Swissquote vs Interactive Brokers

Swissquote

Swissquote is a Swiss broker and bank. They were founded in 1996 and have more than 700 employees. The broker itself is part of the Swissquote Group Holding SA company.

Although it is a Swiss company, it offers financial services to several countries. But in this article, I focus on Swiss investors.

Swissquote is a publicly traded company, meaning it must reveal its financials publicly. It is also a licensed bank in Switzerland. They currently have more than 400’000 users.

They offer access to many financial services. But in this article, I only want to focus on the stock exchange brokerage services.

Interactive Brokers

Interactive Brokers is a broker from the United States with a presence in Europe.

They have several legal entities. You will deal with a specific entity depending on where you are from. For instance, Swiss investors deal with the entity from the Unit Kingdom.

They also are a publicly traded company and a very profitable brokerage company. They have more than 1500 employees worldwide and were founded in 1978. As of 2021, they have more than 1.6 million customers.

They also offer access to a wide range of investment instruments. In this comparison, I will only focus on the stock broker part of Interactive Brokers.

Features

The most important criterion is that your broker should have all the needed features. So, let’s start by comparing the features of Swissquote vs Interactive Brokers.

While important, it is not a very difficult criterion. Indeed, most investors do not need many features. You only need very few features if you are a passive investor like me. And after that, some features are nice to have but not essential.

Both brokers give you access to the most important stock exchanges, such as the Swiss Stock Exchange (SIX) and the New York Stock Exchange (NYSE). And they give you access to the biggest European stock exchanges.

You can access stocks, bonds, and ETFs with both brokers, which is probably everything most investors need. You can also access futures and options and more advanced investments, but that only concerns a tiny portion of investors.

Very importantly, both brokers will give you access to US ETFs. These ETFs are the most efficient for Swiss investors.

Both brokers will let you trade from your desktop and your mobile phone. And they both have different applications.

We should also talk about a few advanced features. Both brokers will give you access to margin loans if you ever need leverage. Interactive Brokers allows you to buy fractional shares, while Swissquote does not have this feature. I do not think it is a big deal, but some people like to have access to fractional shares.

Overall, both Swissquote and Interactive Brokers should have all the features you need for investing in the stock market.

Fees

Fees of a broker are the second most crucial criterion, very close behind the first. So, let’s compare the fees of Swissquote vs Interactive Brokers.

Let’s start with account management fees. Interactive Brokers has no custody fees of any sort. At Swissquote, you will pay 0.025% custody per quarter, with a minimum of 15 CHF and a maximum of 50 CHF. So, you will pay anywhere between 60 CHF and 200 CHF per year in custody fees. This custody fee is not cheap, depending on your account size.

Let’s look into the transaction fees next. IB has two fee systems: tiered and fixed. I am using the tiered system because it is cheaper for small investments. Swissquote has only one system, with different fees for each stock exchange. On top of that, SQ has a list of so-called ETF Leaders, with a fixed cost of 9 CHF on the Swiss stock exchange and 9 EUR on European stock exchanges.

Let’s run a few examples:

• 1000 CHF of CHSPI (ETF Leader): 9 CHF at SQ, 3.60 CHF at IB
• 10’000 CHF of CHSPI (ETF Leader): 9 CHF at SQ, 9.20 CHF at IB
• 1000 CHF of Nestlé (SIX): 20 CHF at SQ, 3 CHF at IB
• 10’000 CHF of Nestlé (SIX): 30 CHF at SQ, 6.50 CHF at IB
• 1000 USD of VT (NYSE): 25 USD at SQ, 0.35 USD at IB
• 10’000 USD of VT (NYSE): 30 USD at SQ, 0.37 USD at IB

We can observe a few important when comparing the fees of Swissquote vs Interactive Brokers. First, for ETF Leaders, Swissquote is quite affordable, on the same level as IB. When it comes to Swiss shares, the difference is already more pronounced. But when considering US shares, Swissquote is much more expensive than IB, almost a hundred times over.

If you want to buy something in a foreign currency, you will need to convert from your base currency, for instance, from CHF to USD. Interactive Brokers will charge you 2 USD per currency conversion. Swissquote will charge you 0.95% for each currency conversion.

Let’s compare the fees of Swissquote vs Interactive Brokers for a few conversions:

• 100 CHF to USD: 2 USD at IB, 0.95 CHF at SQ
• 1000 CHF to USD: 2 USD at IB, 9.5 CHF at SQ
• 5000 CHF to USD: 2 USD at IB, 47.5 CHF at SQ

For currency conversions, Interactive Brokers will generally be much cheaper than Swissquote. Only if you convert less than 200 CHF will IB be more expensive than SQ.

Overall, Interactive Brokers is significantly cheaper than Swissquote. The difference will not be critical if you only invest in Swiss ETFs. However, the difference can be very significant if you primarily use US ETFs.

Safety

If you invest a significant amount of money with a broker, you want your money to be safe. So, we must compare the safety and regulations of Swissquote vs Interactive Brokers.

Let’s start with the regulations. Swissquote is regulated in Switzerland by the Swiss Financial Market Supervisory Authority (FINMA). Interactive Brokers is regulated in the US by the Security Exchange Commission (SEC) and in the UK by the Financial Conduct Authority (FCA). So, both brokers are regulated by well-respected supervisors.

Both brokers segregate the money from the customers from their main entities. So, if they default, the creditors will have no claim on the money from the customers.

In case of bankruptcy, in theory, all your assets should be safe since everything is separated from the entity itself. If one of the custody banks defaults, your cash has an extra level of protection. For Swissquote, your cash is protected by esisuisse for up to 100’000 CHF. With IB, your cash, stocks, and bonds will be covered by SIPC for up to 500’000 USD (250’000 USD limit for stocks).

If you have a lot of cash, protection will get even better since they will use multiple custody banks, and each bank will get protection up to 250’000 USD. You need to opt for the Insurance Bank Deposit Sweep program. So, in theory, your cash is safe at IB for up to 2.5 million USD. But this should not be the case for most of my readers.

The fact that both brokers are publicly-listed companies lends credibility to these two companies.

Regarding technical security, both brokers seem to be doing everything they need. I have not found any information about data leaks or security breaches. They both offer second factors of authentication, which is extremely important.

Swissquote will likely be easier to deal with in case of an issue since they are based in Switzerland. It may be harder to deal with serious issues with IB, given the more limited access to their customer service.

Overall, both brokers are among the safest stock brokers available. I have a significant amount of money in my IB account and feel safe with it.

Reputation

Reputation is also an essential part of choosing a broker. This tells a lot about what users think about the services. So, let’s see what users think of Swissquote vs Interactive Brokers.

In both cases, these brokers have an excellent overall reputation. I have never heard of massive issues with these brokers.

On TrustPilot, both brokers get similar scores with 3.3 stars for IB and 3.2 for Swissquote. For both services, people complain about the customer service. While this is not a great sign, this is the case for almost every service I have reviewed.

On Interactive Brokers, people complain about how it is sometimes complicated to use it. And on Swissquote, people complain about the high fees.

As for the good reviews, people think it is very simple to trade with Swissquote, and people like the fees of Interactive Brokers.

Overall, the reputation of both brokers is sound. Many people are complaining, but none of these complaints are very worrying. Overall, long-time users of both brokers are happy with it.

Swissquote vs Interactive Brokers Summary

Let’s make a summary of Swissquote vs Interactive Brokers:

Best broker overall	Best Swiss Broker
Interactive Brokers	Swissquote
5.0	4.5
Extremely cheap	Very affordable
Pros: Outstanding prices Many investing instruments Excellent execution Access to US ETFs Good reputation	Pros: Swiss broker Easy to use Many investing instruments Access to US ETFs Good reputation
Cons: A little intimidating at first	Cons: Expensive to trade US shares Expensive currency conversion
Start investing!	Invest with the MKT_THEPOORSWISS code
My Review	My Review

Best broker overall

Interactive Brokers

5.0

Extremely cheap

Pros:

• Outstanding prices
• Many investing instruments
• Excellent execution
• Access to US ETFs
• Good reputation

Cons:

• A little intimidating at first

Start investing!

My Review

Best Swiss Broker

Swissquote

4.5

Very affordable

Pros:

• Swiss broker
• Easy to use
• Many investing instruments
• Access to US ETFs
• Good reputation

Cons:

• Expensive to trade US shares
• Expensive currency conversion

Invest with the MKT_THEPOORSWISS code

My Review