Information Regarding IBKR's Calculation of Tiered Commission Monthly Trade Value
IBKR currently offers a Tiered pricing commission structure for select European and Asian exchanges. Customers may take advantage of reduced commissions based on the volume traded on a monthly basis across eligible exchanges.
European Tiered Commission
Currently IBKR offers the Tiered commission structure for stocks in Belgium, Denmark, France, Germany, Italy, Netherlands, Switzerland, Norway, Sweden and the UK.
IBKR maintains the EUR-equivalent, CHF-equivalent, DKK-equivalent, USD-equivalent, GBP-equivalent, NOK-equivalent and SEK-equivalent trade values of all executions traded under the Tiered model. Conversions are done using the prior day's exchange rate. This accounting allows for a customer whose primary trading is on the Swedish stock exchange to easily compare statement information to the tier breaks on the IBKR website and still receive the benefit of a reduced tier when trading a EUR-denominated stock eligible for Tiered pricing.
Asia/Pacific Tiered Commission
Currently IBKR offers the Tiered commission structure for trades in Australia, Hong Kong, Japan and Singapore. IBKR maintains the AUD-equivalent, HKD-equivalent, JPY-equivalent and SGD-equivalent trade values of all executions traded under the Tiered model. Conversions are done using the prior trading day's exchange rate. This accounting method allows for a customer whose primary trading is on the Hong Kong stock exchange to easily compare statement information to the tier breaks on the IBKR website and still receive the benefit of a reduced tier when trading a JPY-denominated stock eligible for Tiered pricing.
General
Tier breaks and the applicable commission rates are provided on the IBKR website. In general, volume/value tiers are calculated once daily, not at the time of the trade. As such, execution reductions will start the trading day after the threshold has been exceeded.
Example
Assume an account has executed trades on the Hong Kong stock exchange on August 1 against a trade value of 15,100,000 HKD. The account's monthly trading value will be tracked as follows:
HKD value = 15,100,000
SGD value = (15,100,000 x 0.16048 exchange rate) = 2,423,248
JPY value = (15,100,000 x 10.075 exchange rate) = 152,132,500
The following day, for an execution on the Tokyo stock exchange commissions will be based on the month to date trade value as expressed in JPY, which in the example is 152,132,500. This month to date trade value exceeds the Tier 1 threshold therefore the trade will be commissioned at the Tier 2 level, or 0.05%.
Note that the above may lead an account to be charged commissions on two different tiers on the same trade date due to exchange rate fluctuations. Traders should take note of this possibility when trading across multiple venues.
Please be aware that examples provided above are for instructional purposes only and may not reflect current commission rates. Please always refer to the IBKR website for the most updated commission and fee rates.
Add/Remove Liquidity
Overview:
The goal of this article is to provide proper understanding of exchange fees and add/remove liquidity fees for the Tiered commission schedule.
The concept of adding or removing liquidity is applicable to both stocks and stock/index options. Whether or not an order removes or adds liquidity is dependent on that order being marketable or non-marketable.
Marketable orders REMOVE liquidity.
Marketable orders are either market orders, OR buy/sell limit orders whose limit is at or above/below the current market.
1. For a marketable buy limit order, the limit price is at or above the Ask.
2. For a marketable sell limit order, the limit price is at or below the Bid.
Example:
XYZ’s stock current ASK (offer) size/price is 400 shrs at 46.00. You enter a buy limit order for 100 XYZ stock @ 46.01. This order will be considered marketable because an immediate execution will take place. If there is an exchange charge for removing liquidity, the customer will be charged that fee.
Non-Marketable orders ADD liquidity.
Non-marketable orders are buy/sell limit orders in which the limit price is below/above the current market.
1. For a non-marketable buy limit order, the limit price is below the Ask.
2. For a non-marketable sell limit order, the limit price is above the Bid.
Example:
XYZ’s stock current ASK (offer) size/price is 400 shrs at 46.00. You enter a buy limit order for 100 XYZ stock @ 45.99. This order will be considered non-marketable, because it will be posted to the market as the best bid, and instead of being immediately executed.
If and when someone else sends a marketable sell order that causes your buy limit order to be executed, you should receive a rebate (credit), if an add liquidity credit is available.
Non-marketable orders are buy/sell limit orders in which the limit price is below/above the current market.
1. For a non-marketable buy limit order, the limit price is below the Ask.
2. For a non-marketable sell limit order, the limit price is above the Bid.
Example:
XYZ’s stock current ASK (offer) size/price is 400 shrs at 46.00. You enter a buy limit order for 100 XYZ stock @ 45.99. This order will be considered non-marketable, because it will be posted to the market as the best bid, and instead of being immediately executed.
If and when someone else sends a marketable sell order that causes your buy limit order to be executed, you should receive a rebate (credit), if an add liquidity credit is available.
PLEASE NOTE:
1. All accounts trading options will be subject to any options exchanges’ remove/add liquidity fees or credits.
2. Per IBKR’s website, only negative numbers under the Remove/Add Liquidity schedules are rebates (credits).
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