Interactive Brokers vs eToro UK

In recent years, both Interactive Brokers and eToro have experienced significant growth in terms of market share and performance. Currently, they hold prominent positions in the market.

While these two platforms have distinct features, they also share certain similarities. In this article, we will thoroughly analyse their characteristics and perform a detailed comparison of Interactive Brokers Vs eToro.

eToro vs Interactive Brokers

History of Interactive Brokers vs eToro

History of Interactive Brokers

Interactive Brokers, established in 1978 by Thomas Peterffy, stands as a testament to his pioneering spirit in computer-assisted trading. Peterffy recognised the potential of computers in accessing global markets and executing trades at significantly lower costs compared to traditional brokerage firms.

The company’s foundation is remarkable, considering that Peterffy initially received only $100 from his parents, which he transformed into a substantial sum by creating a brokerage that has now earned an enormous reputation.

Initially, Interactive Brokers operated as a market maker on the Nasdaq stock market, actively participating in trading on both sides of the market for several highly active over-the-counter (OTC) securities. Currently, Interactive Brokers has developed into an online brokerage firm, offering an extensive range of products and services available to both individual and institutional clients.

History of eToro

eToro’s history traces back to its founding in 2007 when it was driven by a vision to revolutionize the trading landscape.

In 2010, eToro introduced its trading platform and worked to develop a remarkable market strategy, which has driven the company to its current status as a leading and highly respected brokerage firm.

Today, eToro is distinguished as one of the most recommended brokers in the industry, a reward to its innovative approach and success in reshaping the trading world.

Regulation and Investors’ Protection: Interactive Brokers vs eToro

Regulation and security are essential elements when considering brokers. In the case of Interactive Brokers and eToro, which have gained significant attention, it is important to understand the mechanisms in place to secure clients’ funds when dealing on these platforms.

Interactive Brokers’ Regulation UK

Interactive Brokers has one of the strictest regulatory schemes, having obtained approval from globally recognised agencies, including:

  • The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA)
  • The Financial Conduct Authority (FCA) in the United Kingdom
  • The Central Bank of Ireland (ICB) within the EU

These regulatory bodies impose stringent requirements, making Interactive Brokers a highly secure option for traders. In the case of UK investors, the main regulatory body is the FCA when opening an account with them.

Interactive Brokers Protection Scheme | Is my money safe?

In addition to its regulatory bodies, Interactive Brokers UK holds money in a segregated account. This means that in the event of a failure, these funds will be returned to clients rather than treated as recoverable assets by general creditors. In the event of a shortfall, clients could be compensated up to £85,000 (FSCS) in the event of bankruptcy, ensuring the safety of clients’ money.

eToro’s Regulation UK

eToro adheres to various regulatory frameworks across different countries, ensuring compliance and investor protection:

  1. eToro (UK) Ltd. operates under the regulation of the Financial Conduct Authority (FCA) in the United Kingdom.x
  2. eToro AUS Capital Limited is an Australian company authorised by the Australian Securities and Investments Commission (ASIC).
  3. eToro (Europe) Ltd., based in Cyprus, is regulated by the Cyprus Securities and Exchange Commission (CySEC).

eToro Protection Scheme | Is my money safe?

eToro is not legally allowed to use or reinvest clients’ funds. Therefore, if insolvency occurs, eToro Money ensures your funds are fully protected, aside from the cost of returning them to you. By safeguarding all client funds, eToro Money is NOT required to comply with the Financial Services Compensation Scheme (FSCS), which only protects up to £85,000 in case of a bank default. Instead, eToro Money is committed to securing all your funds in full.

Product offerings: Interactive Brokers vs eToro

When comparing the product and market offerings of Interactive Brokers and eToro, it’s important to consider the differences in assets and products to choose the best broker for your strategy and goals. Let’s examine their respective offerings more closely.

Product offerings of Interactive Brokers in the UK

Interactive Brokers focuses more on experienced investors and traders, and their product range reflects this focus. The platform offers an extensive range of products such as:

  • Real stocks and ETFs, including fractional shares
  • Options from over 30 market centres
  • Futures on over 30 market centres
  • Spot forex with over 100 currencies available
  • CFDs on forex, stocks, indices, and metals.

Additionally, Interactive Brokers operates in over 140 countries across five continents, offering various products suitable for different markets. The platform has been created to please experienced traders with in-depth knowledge of the available products, ensuring a magnific trading experience.

Product offerings of eToro in the UK

eToro offers a slightly more simplified product selection than Interactive Brokers.

It includes stocks, ETFs, and cryptocurrencies, and CFDs on various financial assets such as stocks, currencies, futures, indices, and commodities. eToro provides investment options across short, medium, and long-term durations, with or without leverage.

eToro’s main feature is Copy Trading. It lets clients copy the portfolios of top traders, adding a social element to the platform and making it easy to trade successfully without much effort.

Interactive Brokers vs eToro: Commissions and Trading Fees

When comparing trading fees between Interactive Brokers and eToro, it’s clear that these two brokers are quite different and serve different types of customers, as we’ll explain in the next sections.

Interactive Brokers: Commissions and Trading Fees in the UK

Interactive Brokers offers competitive and low commissions across different markets. However, its cost structure may appear quite overwhelming and confusing. Trading costs and non-trading costs differ according to markets and products, as explained below.

Stocks and ETFs

Interactive Brokers typically offer low commissions for stocks and ETFs. The commissions are volume-based, meaning the cost per share is calculated as a percentage of the trading value, with minimum and maximum limits. ETF fees follow the same structure as those for stocks.

MarketCommission/shareMinimumMaximum
North America
United States$0.005$11%
CanadaCAD 0.01CAD 10.5%
Mexico0.1%MXN 60No
Europe
United Kingdom0.05%£3No
Belgium, France, Germany, Spain, Italy, Netherlands0.05%€3No
Switzerland0.05%CHF 5No
Austria0.10%€4No
Poland0.1%PLN 15No
Norway, Sweden0.05%NOK/SEK 49No
Portugal0.15%€6No
Estonia, Latvia, Lithuania0.2%€10No
Hungary0.1%HUF 200No
Asia-Pacific
Australia0.08%AUD 6No
Hong Kong0.08%HKD 18No
Japan0.08%JPY 80No
Singapore0.08%USD 2.5No

Forex

Interactive Brokers uses a volume-based commission structure, so higher trading volumes lead to lower commission rates.

Monthly traded amountCommissionMinimum
USD ≤ 1,000,000,0000.20 basis points of the trade value$2.00
USD 1,000,000,001 – 2,000,000,0000.15 basis points of the trade value$1.50
USD 2,000,000,001 – 5,000,000,0000.10 basis points of the trade value$1.25
USD > 5,000,000,0000.08 basis points of the trade value$1.00


Mutual funds

Non-U.S. residents can purchase thousands of mutual funds outside the U.S. without transaction fees. However, most other funds have a commission of €4.95 per trade (or currency equivalent).

The fee structure is percentage-based:

Country of the fundFeeMinimumMaximum
US funds with no transaction fees0%$0$0
Euronext fixed pricing structure0.1% of the trade value€4€29.00
Other funds€4.95N/AN/A

Bonds

Interactive Brokers generally maintain low bond fees based on trading volume and include a minimum amount.

BondsVolumeCommissionMinimumMaximum
US CorporateNominal value ≤ $10,0000.10% * nominal value$1$250 or 1% of market value, whichever is lower
US TreasuriesNominal value ≤ $1,000,0000.002% * nominal value$5No
United KingdomMarket value ≤ £10,0000.10% * market valueNoNo
Hong Kong GovernmentMarket value ≤ HKD 15,000,0000.08% * market valueHKD 18No


Futures

Just like with options, Interactive Brokers charges fees based on the number of contracts traded for futures. Here are some examples:

FuturesCommission per contract
United Kingdom£1.70
United States$0.85
CanadaCAD 2.40
AustraliaAUD 5
Hong KongHDK 20


CFDs

Interactive Brokers offers low CFD trading fees:

CFDMonthly traded amountCommission per shareMinimum
CFD on US stocks≤ $300,000$0.005$1.0
CFD on European stocks≤ 10,000,000€0.05%€3.0
CFD on Australian stocks≤ 10,000,000 AUD0.05%AUD 5.0
CFD on Hong Kong stocks≤ HKD 300,000,0000.05%HKD 12.0
CFD on Japanese stocks≤ 9,000,000,0000.03%JPY 100.0
CFD on US 500 index0.005%$1.0
CFD on UK 100 index0.005%£1.0
CFD on Japan 225 index0.01%JPY 40.0
CFD on currencies≤ 1,000,000,0000.20 basis points * trade value$2.0

Additionally, Interactive Brokers is very interesting due to its low non-trading service fees. There are no charges for deposits, inactivity, or account maintenance. However, a small fee applies to additional monthly withdrawals (£10 per withdrawal, with the first one each month being free).

eToro: Commissions and Trading Fees in the UK

eToro’s fee structure is much simpler. The platform charges several types of fees:

  • Conversion Fee: Accounts are only in USD, so depositing or withdrawing GBP requires covering a variable conversion fee.
  • Spread: This variable cost is included in the prices shown on the platform.
  • Overnight Fee: This applies if CFD positions remain open overnight.
  • Withdrawal Fee: A fee of $5 per withdrawal.
  • Inactivity Fee: Charged after 12 months of inactivity.

eToro charges 0% commissions. However, you still need to cover the spread, as shown below:

eToro Fees
Financial productSpread
CurrenciesStarting from 1 Pip
CommoditiesStarting from 2 Pips
Stock IndicesStarting from 0.75 points
Stocks and ETFs (CFDs)0.15%
Cryptocurrencies1%

Trading platform: Interactive Brokers vs eToro UK

After reviewing the commissions and fees, let’s focus on the trading platforms. Interactive Brokers and eToro share one thing in common: Both use their own custom-designed platforms, offering significant value and a competitive edge.

Interactive Brokers Trading Platform

Interactive Brokers delivers a feature-rich platform with tools and resources designed for specialized investors. It’s accessible as a web application or a downloadable app for PC and Mac. The two web platforms available are Client Portal and Webtrader.

The platform primarily targets professional investors and may take some time to learn. Its features aren’t always intuitive for beginners.

Interactive Brokers also offers a mobile platform for iOS and Android devices, allowing clients to trade and manage their investments on the go.

Interactive brokers platform UK
Interactive Brokers Platform view

eToro’s Trading Platform

eToro provides a proprietary trading platform known for its user-friendly and intuitive interface, making it accessible to a wide range of traders, from beginners to experienced investors.

The platform is web-based and can be accessed through a browser without any downloads. It offers a seamless trading experience for various financial assets, such as stocks, ETFs, currencies, and cryptocurrencies.

Unique Features:

  1. CopyTrader:
    • Replicate Popular Investors: CopyTrader lets users copy the portfolios of successful traders, making it great for beginners and passive investors.
    • Assess Performance: Users can view the traders’ profiles and annual and monthly performance records, which are public.
    • Risk Score: Each trader receives a risk score, and detailed statistics such as the number of trades per week, average holding period, and performance charts are available.
    • Investment Minimum: The minimum investment for using this feature is $200, but it allows customization based on user preferences and risk tolerance.
  2. Smart Portfolios:
    • Automated Investments: Smart Portfolios provide automated investment solutions.
    • Optimized Returns: These portfolios are intelligently diversified to optimize returns, considering users’ risk levels and investment goals.

etoro platform UK screenshot
Etoro’s Trading Platform View

Examples of eToro’s Investing Opportunities:

  1. Theme-Based Investing:
    • Invest in portfolios centered around themes like future payment systems, drone tech, renewable energies, and more.
  2. “Star” Trader Portfolios:
    • Invest in portfolios featuring a selection of standout traders on the platform.

No Additional Fees:
These portfolios don’t have extra management fees or commissions, except for fees tied to the underlying assets. CFD allocation is clearly indicated, so users can verify performance, asset distribution, and investment strategy.

Portfolio Creation:

  • Smart Portfolios are created using eToro’s algorithms, which rely on machine learning and data science.
  • External Partners: Sometimes, eToro’s external partners also help design these portfolios.

Simplicity:
Though the strategy may seem complex, eToro provides a user-friendly solution, making it easy for investors to access diverse investment opportunities across a wide range of assets.

etoro Copy Trading Feature
etoro Copy Trading Feature

Deposits and withdrawals of funds: Interactive Brokers vs eToro

When choosing between Interactive Brokers and eToro, it’s important to consider how each platform handles deposits and withdrawals, including the conditions, requirements, and overlooked details. Here is a breakdown of how these processes differ:

Deposits with Interactive Brokers

  • Access: Navigate to the “fund transfer” option on the platform.
  • Choose Payment Method and Currency: Select your payment method and desired currency.
  • Complete the Details: Enter the required information for the deposit amount in the chosen currency.
  • Finalize: Click “Finish” to process the deposit. Processing typically takes a short time but can vary.

Withdrawal of funds from Interactive Brokers

  • Access: Go to “your portfolio” and click the “withdraw” option.
  • Choose Currency: Select your currency and follow the steps provided.
  • Withdrawal Limits: One free withdrawal is allowed per month. Additional withdrawals incur a fee.

Deposits with eToro

  • Access: Click “deposit funds” on the platform.
  • Enter Amount and Method: Enter the amount and choose your preferred payment method. Options include PayPal, bank transfer, Klarna, Skrill, and card payments. (Some of the deposit options might entail a fee)

Withdrawal from eToro

  • Access: Click “withdraw funds” on the platform.
  • Choose Amount and Method: Enter the amount and select the withdrawal method, which defaults to the deposit method. If needed, change the currency (default is USD).
  • Finalize: Confirm the transaction. Processing usually takes around two days. The minimum withdrawal amount is $30.

Customer Service: Interactive Brokers vs. eToro

Quality customer service is crucial when comparing Interactive Brokers and eToro. Here’s how each broker handles support:

Customer service at Interactive Brokers

  • Contact Methods:
    • Phone Support: Available 24/7 via a dedicated phone line.
    • Email and Chat: Additional support is available through email and live chat.
    • FAQs: A comprehensive FAQ section is available to answer common questions.

Customer service at eToro

  • Support Channels:
    • Live Chat: Users can engage with customer support via live chat.
    • Help Panel: The platform has a “Help” option for submitting support tickets. Response times are generally quick.
    • FAQs: A well-organized FAQ section addresses common questions.

However, eToro does not offer phone support for inquiries or complaints, which might be a consideration for those who prefer direct communication.

Conclusions: Which Broker is Better: Interactive Brokers or eToro?

Both Interactive Brokers and eToro are reputable brokers offering extensive financial products and are regulated by the Financial Conduct Authority (FCA) in the UK. However, each broker is more suitable to a different audience, offering them with unique features and strengths:

Interactive Brokers:

  • Product Range: Provides a comprehensive range of financial products, including futures, options, currencies, stocks, ETFs, and CFDs.
  • Audience: Designed for advanced investors and professionals handling high trading volumes.
  • Pricing: Operates on a volume-based fee structure with minimum and maximum thresholds.
  • Customer Support: Offers 24/7 support via phone, email, and chat.
  • Platform: More suitable for experienced users and traders with complex tools and resources.

eToro:

  • Social Trading: Features CopyTrader, enabling users to replicate successful traders’ portfolios.
  • Ease of Use: Designed with user-friendly technology for beginners.
  • Product Range: Specializes in stocks, ETFs, currencies, CFDs, and cryptocurrencies (limited in the UK).
  • Pricing: Offers competitive fees with 0% commissions on stocks ETFs and low-cost CFDs.
  • Customer Support: Provides live chat and ticket support but lacks phone support. 

Conclusion:

  • Interactive Brokers is ideal for experienced investors looking for diverse assets and sophisticated tools.
  • eToro is best for beginner investors seeking a simple, affordable platform with unique social trading features.

Ultimately, your decision should align with your investing experience, investment goals, and preferred platform features.

Summary of the comparative analysis of Interactive Brokers vs eToro

Aspects to compareInteractive BrokerseToro
RegulatorCySEC
FCA
ICB
CySEC
FCA
ASIC
Products availableStocks and ETFs
Currency pairs
Futures
Bonds
Options
CFDs
Stocks and ETFs
Currency pairs
Indices
Ready-made portfolios
CFDs
Cryptocurrencies
Trading feesVariable, based on trading volume0% (spread might apply)
Customer
service
Phone, mail, chat, website formLive chat, ticket support
PlatformSeveral platforms supportedBrowser-based, mobile phone
Strengths✅Access to countless assets
✅24/7 customer service
✅Platform for professional traders
✅Social trading (Copytrading).
✅0% commissions
✅Real assets & CFDs, cryptocurrency
Weaknesses❌Not very intuitive for beginners❌Base currency is USD only (FX change fee)
❌Minimum bank transfer of $500 ($50 via other methods)
Investor/Trader profileRecommended for experienced traders/investorsRecommended for beginners
Experts can join the social trading programme for extra income

Interactive Brokers vs eToro: FAQ

Is eToro a regulated broker?

Yes, eToro is a regulated broker. It operates under multiple regulatory bodies, including the FCA in the UK.

Can I trade cryptocurrencies on Interactive Brokers?

No, Interactive Brokers does not offer cryptocurrency to UK residents. If you want to buy and sell crypto, you may want to consider eToro instead. An alternative might be ETFs on crypto.

What is the minimum deposit required to open an account with Interactive Brokers?

Interactive Brokers has different minimum deposit requirements depending on the type of account you wish to open. For individual or joint accounts, the minimum deposit is $0, meaning there is no specific minimum requirement. However, to trade on margin or access certain features, a minimum deposit of $2,000 is typically required.

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