Interactive Brokers (IBHK) Step-by-Step Guide: How to Open an Trading Account

Interactive Brokers (IBHK) Step-by-Step Guide: How to Open an Trading Account

 Hong Kong has many online brokerages for individual investors to choose from, but Interactive Brokers (IBKR) is the household name that comes to mind for most investors.

With IBKR, investors can engage in local and offshore investments all in one place, buying and selling stocks, options, futures, forex, bonds, funds, and more other investment products. Not limited to that, IB also provides low margin rates, low interest rates, and stocks on more than 80 global exchanges. And IB no longer requires a minimum maintenance fee since 2021, lowering the entrance requirement for new traders.

With so many benefits, readers who wish to open an IB account can read MoneySmart’s step-by-step guide!

Table of Contents: Interactive Brokers account opening

Interactive Brokers new account offers for 2023

Interactive Brokers logo
Online Promo
Min. Commission Fee US Stocks
Min. Commission Fee HK Stocks
Min. Funding

What are Interactive Brokers (IB)?

Interactive Brokers is an American brokerage firm that also operates in Hong Kong. It is currently one of the largest trading platforms in the US and has a strong presence in Asia.

The group and its subsidiaries possess a total equity capital that exceeds 8.5 billion US dollars and generate an average daily revenue of 1,832,000 trades, which renders Interactive Brokers one of the largest internet brokers in the US.

What can you invest in with Interactive Brokers?

Interactive Brokers provides Hong Kong investors with a plethora of investment opportunities, opening the door to local and foreign investments such as stocks, options, futures, forex, bonds, and funds. Investors can use one single account to tap into 150 global markets, with support for 23 currencies.

Interactive Brokers’ Investment Products
Investment Products Features
Stocks Buying and selling stocks in 150+ markets
Options Commissions range from USD 0.15 to USD 0.65 per US option contract.
Futures Low commissions from USD 0.25 to USD 0.85 per contract with 30+ markets
Forex 100+ currency pairs are available
Bonds 1 million+ global bonds available
Funds 500+ Exchange-traded Funds (ETFs) are available
Cryptocurrencies Trading of Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Litecoin (LTC)
Other Investment Products Trading of REITs

What are the Interactive Brokers Hong Kong commission fees?

Other than the versatile products available, IB also provides competitive margin rates (USD margin rates as low as 0.75%) and currency exchange rates.

Interactive Brokers offers flexible pricing structures for stock trading fees. You can choose either Fixed pricing or tier pricing.

Fixed pricing

Fixed pricing charges a fixed rate per share or a fixed percentage of the trade value, which includes all IB commissions, exchange fees, and most regulatory fees. It is the simpler of the two, and the option is standard across most brokers.

However, transaction fees included in stock trades are excluded from fixed pricing.

Tiered pricing

With tiered pricing, the more you trade, the lower the commission per share. But it is a more complex structure made up of various sub-fees, including regulatory, exchange, trading, and clearing fees. Some fees are per share, others are flat, and some are based on the total value.

If local market exchanges offer rebates, IB will partially or fully refund them.

Which one should you choose? Tiered pricing or Fixed pricing?

When it comes to choosing between fixed pricing and tiered pricing for Interactive Brokers, the difference can be summed up in one word: complexity. Fixed pricing is the straightforward and predictable option, while tiered pricing can be a maze of sub-fees and variables that vary from exchange to exchange.

If you’re new to trading or simply prefer a simpler approach, fixed pricing may be the way to go, especially if you have a relatively small trading volume. And with fixed pricing, you know exactly what you’re paying and can avoid any surprises.

Quick tips for choosing a pricing model:

  • For small transactions, Fixed pricing usually offers a lower fee than tier pricing.
  • Note that when you change the pricing method with IB, it generally takes 1 day to apply.

How much does the commission cost for Hong Kong stock trading on IB?

IB commission for HK stock trading    
Monthly Trade Value (HKD) Tiered Pricing Fixed Pricing
Tier I: ≤ 15,000,000 0.05% of Trade Value 0.08% of Trade Value
Tier II: 15,000,000.01–300,000,000 0.05% of Trade Value  
Tier III: 300,000,000.01–900,000,000 0.03% of Trade Value  
Tier IV: 900,000,000.01-2,000,000,000 0.02% of Trade Value  
Tier V> 2,000,000,000 0.015% of Trade Value  
Minimum per order Tier I: HKD 18.00

Tier II: HKD 12.00

Tier III: HKD 8.00

Tier IV: HKD 6.00

Tier V: HKD 4.00

HKD 18
Maximum per order 1% of Trade orders 1% of Trade orders
The above information is for reference only. Fees are subject to the latest version of the IB commission fee structure as published.

How much does the commission cost for US stock trading on IB?

IB commission for US stock trading
Monthly Volume (shares) Tiered Pricing Fixed Pricing
≤ 300,000 USD 0.0035 USD 0.005
300,001–3,000,000 USD 0.0020
3,000,001–20,000,000 USD 0.0015
20,000,001–100,000,000 USD 0.0010
> 100,000,000 USD 0.0005
Minimum per order USD 0.35 USD 1.00
Maximum per order 1% of Trade orders 1% of Trade orders
The above information is for reference only. Fees are subject to the latest version of the IB commission fee structure as published.

Does IB have an account maintenance fee?

The account maintenance fee has been cancelled as of July 1, 2021. So, there is no minimum balance to keep an IB account.

What are the margin rates offered by Interactive Brokers?

Interactive Brokers offers financing at very low rates, making it an attractive option for those looking to borrow funds to leverage their investment. Here’s the scoop on the margin loan interest rates if you’re thinking of borrowing from IB.

Margin Rates Offered By Interactive Brokers
Currency Tier Margin Rate As Of June 30, 2023
USD 0 ≤ 100,000 6.580% (BM + 1.5%)
100,000 ≤ 1,000,000 6.080% (BM + 1%)
1,000,000 ≤ 50,000,000 5.830% (BM + 0.75%)
50,000,000 ≤ 200,000,000 5.580% (BM + 0.5%)
> 200,000,000 5.580% (BM + 0.5%)
HKD 0 ≤ 780,000 8.718% (BM + 2.5%)
780,000 ≤ 7,800,000 8.218% (BM + 2%)
7,800,000 ≤ 780,000,000 7.718% (BM + 1.5%)

Quick tips for margin loans:

  • Margin loans will be charged a minimum floor of 0.75%. (Rates are subject to change.)
  • If financing is not prearranged, a surcharge of up to 1% may be applied to the spread.

Interactive Brokers (IBKR) interest rates

With IBKR, you may earn market rate interest on your instantly available cash balances. Here are notes regarding the IBKR interest rates:

  • Accounts with a Net Asset Value (NAV) of USD 100,000 or more earn full interest.
  • Accounts with NAV below USD 100,000 earn proportional interest.
  • No interest is paid on the first USD 10,000 of cash.
  • Interest is earned on settled cash balances in the securities segment, not in the commodities segment.
  • IBKR Pro and IBKR lite has different interest rates.

What’s the difference between IBKR Lite and Pro?

IBKR Lite: offers $0 commissions on trading US listed stocks and ETFs for retail clients, with no minimum account requirements or inactivity fees. IBKR Pro: is the plan for experienced investors and active traders.

What are the interest rates of IBKR idle cash?

Currency Tier Rate Paid: IBKR PRO Rate Paid: IBKR LITE
USD 0 ≤ 10,000 0% 0%
> 10,000 4.830% (BM – 0.5%) 3.830% (BM – 1.5%)

What are the benefits of opening an IB account? 7 reasons to use IB as your trading account

Interactive Brokers (IB) (stock code: IBKR) is the largest US broker in the world and has been rated as the top internet broker in the US by Barron’s for 10 consecutive years.

Reason #1: High Security

Interactive Brokers (IB) is the largest US-based brokerage firm, listed on the NASDAQ stock exchange, with a market value exceeding $30 billion. IB is the leading broker for many brokers worldwide, which makes it very safe. Moreover, IB is regulated by the Securities and Futures Commission of Hong Kong.

Reason #2: Wide Range of Investment Products

Hong Kong users can invest locally and offshore and trade stocks, options, futures, currencies, ETFs, bonds, and funds, among other investment products.

Reason #3: Offshore Investment

One account can invest in 150 global markets and 23 currencies and support 33 countries, including US stocks, Hong Kong stocks, A-shares, Singapore stocks, Japanese stocks, and US stocks.

Reason 4: Free Collection of Stock Dividends

IB does not charge a fee for collecting stock dividends, reducing transaction costs, and increasing interest income.

Reason #5: Low Trading Costs

Only charges the lowest commission, with trading commissions as low as 0.08%.

Reason #6: Low Foreign Exchange Spreads

Whether it’s for immigration, travel, or forex investments, IB offers low foreign exchange spreads, providing compact spreads based on 1/10 of a pip with real-time quotes.

Reason #7: Earn Interest on Idle Funds

If you’re hesitant to invest all your funds in the stock market and prefer to have some cash on hand, Interactive Brokers allows you to earn interest on your idle cash.

What is the difference between Interactive Brokers Hong Kong Limited and Interactive Brokers LLC?

You may not know that there’s a difference when you open an account with Interactive Brokers when you are coming from different regions.

If you live in Hong Kong, your account will be opened with Interactive Brokers Hong Kong Limited, a local Interactive Brokers Securities branch. Your account will be subject to local legal requirements, while US dollar assets will be kept in the US.

If you are a resident of other Asian regions, your account will be established with Interactive Brokers Securities, LLC, which is based in the United States and regulated by US laws.

Region Account Establishment Regulation
Hong Kong Interactive Brokers Hong Kong Limited Local laws
Other Asian regions Interactive Brokers Securities in the United States US laws

Steps to open an Interactive Broker account

  1. Go to Interactive Brokers Hong Kong’s Website:
  2. Choose the account type and set up a username and password.
  3. Verify your email address.
  4. Log in to your IB account and fill in your personal information.
  5. Set up your trading options (cash or margin).
  6. Fill out the W-8BEN form.
  7. Make sure the information is correct.
  8. Submit identification and proof of address documents.

Step 1 for IB Account Opening: Go to Interactive Brokers Hong Kong.

Once you have entered the Hong Kong Interactive Broker website, click the “Open Account” button on the right corner.

Step 2 for IB Account Opening: Create a username and password.

Create your own username and password.

Step 3 for IB Account Opening: Select your account type.

At Interactive Brokers, you can choose from different types of accounts to find one that’s right for you. If you want an account just for yourself, select the “Individuals Account” option under “Account Types.” This should give you what you need.

What is the difference between an individual account and a joint account? (An individual account is a single account owned by an account holder, while a joint account is a single account owned by two account holders.)

Step 4 for IB Account Opening: Fill in your personal information.

You can fill in your personal information as requested. Here are some reminders:

  • What should be filled in for the Tax Identification Number? For Hong Kong residents, you can fill in your Hong Kong Identity Card (HKID) number as the tax identification number.

  • National Identity Card Number: Remember to fill in the blanket and number in your HKID.
  • Base Currency: The calculation method for cash inflow in the form of base currency and transaction products can be changed at any time in the account management system.

Step 5 for IB Account Opening: Set up your trading option

Here you will select the trading options. Interactive brokers offer the Cash option and the Margin option. What is the difference between these 2 options?

  • Cash account: Trading with own funds, no minimum deposit requirement, does not support margin or short selling. If you choose a cash account, you can upgrade to a margin account through account management after opening the account.
  • Margin account: Investors can use stocks as collateral to borrow money from brokers and can also short-sell stocks.

Stock Yield Enhancement

The Stock Yield Enhancement Program can help you earn additional income from your fully paid shares. By lending your shares to IBKR in exchange for cash collateral, other traders can short-sell them and earn interest. You don’t need to worry about potential risks, as IBKR bears all the risk if the shares are not returned, and you can opt out of the program and sell your shares at any time.

Step 6 for IB Account Opening: Confirm your tax residence.

In this part, you’ll be filling out Form W8-BEN, which is a form for foreign individuals to identify their tax status with the US Internal Revenue Service (IRS). Based on the data the applicant previously provided, the form’s personal information section will be automatically filled in. Applicants only need to select the suitable option for “Treaty Benefits Qualifications”.

Step 7 for IB Account Opening: Make sure the information submitted is correct.

Before the final submission, you can have an overview of the application and make sure the provided information is correct.

Step 8 for IB Account Opening: Submit the required identification and address proof documents for review.

Once the application form is completed, you need to submit the corresponding identity proof and address proof documents for verification. The submission of identity proof and address proof documents is not applicable to all applicants.

If your application status is “completed and submitted for review,” no additional documents are required, and you can wait for the approval process. New accounts are typically approved within 1–2 business days.

The review progress will be sent via email. Once the application is approved and the account is funded, you can start trading.

Step 9 for IB Account Opening: Fund your account and submit proof of documents.

Almost there! After filling out the application form, you need to submit the corresponding proof of identity and address documents for review.

Select a Signature Verification Method

You can choose option 4: Link your trading account to your Hong Kong bank account (recommended) to complete the signature verification.

Here are some reminders for the verification procedures:

  • Fill in your bank account information.
  • Users must deposit at least HKD 10,000 or the equivalent in offshore HKD or US dollars.
  • Once you’re done, click “Create Deposit.”
  • Ensure that your bank account name matches your Interactive Brokers trading account name; otherwise, you won’t be able to deposit funds!

Confirm your phone number

You need to confirm your phone number by entering the verification code via SMS.

Signature verification and submitting an identity proof

Once you have been verified, you need to submit an identity proof with a photo of yourself to complete the process.

After completing all these steps, you’re ready to trade!

Frequent Asked Questions about IBKR

What is the minimum account opening requirement for IBKR?

IBKR does not set a minimum account opening requirement and has also waived account maintenance fees. There is no minimum account balance requirement.

What are the commission fees for IBKR?

There are two commission fee structures: tiered and fixed.

For tiered pricing, the minimum commission fee is 0.35 USD for US stocks and HKD 4 for Hong Kong stocks. For fixed pricing, the minimum commission fee is 1 USD for US stocks and HKD 18 for HK stocks.

What is the account opening process for IBKR?

Choose the account type on the IBKR website, set up a username and password, fill in personal and tax information, and submit relevant identification and address proof documents for review. The entire application process takes about 10 minutes, and new accounts are usually approved within 1–2 business days.

What are the account opening promotions for IBKR?

Free trial and $1 million in simulated trading funds.

Is the IBKR account an offshore account?

IBKR has Hong Kong and US accounts, and only US accounts are considered offshore accounts and are protected by SIPC.

Can you trade cryptocurrency with Interactive Brokers Hong Kong?

In September 2021, IB announced the provision of cryptocurrency trading and custody services, allowing users to buy and sell four cryptocurrencies, which include Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Litecoin (LTC).

How do you fund your account?

To begin the process, click on “Fund Your Account”. If you’re funding with HKD, you have 5 options to fund your account:

  1. Instant Local Transfer via eDDA
  2. Instant Local Transfer via FPS (recommended)
  3. Bank Transfer
  4. Mail a Check
  5. Transfer from the Wise Balance

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