If I get it right, "Sig" buys short dated treasuries in US dollars for totally another purpose, he's not bothered by negative interest rates. Short term treasuries in EUR offer negative yield too, so that's not an answer. I've never found an easy turnaround, every solution has risks potentially greater the 1.1%/y. As far as I know, only solution is using multiple brokers (not 100% satisfactory, I know....). Just to let me know, has IB confirmed the limit of 100k EUR is evaluated at the sub account level?
Dear Tonyf, Thank you for your reply but this solution does not work. If I'd buy USD treasuties I would have again the risk of the exchange rate with the Euro as my base currency is Euro. Moreover when buying treasuries (as with any other bonds)IB asks you a maintenance margin and in this way I would not have all the liquidity available for trading. Also, If I'd buy Eur denominated short term bond I would have in this case negative interest on the purchased bond.
Dear tonyf, Thank you for your reply but I have a different point of view. In relation to the first point, holding position in currencies other than your base currency is always a risk and I wouldn't like to have any not calculated risk. Eventually I could have a maximum 15% account of non Eur currencies to diversify my portfolio but in this way I would not have solved my problem. In relation to the second point it is true what you say but I have been trading futures for the last 20 years with tested trading system, instead I do not know the stock market because I have never worked with it and in this way I would take useless risk. Moreover buying Usd denominated stock would not eliminate my problem because I would have an added risk on the currency and on the stock and also less cash available on my account because of the margin used to trade stock.
Dear Angelo_60, I agree with your point of you. I have contacted IB customer support and they have told me that the €100.000 is valid for every account and not on the total liquidity amount you have with IB. So if for example you have €100.000 on the main account and €100.000 on the sub account you do not pay any interest. Note: IB customer support gives wrong replies 80% of the time.
Dear nooby_mcnoob , Currency option are priced keeping into consideration the difference value between the two currencies interest rates. In the end, the cost that I would have to pay would be identical if not bigger than what I pay to IB keeping my cash in Eur.
If you've priced it out, most likely you are correct. But thought experiment: you convert 1M EUR to equiv USD. Get 1% interest on that. Pay 1% to buy equivalent currency option. Could be net zero? Haven't priced it myself so wouldn't know.