Which futures broker is best for forex conversions?

Discussion in 'Professional Trading' started by benwm, Mar 9, 2011.

  1. benwm


    The area of "forex conversions" at our friendly futures broker seems to be somewhat of a murky area. But what is the point in saving 20 cents here or there on your futures commissions if you then get shafted converting back your hard earned foreign currency proceeds into your base currency, and lose hundreds or thousands in the process. We've all experience being 'mugged' at the local bank or tourist office's forex desk when we go on holiday and need some rand, colons or rupees for our trip. But it's not just when you go on holiday, is it? See this recent thread posted by another ETer:-

    Loss $1000USD when I deposit in Tradestation
    http://www.elitetrader.com/vb/showt...&perpage=6&highlight=conversions&pagenumber=1 :eek:

    Interactive Brokers are pretty transparent, I have to say I am very satisfied with their transparency, spreads and commissions:-

    But what about the others, especially those which claim to beat IB on futures comms? I am still waiting to hear Global Futures policy on forex conversions, but I suspect others are just as bad.

    Let's share our experiences to uncover which brokers are the best ones in this area...
    How wide are the spreads and commissions for conversions?
    How many pay interest on long currency balances (in normal times)?
    How much do you get charged when your currency balance goes negative due to some (hopefully) temporary losses? :D

    Perhaps reps from some of the ET sponsor brokers can come and explain their policy for their and our benefit...
  2. benwm


    I'll start with my experience at Interactive Brokers...

    I've always found their forex conversion rates to be quite reasonable, often a couple of pip spreads for major pairs, never more than single digit bid-ask spreads. Commissions at $2.50 or 0.2 basis points (0.002%), whichever is greater.

    On long currency balances they pay interest 0.50% below their benchmark reference rate for major currencies such as GBP, AUD, CAD, CHF, EUR, GBP, JPY. This only applies above a specified threshold level for each currency, eg. $10000 for USD, and for balances above $100000 you get a better deal, just 0.25% below their benchmark rate.

    For short balances you get charged 1.50% above the benchmark rate, up to $100000. There are tiered levels so above $1 million you are only charged 0.50% above the benchmark rate.

    In terms of transparency and competitiveness I would have to give them 8/10. If only they could cancel their "cancellation fees" on Eurex I would be a much happier customer... :)
  3. benwm