Interactive Brokers Warning Clients on Negative Interest Rates on CHF, EUR and SEK Cash Balances



Interactive Brokers has started sending warning emails to clients who are holding cash balances in CHF, EUR and SEK, informing them of "special negative interest rate conditions" on those currencies. While the Benchmark Rates on all currencies are above 0%, IB states in their interest schedule that clients will get charged interest if they hold balances in certain currencies:
"For balances held in CHF, CZK, DKK, EUR, JPY or SEK IB will apply an effective negative rate to long balances held."



CHF depositors with a balance exceeding 100,000.01 at IB currently have to pay -1.059%; CZK depositors with balances north of 2,500,000.01, pay -0.12%; EUR deposits in excess of 100,000.01 are charged -0.543%; JPY deposits in excess of 11,000,000.01 are charged -0.3%; SEK deposits in excess of 850,000.01 are charged -0.822%.

For the time being, USD and GBP client balances at IB aren't subject to negative interest rates, but that may change soon. In an interview with CNBC, Stanley Fischer, Vice Chairman of the Federal Reserve, explained that the Fed has no intention of lowering interest rates in the US. However, the panic in the aftermath of the Brexit vote has strengthened the USD substantially, which will also make it difficult for the Fed to raise rates in the near term.

The situation in the UK is much more volatile than in the US. The unexpected outcome of the UK Referendum has forced the Governor of the Bank of England, Mark Carney, to hint at monetary easing and a potential interest rate cut at a recent press conference. On July 14, the Bank of England's Monetary Policy Committee, which sets interest rates, will be holdings its first meeting since Brexit.

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