Interests on futures accounts

Discussion in 'Retail Brokers' started by DT-waw, Dec 15, 2001.

  1. DT-waw


    On some internet site I saw an explanation of "Interests Earned" field in Tradestation report. Analysis.htm

    "Interests earned: the interest rate your money earns when not in the market".

    With stock accounts it's easy: I buy a stock - I have less money on the account - I will earn less interests. How it works with futures accounts?
    From what I know, when I open a position in futures, funds ( required margin ) are still on the account, they're "locked" until I close a position. Account cash balance is changing only due to profits or losses, but funds are always on my acct, regardless of open positions.

    So, how are my interests calculated? How are interests calculated on IB's futures accts?

  2. dkamp

    dkamp Guest

    Neither TradeStation nor IB (nor any other futures broker I'm familiar with) pay interest on funds in a Futures account. That appears to be one of the tradeoffs when doing futures trading. (There's a thread up here somewhere that previously discussed this topic.)
  3. rickty


    Neither TradeStation nor IB (nor any other futures broker I'm familiar with) pay interest on funds in a Futures account.

    However, I believe, you can buy treasury notes in your futures account and use it as margin colateral. So you'll be earning interest with your treasury notes.

  4. WarEagle

    WarEagle Moderator

    Richard is right. When my account was with Lind-Waldock, I could buy T-notes in $10,000 increments. I have not seen this option at IB, but the commission savings more than made up for a little interest.

  5. JayS


    I think both of you mean T-bills, T-notes are a different animal.
  6. WarEagle

    WarEagle Moderator

    oops, my bad, you are right, I meant t-bills.
  7. def

    def Sponsor

    small correction,
    IB does pay interest on futures accounts on balances above 10K. The interest earned is Libor-50 bps on balances less than 100K and libor - 25bps on higher balances. Libor as of Nov 30 was 2.174. The benchmark rate depends on the currency the account is funded in.
  8. dkamp

    dkamp Guest

    Def: Cool. That must have changed since the last time this topic was discussed up here. Any word yet on multi-currency futures accounts or combined stock and futures accounts (I've got a currently inactive stock only account with IB that I'd like to convert). Thanks.
  9. def

    def Sponsor

    i believe the interest policy has been the same since day 1. as for the mult-curreny on futures - it is supposed to be coming very shortly. all-in-one - i don't know.
  10. DT-waw


    Still, my question hasn't been answered. Def, does IB pay interests even if my all account's funds are used to cover margin for open positions in futures?

    #10     Dec 28, 2001