Interactive Brokers vs Saxo Bank: Broker Comparison and Review
Interactive Brokers and Saxo Bank are two popular brokers among retail traders. Interactive Brokers vs Saxo Bank – which Is The Best Broker?
We have used both brokers and believe Interactive Brokers is a much better choice than Saxo Bank. However, read below for our hands-on comparison of Interactive Brokers vs Saxo Bank.
Interactive Brokers (IB) and Saxo Bank are global online brokers offering a wide range of trading products and services. However, there are some key differences between the two brokers, which we highlight in this article.
In this article, we look at the different variables you should look at BEFORE starting the application process. For some, IB might be the best choice, and for others, it might be Saxo. Only you can judge that!
Which broker to choose?
Sadly, there are fewer and fewer brokers to choose from. Strict anti-money laundering rules (AML) make many brokers hesitant to accept foreigners, and increased regulation and red tape make it hard for small brokers to compete.
Interactive Brokers and Saxo Bank are two brokers that accept traders and investors from a wide range of countries. However, Saxo only accepts retail clients from within the EU.
We have skin in the game. Recently, we were customers of both IB and Saxo. We have been with IB for fifteen years and on and off before that. Recently, we also opened an account with Saxo, but closed it after a few months.
If you find anything wrong in the article, please contact us.
Before you start, the main question you should ask is this:
What are your aims and goals?
Which is the best broker might depend on your personal circumstances. Are you an active trader? Are you an algorithmic trader?
Interactive Brokers vs Saxo Bank compared – financial safety:
The Danish financial authorities regulate Saxo, and your deposit is insured up to 100 000 EUR in cash or 20 000 in securities. Saxo is a bank with separate legal entities in different parts of the world. Both the services and the costs might differ depending on the entity.
Interactive Brokers is regulated by many regulators. In Europe IB is based in three jurisdictions: UK, Hungary (!), and Ireland. The two latter as a result of Brexit. IB had a third option, Luxemburg, but they have chosen to close that one down.
As of today, the Hungarian branch is being merged with the Irish branch. Ireland only has a 20 000 EUR deposit guarantee.
What happens in a bankruptcy?
Saxo charges a 0.25% annual custody fee for stocks. The custodian bank holds shares, but Danish law states that the beneficial owner can claim the shares if needed.
Interactive Brokers hold shares in “street name”. This means that IB is the official owner, and your assets in IB are a liability for IB. Thus, in bankruptcy, you are at the mercy of IB being able to repay. However, we regard IB as pretty safe because of the following:
- They have billions of USD more in equity than required by the regulator;
- Thomas Peterffy, the majority owner, has skin in the game and owns more than 70% of IB (IB is listed on Nasdaq with the ticker code IBKR);
- IB has one of the highest margin requirements for customers;
- They have been in the business for a long time;
- They are scrutinized by shareholders (IB is listed on NASDAQ – IBKR is the tickercode)
Support and help desk
It’s well-known among traders that IB has a lot to be desired when it comes to support. They are available 24 hours, five days a week, but are most likely understaffed. You risk waiting for hours both on chat and telephone. Tickets/mail take days to get answered. We have spent endless hours filling out papers and going around in circles. Please read our full report about IB and support:
For example, only IB can enter the passport number in the settings (not yourself). When you get a newly issued passport with a new passport number, you will be going around in circles because support determines that the two passport numbers are different, but you can’t change the number. We had this problem until we finally found out why they declined our scanned copies.
Mind you, all is automated, so they don’t give any indications what is the problem. This is just one of numerous examples.
We’ve had numerous issues with support, AML, and access rights, and we conclude that the support is a weak part of their operation.
Due to AML, opening an account at IB has become very time-consuming. For a corporation, you can expect many emails back and forth.
Saxo has a dedicated person to help you set up the account, so it’s a much less cumbersome process.
We believe you should not keep a substantial part of the assets in IB because of the poor support. Saxo Bank’s customer service generally receives much more positive reviews.
IB vs Saxo 2023 – commissions and fees
Interactive Brokers has lower trading fees overall than Saxo Bank for stocks. As a matter of fact, IB is in a class of its own, and Saxo can’t compete on commissions. Saxo has very high minimum commissions, at least for EU clients.
For US stocks and clients, IBKR offers free stock and ETF trading for US customers, while Saxo Bank charges a commission of 0.02% per share.
Regarding forex, we believe Saxo Bank does charge lower forex fees than IBKR, but its fees for other asset classes are generally higher.
IB vs Saxo – trading platforms
In our opinion, Saxo Bank’s trading platforms are generally more user-friendly than Interactive Brokers. IB has the old and trusted TWS workstation, but it takes time to understand it fully.
Opposite, Saxo Bank offers a variety of platforms, including its own proprietary SaxoTraderGO platform and the popular MetaTrader 4 platform.
Product offerings of IB and Saxo
Interactive Brokers offers a broader range of trading products than Saxo Bank, including stocks, ETFs, bonds, options, futures, currencies, and cryptocurrencies.
Saxo Bank also offers a wide range of products, but its focus is primarily on forex and CFD trading.
Research and education – Saxo is better than IB
Saxo Bank offers a more comprehensive range of research and education tools than Interactive Brokers. Saxo Bank provides clients access to daily market analysis, trading webinars, and educational courses. They won’t make you money, but at least you can get a better understanding.
Interactive Brokers also offers some research and education tools, but its offerings are not as extensive as Saxo Bank’s.
IB and Saxo Bank technology:
Again, IB is a league on its own. You can have one account and access to CFDs, stocks, futures, forex, etc. – all in one account.
You can deposit money in various currencies outside your base currency. When you want to convert, you convert at the prevailing spot price minus a small commission.
Saxo Bank uses the mid-spot-rate and charges a pretty steep 0.75% commission.
Moreover, you can trade any instrument you want from one account: stocks, options, futures, commodities, CFDs.
Interactive Brokers (IB) or Saxo? Overall conclusion
Overall, we believe IB is the better choice if you are trading frequently. This boils down to costs, technology, and access to markets.
If you are not an active trader, Saxo might be an option.
Which is the best broker depends on your individual needs and preferences. If you are a new trader, you may want to choose Saxo Bank because of its user-friendly trading platform and comprehensive research and education offerings. If you are an experienced trader looking for a low-cost broker with a wide range of trading products, you may choose Interactive Brokers.
FAQ:
What is the main difference between Interactive Brokers and Saxo Bank?
The main difference lies in their approach to fees, technology, and product offerings. Interactive Brokers (IB) is known for lower trading fees, advanced technology, and a broader range of trading products. Saxo Bank, on the other hand, emphasizes user-friendly platforms, higher minimum commissions, and a focus on forex and CFD trading.
How is the financial safety of Interactive Brokers and Saxo Bank compared?
Saxo Bank is regulated by the Danish financial authorities, with deposit insurance up to 100,000 EUR in cash. IB is regulated by various authorities, and its financial safety is supported by a substantial equity surplus, majority ownership by Thomas Peterffy, and stringent margin requirements.
What happens in a bankruptcy with Interactive Brokers and Saxo Bank?
IB is known for suboptimal support, with long wait times and delays in ticket responses. Saxo Bank generally receives more positive reviews for customer service, with a dedicated person to assist in the account setup process. Saxo Bank charges a 0.25% annual custody fee for stocks, and Danish law allows the beneficial owner to claim shares if needed. IB holds shares in “street name,” making IB the official owner. In bankruptcy, IB’s ability to repay determines the fate of the assets.