In this article:
Overview
Wealthsimple doesn't charge commission on equity and ETF trades made in a margin account. However, if you've borrowed funds from Wealthsimple, you're charged interest on the amount borrowed (margin used).
Your interest rate depends on how much you borrow. Rates are lower for larger balances. If you trade 100 or more US options contracts in a calendar month, you get our lowest rate on any balance.
| Amount borrowed | CAD rate | USD rate |
|---|---|---|
| $0–$9,999 | 5.70% | 8.00% |
| $10,000–$49,999 | 5.45% | 7.90% |
| $50,000–$99,999 | 5.20% | 7.75% |
| $100,000–$499,999 | 4.65% | 7.70% |
| $500,000–$999,999 | 4.30% | 6.95% |
| $1,000,000–$2,499,999 | 3.95% | 6.20% |
| $2,500,000–$4,999,999 | 3.65% | 5.60% |
| $5,000,000–$9,999,999 | 3.45% | 5.15% |
| $10,000,000 or more | 3.24% | 4.50% |
| Any amount, if you trade 100 or more US options contracts in a calendar month | 3.24% | 4.50% |
These rates move with the Wealthsimple Prime rate.
Current Wealthsimple Prime rates:
- Wealthsimple CAD Prime rate: 4.70%
- Wealthsimple USD Prime rate: 7.00%
How your margin rate is set
Your rate applies to your whole balance. If you borrow $150,000 CAD, the 4.65% rate applies to the full $150,000, not just the part above $100,000.
We add up your CAD and USD borrowing. To find your range, we total everything you've borrowed in CAD and USD across all your margin accounts, with your USD balance converted to CAD. You then pay the CAD rate on your CAD balance and the USD rate on your USD balance. Portfolio line of credit balances aren't included.
We check your balance every day. If your balance moves into a new range, your new rate applies from the next day. This applies whether your balance drops because you paid down your loan or because holdings were sold in a margin call.
Accounts with more than one owner get the lowest rate. If an account has more than one owner, it's charged the lowest rate any owner qualifies for. Each owner's borrowing total includes everything borrowed in that shared account.
Get our lowest rate with options trading
If you trade 100 or more US options contracts in a calendar month, you get 3.24% on your CAD balance and 4.50% on your USD balance, whatever your balance is.
What counts toward the 100 contracts
- US options contracts count. Canadian options don't.
- We count contracts, not trades. A multi-leg order counts every contract in it.
- Opening and closing trades both count, including closing trades made by auto-sell.
- We count contracts across all your trading accounts.
- Contracts traded in a joint margin account count toward every account holder.
- Contracts traded in a corporate margin account count toward the corporation's majority-owner director.
- Cancelled, expired, and rejected orders don't count. Neither do exercises, assignments, expiries, or liquidations.
When the options rate starts and how long it lasts
The lower rate starts the day after you reach 100 contracts. It lasts for the rest of that month and all of the next month. At the start of the month after that, we check whether you traded 100 or more contracts in the previous month. If you did, you keep the lower rate for another month. If you didn't, the rate for your balance range applies again from that day.
Each day, you pay the rate for your balance range or the options rate, whichever is lower.
Interest accrual and payments
Interest accrual
The interest you pay is based on:
- the interest rate
- the amount borrowed (CAD/USD margin used)
- the length of time you borrow the money
Interest begins accruing daily at the end of the day the trade is initiated and continues for as long as the margin is used. You pay interest on both USD and CAD margin used balances, and interest is posted to the account on the first business day of each month (for the previous month).
Interest accrual example
Let's say you use $20,000 CAD of margin to purchase stock XYZ, and you have no other margin borrowing. Seven days later, you sell stock XYZ and are no longer borrowing funds. Here's how the interest is calculated:
Interest rate for CAD margin between $10,000 and $49,999: 5.45%
Daily interest amount = Margin amount x annual interest rate divided by 365 = 20,000 x 0.0545 divided by 365 = $2.99
Total interest = Daily interest x number of days = 2.99 x 7 = $20.93
The total interest cost for borrowing $20,000 CAD for 7 days would be $20.93.
Interest payment
Interest is deducted monthly from the USD and CAD cash balance in the margin account.
Your account is considered delinquent if you don't have securities or cash in your account when we take your interest payment. To avoid penalties and account restrictions, fund your account using one of these methods:
- Close limit buy orders in your margin account
- Sell securities in your margin account
- Transfer margin-eligible securities to your margin account from another Wealthsimple account
- Interac e-Transfer®
- Move funds from your Wealthsimple chequing account or other Wealthsimple Trade accounts
- Make a deposit from your Visa or Mastercard debit card
You can also use the following methods to fund your account:
- Transfer an external account from another institution
- Make a deposit from a linked bank account
- Wire transfer
Interest payments and margin calls
If an interest payment causes your Margin available balance to fall below zero, you're subject to a margin call. You can pay back amounts borrowed at any time by bringing your CAD/USD margin used balance to zero.
Frequently asked questions
How is my margin rate decided?
Your rate depends on how much you borrow, not your client status. We add up what you've borrowed across all your margin accounts, in both currencies, and the rate for that range applies to your whole balance. We check your balance every day. If it moves into a new range, your new rate applies from the next day. If you trade 100 or more US options contracts in a calendar month, you get our lowest rate on any balance.
I'm a Premium or Generation client. Why don't I get a margin discount anymore?
Margin is now priced on how much you borrow, not your client status, so the Premium and Generation margin discounts no longer apply. Your other status benefits aren't affected.
How do I get the lowest rate?
Rates are lower for larger balances. You can also get our lowest rate, 3.24% CAD and 4.50% USD on any balance, by trading 100 or more US options contracts in a calendar month.
What counts toward the 100 options contracts?
Only US options contracts count. Canadian options don't. We count contracts, not trades, so a multi-leg order counts every contract in it. Opening and closing trades both count, and we count contracts across all your trading accounts. Contracts traded in a joint margin account count toward every account holder, and contracts traded in a corporate margin account count toward the corporation's majority-owner director.
When does the options rate start, and how long does it last?
The lower rate starts the day after you reach 100 contracts and lasts for the rest of that month and all of the next month. At the start of the month after that, we check whether you traded 100 or more contracts in the previous month. If you did, you keep the lower rate for another month. If not, the rate for your balance range applies again from that day.
I borrow in both CAD and USD. Which rate applies?
Your range is based on the total you've borrowed in both currencies across all your margin accounts, measured in CAD. You then pay the CAD rate on your CAD balance and the USD rate on your USD balance for that range. If you qualify for the options rate, your CAD balance gets 3.24% and your USD balance gets 4.50%.
How do joint and corporate accounts affect my rate?
If an account has more than one owner, the account is charged the lowest rate any owner qualifies for. Each owner's borrowing total includes everything borrowed in that shared account. Options contracts traded in a joint margin account count toward every account holder. Contracts traded in a corporate margin account count toward the corporation's majority-owner director.
I paid down my margin loan and my rate went up. Why?
Your rate depends on how much you borrow. If paying down your loan moves your balance into a lower range, the higher rate for that range applies from the next day. Depending on how much you paid down, your total interest may be lower or higher than before. The same applies if holdings are sold in a margin call and your balance drops into a lower range.
Should I borrow more to get a lower rate?
That's your decision, and we can't advise you on it. Borrowing more increases your risk, including the risk of a margin call. The lower rate only applies on days your balance is in that range.
Is my portfolio line of credit rate changing?
No. These rates apply to margin accounts only. Your portfolio line of credit rate still depends on your client status.
Learn more about the Wealthsimple margin account
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