Interactive Brokers is an online broker that offers some of the lowest margin rates in the industry. That’s because they offer a tiered margin rate schedule based on the account’s net liquidation value. The rates start at 3.25% for the first $100000 and go down to 2.5% for accounts over $1 million. This makes them a great choice for active traders who want to keep their costs down.
But why are their rates so low?
There are a few reasons.
First Interactive Brokers has a very efficient platform. They use a Direct Market Access (DMA) model which means they don’t have to route their orders through a middleman. This saves them money which they can pass on to their clients.
Second they have a very large volume of trades. This gives them negotiating power with the exchanges and allows them to get better rates.
Third they are a very technology-focused company. They have developed their own trading platform TWS which is used by professional traders around the world. This platform is very efficient and helps to keep their costs down.
Fourth they have a very good risk management system. This allows them to offer lower margin rates because they are confident in their ability to manage risk.
Overall these factors combine to make Interactive Brokers one of the best choices for active traders who are looking for low margin rates.
What is the main reason why interactive broker’s margin rates are so low?
The main reason why interactive broker’s margin rates are so low is because they offer direct market access to major exchanges and ECNs and they route all orders electronically.
This allows them to avoid the fees that come with using traditional brokers.
What other benefits do interactive brokers offer?
In addition to low margin rates interactive brokers also offer low commissions advanced trading tools and a variety of other investment products.