan is usually cheaper for investors with larger monthly volumes.

For both plans, Interactive Brokers charges a monthly “activity” fee for accounts whose assets and cash together are worth less than $100,000. For portfolios worth below $100,000 and above $2,000, the fee is $10 per month. Commissions you generate from trades are subtracted from the amount. If you paid an equivalent of $6 (~ €5) in commission, you will be charged $4 in activity fees. There is no activity fee in the first three calendar months.

  • Fixed pricing charges a set percent for trades. Additional fees are included in the price, such as exchange and regulatory fees. Under the fixed plan, an ETF on Xetra would cost 0.1% of your trade value in fees with a minimum of €4 and maximum of €29. A medium-sized trade of 100 shares of €50 per share would cost €5.00.
  • Tiered per-trade plan charges 0.05% per trade. Exchange, regulatory, clearing and other fees are vary and are added on top. Under tiered pricing, an ETF on Xetra would cost 0.05% per trade in fees with a minimum of €1.25 and maximum of €29, an exchange fee of €0.96, a clearing fee of €0.23, and a regulatory fee of €0.01. A large-sized trade of 1,000 shares of €20 per share would cost €11.2.

Platforms and tools

Interactive Brokers offers a number of trading platforms for regular investors and professional traders alike.

In this review, I want to highlight the platforms that are geared towards everyday users. These are the web application, the Client Portal, and the app for Android and iOS, the IBKR Mobile. I would recommend that you stay clear of the Trader Workstation – it’s only meant for professionals.

Client Portal

The Client Portal or is Interactive Brokers’ beginner-friendly web-platform. This is the easiest place for investors to buy and sell simple products like stocks and index funds.

The Client Portal is structured to present a clear overview of your portfolio on the front page, along with other key performance indicators, such as gains and losses. To give your dashboard a personal touch, you can also add or remove widgets that provide additional information.

From the top menu, you can search among thousands of assets by entering the company name, symbol, ISIN code, or similarly. Each product page contains key metrics, a company description, and of course some pretty performance charts. You can also trade by clicking the “Trade” button which will let you create a buy or sell order directly.

Since there are thousands of products to choose from and these sometimes look very similar, always remember to double check you are dealing with the right investment, currency, and using the right exchange.

IBKR Mobile

If you prefer to trade on the go, you can download the IBKR Mobile app. The mobile platform is slightly more complicated than the Client Portal, but provides all the features you need to stay on top of your investments.

Essential features include a portfolio overview, P&L (profit-and-loss) analysis, order placements, watchlists, alerts, and research tools like asset data and news.

Is Interactive Brokers safe?

Interactive Brokers is one of the safest brokerage firms around. The company has existed for almost half a century, is regulated by several top-tier financial authorities, has impressive financials, and provides numerous technical safety measures to protect your account. Moreover, its mother company is publicly traded on Nasdaq, meaning all financial statements are published online for everyone to review.

What happens if IB goes bankrupt?

Regulation

To legally do business in multiple jurisdictions, Interactive Brokers serves its clients from a number of locally regulated entities around the world. In Europe, IB operates the following licensed bodies:

From what could be gathered online, European clients of IB are assigned to these as follows (some countries are missing from the list):

  • IBUK: UK
  • IBIE: Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Lichtenstein, Malta, Netherlands, Norway, Norway, Portugal, Spain, Sweden, Switzerland
  • IBLUX: Luxembourg
  • IBCE: Austria, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia

Investor protection

What happens to your investments if Interactive Brokers goes bust? Although there are only a handful of historical examples of large brokerages collapsing, it does happen from time to time. However, modern US, EU, and national regulation for the financial markets have created multi-layer protection systems to safeguard investor assets. A ton of rules, basically.

Asset segregation

Most importantly, brokers like IB are required to keep client assets, your “real” equity like stocks, segregated from those of the broker in a special bank account, also known as a custodian account or securities depository. When you buy shares of equity, these are stored electronically with the custodian with you registered as the beneficiary owner. In practice, these “accounts” are digital ledgers with names and numbers.

Interactive Brokers asset segregation

In case of bankruptcy of your broker, creditors of the bankrupt broker cannot lay claim to your funds as these are held by separate legal entities. Meaning, everything else being equal, your equity would be returned to you eventually, although it may take years.

Investor compensation schemes

If this system should fail or if the records were mismanaged, only then would the various investor compensation schemes come into play as a last resort. In this scenario, European investors are protected from loss differently depending on which entity of IB they belong to:

RegulatorCompensation (up to)
IBUKFCA$500,000
IBLUXCSSF€20,000
IBIEIBIE€20,000
IBCEIBCE€100,000

But remember, there is only coverage against failed brokerage firms, not against failed investments. So, if say your TSLA position went belly up, it would still be tough luck.

Final thoughts

To sum up, Interactive Brokers is an excellent fit for European investors with some years of experience behind the back and a portfolio worth more than $100k. You will have access to thousands of instruments at low cost through the Client Portal, including individual stocks and popular passive products like low-cost ETFs, which altogether makes it easy to build and maintain a diversified portfolio.

At the same time, Interactive Brokers is also great for European hobby traders with high risk tolerance. If you execute multiple orders per month and you are comfortable with advanced order types, you will appreciate the low commissions, professional platforms, and low margin loan interest rates.

Interactive Brokers Europe review

Lucas P.

Products
Platform
Fees
Account opening
Customer service
Trust

Summary

Interactive Brokers is an excellent broker for Europeans with an account size over 100k, offering low trading fees, the largest investment selection, and a superior track record of over 40 years.

4.8

Frequently asked questions about Interactive Brokers

What is the minimum deposit for Interactive Brokers in Europe?

There is no minimum deposit for Cash accounts. Furthermore, IB charges no fees for bank deposits or withdrawals.

How does Brexit affect European clients of Interactive Brokers?

Clients of Interactive Brokers residing in the European Economic Area (EEA) were forced to migrate their account from the UK to one of three new European entities.

Is Interactive Brokers safe?

Interactive Brokers has survived several financial crises, is regulated by multiple top-tier regulators around the world, separates client and proprietary funds, and claims around $8.5 billion in equity capital. Altogether, this makes IB a safe broker.

Is Interactive Brokers Lite available in Europe?

No, IBKR Lite is not available outside the US. For European investors, there are commission-free alternatives available like DEGIRO and eToro.

Where can you use Interactive Brokers in Europe?

Interactive Brokers is available in the following countries: Albania, Andorra, Austria, Belgium, Bulgaria, Channel Islands and Jersey, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Hungary, Iceland, Ireland, Isle of Man, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Republic of Moldova, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, The former Yugoslav Republic of Macedonia, Ukraine, United Kingdom.

Is Interactive Brokers good for beginners?

For complete beginners, Interactive Brokers might seem overwhelming at first. With some practice however, you should be able to navigate the platforms with relative ease.

How much is the monthly activity fee for EU clients?

If your total account value is worth more than $100,000 or equivalent, there is no monthly fee. If your account is worth between $100,000 and $2,000, the fee is $10 per month minus the trading fees you paid. For accounts worth less than $2,000, the fee is $20 per month minus the trading fees.

About the author: Lucas P., a pen name for privacy reasons, is an investor, hobby finance writer, and die-hard FIRE enthusiast. Lucas has previously served as editor for a news outlet in his European home country but now spends his time dabbling with traditional and alternative investments. To learn more about Lucas, visit his profile page.