Interactive Brokers’ interest rates are based on the benchmark rates for each currency and may change daily. These benchmarks use a combination of internationally recognized reference rates (such Fed Funds), bank deposit rates, and dynamic interbank rates determined from foreign exchange and money markets to calculate an IBKR Reference Benchmark rate.
How often do interest rates change?
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Methodology for determining effective rates
Background
In determining the interest that account holders are paid on cash credit balances and charged on debit balances, each currency is assigned to our Reference Benchmark rate. Our Reference Benchmark rate is determined from short-term market rates but capped above/below widely used external reference rates or, where appropriate, bank deposit rates. This page explains how our Reference Benchmark rates are determined…
Benchmark interest calculation reference rate descriptions
| Currency | Reference Rate | Description |
Introduction to market implied rates
BACKGROUND
In determining the interest that account holders are paid on cash credit balances and assessed on debit balances, each currency is assigned a reference or benchmark rate, from which a spread is deducted for credit interest and added for debit interest.1 As account holders may withdraw unencumbered cash balances upon demand and regulations generally restrict the reinvestment of such balances to short-term instruments of high credit quality, benchmarks typically represent the rate at which local banks may borrow on an overnight or short-term basis (e.g., EONIA, Fed Funds)…
What is the SEOCH / HKCC Margin Financing Charge?
Interactive Brokers may deposit cash to cover margin requirements for positions held in Hong Kong Futures Exchange (HKFE) or Hong Kong Stock Exchange (SEHK) contracts. The interest earned on that cash may be less than what is earned on other investments. To account for this difference, Interactive Brokers computes a Margin Financing Charge. This is a monthly charge in HKD that accrues on overnight HKFE and SEHK margin balances. To the extent that an account holds sufficient HKD cash to cover the margin balance, the charge is computed using a rate equal to the difference between the HKD credit interest rate and the rate that Interactive Brokers earns on margin deposits. The remaining margin balance, if any, is charged at a rate equal to the difference between the standard HKD benchmark rate and the rate that Interactive Brokers earns on margin deposits…