Interactive Brokers will now do currency conversions automatically

Baptiste Wicht

The Poor Swiss
Staff member
Hi

Here is something I should probably have mentioned earlier: As of April 2024, IB will now do currency conversions for you if you do not have the necessary currency. Before, you had to do a manual conversion before a trade, but now IB will do it for you if have not done so already! Of course, this is only for cash accounts, because a margin account would go into a negative balance in this case.

It is important to know that the fee is different between these two systems:
  • Manual conversions cost 0.002% of the conversion or 2 USD, whichever is higher
  • Automated conversions cost 0.03% of the conversion
So, below 6500 USD, the automated conversion will be cheaper!

What do you think about this feature? I think it's pretty nice for simplifying the flow of investment on IB, and it can even save investors some money.

You can read more about it on my IB Review:

 
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Very interesting, thanks.

Where do I find the details of currency conversion fees on IB? I looked at in my account at Statements > Activity but did not find anything there.
 
I looked at in my account at Statements > Activity but did not find anything there.
Normally, you should be able to see them under Activity statements. If you look into Trades, you will see something like USD.CHF with fee. The last time I did, it cost me 1.82 CHF (2 USD at the time).
 
Normally, you should be able to see them under Activity statements. If you look into Trades, you will see something like USD.CHF with fee.

Found it! (didn't think of a currency conversion as a trade)

Looking at this statement brings me to another question: why are there no fees on the USD>CHF conversion? I don't really understand what these conversions are (dividends of VT?). Two conversions are for very small amounts, the third one is a bit larger (289.25).

interactive_brokers_trades.jpg

I love this new automatic currency conversion, since I often do conversions below 6,500 USD.
 
Interesting, I don't know why you get these. The very small one may mean IB converted automatically a tiny balance at the end of the day, but the other two are different. Normally, your dividends should not be automatically converted.
 
Had the same observation yesterday. They say on their website they don't charge additional commission on the automatic trade, but put the 0.03% on top of the exchange rate. Now it would of course be nice to see somewhere what that meant for me cost wise, as currently one could think the transfer was completely "free". Feels untransparent to me in the activity report.

Also the Code "L" that also @gaijin sees in his trades refers to "Ordered by IB (Margin Violation)" which sounds scary but is the intended behavior I think for cash accounts. I just always get nervous when I see "violation". XD
 
To be honest I don't get this functionality...

As said: 'IB will now do currency conversions for you if you do not have the necessary currency'

Before I transferred a certain amount of CHF yesterday, I had already had both CHF and USD on my account (leftovers from my recent transactions).
Today I converted a neccesary amount of CHF to USD (paying 2$ commision) to buy US ETFs, and kept the necessary rest in CHF to buy Swiss stocks. I already pre-submitted orders for everything I want to buy - some of them were executed instantly, but not the order for CH stocks.

In other words I had enough CHF to buy CH assets, and enough USD to buy US assets.

In order & Trades I can see following trades now:
1. CHF.USD - my manual conversion
2. ETF A and ETF B bought today on ARCA
3. Four USD.CHF Bought/Sold transactions -> like IB is 'playing' with my money exchanging it back and forth...

Cash holdings is now 0.1 CHF and xxx USD.
Order for CH stocks is still presubmitted.

Does anyone understand this?
Does anyone know how to turn this automatic conversion off?
 
@kt6551601

Four automated transactions is weird indeed, maybe the full transaction was split in four.

I can see a few reasons for these transactions.
  1. Maybe the currency conversion was not settled yet, so the automated conversion was necessary.
  2. Maybe you had enough currency for the trade, but not for the fees.
  3. Maybe you had a tiny amount left and it was automatically converted overnight. But in your case, it should not have left 0.1 CHF.
 
I suspect that it is a kind of timing issue - the user interface showed that the manual conversion is done and currency was successfully exchanged (and money is available in Cash Holdings), but in fact it hasn't been effectively settled yet.
Hence, IB used available USD, and then automatically converted the missing amount from CHF to cover transactions in USD.
 
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