@M.W. I will pass along the request to our treasury team. FWIW, we are currently paying .847% on CAD on balances > 13K CAD.
And who is pocketing the differential between 2.5% and 0.847%? Because around 2.5% would be paid on tbills, even longer term CAD bond yields are way higher. Offering Canadian sovereigns is definitely something that would add tremendous value to IB's product offering. I would guess that they are more popular and in demand than, for example, Greek or Portuguese corporate debt that IB seems to be offering.
Got around the lack of Canadian tbills at IB by using FXConvert to convert my Cad cash to USD cash. I then bought a notional matching amount of CAD futures (quoted in CADUSD) to hedge my currency exposure. The converted amount was then invested by buying US tbills. Only paid 6 pips basis due to the currently low spread between usd and cad benchmark rates. In the end I invested my free cash in the account at a pretty juicy 3% annualized yield, fully fx hedged and with 99% of the invested cash remaining as margin that I can use for other trading opportunities. Plus I did not lock myself into a yield that is most likely rising further as I don't believe either central bank has so far taken inflation seriously enough given their mediocre tools they employed so far. I see little to no balance sheet shrinkage. Just wanted to share this in case someone else is dealing with similar issues.
Would this work with Australian base currency but 3% is not attractive as Bank deposits in AUD are close to 3% with no currency risk so is there any point!
Here GICs (look it up if you don't know) offer up to 4.65%. But you would not be able to utilize the funds for trading purposes.
I'm not a currency trading expert, but I think with FX and FX futures you can basically more or less fully hedge your FX exposure along with any short-term benchmark interest rate differential. In other words, with an FX trade together with an FX futures trade, you can basically use another market's risk-free financial instruments (e.g. U.S. T-bills), and effectively get the prevailing risk-free market rate in your home country on whatever amount you put in that pair trade. Smart-ass, isn't it? I think that's what traderjo did. In his case the risk-free rates are similar, but it works even if they are different. Differentials between the risk-free rates in either currency are usually already reflected in the futures contracts pricing.
@def no pressure, but were you able to find out anything regarding my question? I am looking for EUR denominated government bonds or any other instruments that can serve as futures collateral in lieu of cash (similar to U.S. T-bills), to avoid having a too high cash drag in the futures segment of the account, as IB pays 0% interest on cash-based futures maintenance margin. Thanks for looking into this.
I realized i failed to reply. We do have EUR denominated bonds. Use the country code. For Germany for example, use DE. However not all Gov bonds are electronically tradable. For those not available that you wish to trade for size > $100K, contact bonddesk@ibkr . com during US trading hours.
I guess I'm giving up, this is as useless as calling customer service. My question was: "I am looking for EUR denominated government bonds or any other instruments that can serve as futures collateral in lieu of cash (similar to U.S. T-bills), to avoid having a too high cash drag in the futures segment of the account, as IB pays 0% interest on cash-based futures maintenance margin. Thanks for looking into this."