Negative Month-to-Date (MTD) interest can appear in your account for several reasons, primarily related to borrowing money or having negative cash balances. Here is a detailed explanation of why this occurs and how to understand it:
Causes of Negative MTD Interest
- Negative cash balance in a specific currency
- Borrowing money in one currency to make purchases in another
- Insufficient funds in the currency of the traded security
- Using a margin account to purchase securities without enough cash in the corresponding currency
- Temporary negative balances due to trade settlements
How Interest is Calculated
- Interest is based on your account's Adjusted Cash Balance, not just the visible cash balance
- Adjusted Cash Balance = Ending Settled Cash Balance - Short stock collateral value - Commodity margin requirement
- Interest is calculated and accrued daily but paid out at the end of the month
- There is a one business day lag in posting interest details to your account
Common Scenarios
- Option assignment: An in-the-money sell option is assigned, creating a stock position. The stock assignment settles on T+1, and closing the position on the settlement day can create a negative balance for 1-2 days due to settlement periods.
- Currency mismatch: Having a positive balance in one currency but a negative balance in another can result in both interest earned and interest paid.
Checking Your Account
- To review your cash balances:
- Log in to Client Portal
- Go to Performance & Reports > Statements > Activity
- Look for the Cash Report section and check the "Ending Settled Cash" balance for each currency
- To review your interest details:
Additional Information
- For detailed information on interest calculations and current rates, please visit the Interactive Brokers Pricing and Interest Rates page.