Hello all. I am UK based and have a USD denominated account with IB. In the past when I wanted to fund it, I use money transfer companies to transfer my pounds (converted into US dollars) into my IB account. However, I am not too happy with the exchange rates I am getting, compared to the rates displayed on IB trading platforms. For example this morning, the transfer company I use was quoting 1.1806 to convert GBP to USD (with a £10 transaction cost to transfer the equivalent of £10k), meanwhile IB trading platform was displaying GBPUSD 1.2060/1.2062. I did enquire from IB a while ago whether I could deposit GBP into my account and then use IB platform to convert to the funds in my account to USD, and I got the following reply: "Yes, you may deposit GBP into the account. Once credited to the account, you may leave the funds in GBP and if you wish to purchase products denominated in USD, IB will lend you the funds on margin. Or you can log into any of the trading platforms and convert the funds directly to USD". My question is that would this be a better way for me to fund my account (GBP into my IB account and then convert to USD using IB trading platform) or has anybody had a nasty experience doing it this way or been hit with hidden charges (apart from the usual commission fee for trading on IB)? Many thanks
It should be a better way indeed, you will get the price you see on the IB Platform and pay some transaction fee (around 2 USd for 100 or200k USD). Also it's probably free from your UK bank to wire GBP to IB GBP account, which is also located in the UK.
Do the FX at IB, you will get a better rate. You can change the base currency to GBP in account management.
@danjuma One of the best features of IB is their deliverable forex. Both the rates and commission are great. Its technically T3 settlement to cash, however the pre-settled cash is available for immediate use in orders on the IB platform. But overall, IB deliverable forex "just works" and they're one of the best (if not the best) broker out there for it. Probably the only place better would be LMAX, but to do deliverable on LMAX you need $$$ (min. 50k USD or equivalent per transaction)
LMAX's spreads are way wider than IB, often times 30-100% wider. At least that is what my TCA (transaction cost analysis) resulted in.
LMAX Deliverable or LMAX Trading ? (Not that it should necessarily matter, but just to be sure we're comparing apples and apples). Surprised you've found their spreads so much wider, my understanding was otherwise.
both, in IB quotes are the same for cash conversions and margin order fills. And how much tighter can things get than 0.1 pip in USDJPY or 0.2-0.3 pips in EURUSD? In LMAX you can easily double that. Find me a single broker that offers cash fx that shows tighter spreads than IB and I will worship you. There is none, not in professional space nor retail space.