Interactive Brokers Group Reports Brokerage Metrics and Other Financial Information for December 2023, includes Reg.-NMS Execution Statistics

Rhea-AI Summary

Interactive Brokers Group, Inc. (Nasdaq: IBKR) reported its December Electronic Brokerage monthly performance metrics. The company achieved 1.972 million Daily Average Revenue Trades (DARTs), 13% higher than the prior year. Ending client equity was $426.0 billion, 39% higher than the prior year. Client margin loan balances were $44.4 billion, 14% higher than the prior year. Client credit balances were $104.5 billion, including $3.7 billion in insured bank deposit sweeps, 10% higher than the prior year. The company also had 2.56 million client accounts, 23% higher than the prior year. The average commission per cleared Commissionable Order was $3.17, including exchange, clearing, and regulatory fees. Other financial information included a mark to market loss of $0.3 million on the U.S. government securities portfolio for the quarter, and a gain of $8.4 million for the year ended December 31st. The value of the GLOBAL, reported in U.S. dollars, increased by 0.47% in December and increased by 0.41% for the year ended December 31st.

Positive

• 1.972 million Daily Average Revenue Trades (DARTs), 13% higher than the prior year
• Ending client equity of $426.0 billion, 39% higher than the prior year
• Client margin loan balances of $44.4 billion, 14% higher than the prior year
• Client credit balances of $104.5 billion, including $3.7 billion in insured bank deposit sweeps, 10% higher than the prior year
• 2.56 million client accounts, 23% higher than the prior year
• Mark to market gain of $8.4 million for the year ended December 31st
• Value of the GLOBAL increased by 0.47% in December

Negative

• None.

Insights

Financial Analyst

Interactive Brokers Group's recent performance metrics exhibit significant growth indicators that are essential for evaluating the company's current market position and potential future trajectory. A 13% year-over-year increase in Daily Average Revenue Trades (DARTs) suggests a robust uptick in trading activity, which is typically correlated with higher revenue from trade commissions. This is a key metric for investors as it directly impacts the company's bottom line.

Furthermore, a 39% increase in ending client equity indicates a substantial rise in the value of customer assets under management, which could translate to higher fee-related earnings. Additionally, the growth in client margin loan balances by 14% is indicative of increased client trading activity on margin, which can generate additional interest income for the brokerage. However, this also implies heightened risk, as margin loans are susceptible to market volatility.

The reported average commission per cleared Commissionable Order provides insight into the company's pricing strategy and competitive positioning. With the financial industry facing pressure from zero-commission trading platforms, maintaining a competitive commission structure while ensuring profitability is a delicate balance for firms like Interactive Brokers.

Market Research Analyst

The data indicating a 23% increase in client accounts for Interactive Brokers Group reflects a broader trend in the democratization of investing, wherein more individuals are entering the market. This expansion of the client base is crucial for the company's long-term growth, as it not only increases the potential for transaction-based revenues but also enhances cross-selling opportunities for other financial products and services.

It's important to note that the performance metrics also reflect the state of the market in December, which can be seasonal. Investors should consider whether these trends are sustainable or if they are influenced by year-end financial activities. The modest mark-to-market loss on the U.S. government securities portfolio is not unusual, given the interest rate fluctuations and their inverse relationship with bond prices.

Economist

The reported increase in the value of the GLOBAL, Interactive Brokers' own benchmark measure, although modest, is an indicator of the firm's ability to navigate the complex global trading environment. In a year marked by considerable economic uncertainty, geopolitical tensions and market volatility, a positive performance in this benchmark suggests effective risk management and asset allocation strategies.

The overall financial health of a brokerage like Interactive Brokers is also a reflection of the broader economic landscape, including interest rates, trading volumes and investor sentiment. The reported metrics suggest a resilient performance amidst these factors. However, the long-term impact of changing economic conditions, such as potential interest rate hikes or regulatory changes, should be monitored as they can significantly affect the brokerage's operations and profitability.

GREENWICH, Conn.--(BUSINESS WIRE)-- Interactive Brokers Group, Inc. (Nasdaq: IBKR) an automated global electronic broker, today reported its Electronic Brokerage monthly performance metrics for December.

Brokerage highlights for the month included:

• 1.972 million Daily Average Revenue Trades (DARTs)¹, 13% higher than prior year and 4% higher than prior month.
• Ending client equity of $426.0 billion, 39% higher than prior year and 5% higher than prior month.
• Ending client margin loan balances of $44.4 billion, 14% higher than prior year and 5% higher than prior month .
• Ending client credit balances of $104.5 billion, including $3.7 billion in insured bank deposit sweeps², 10% higher than prior year and 3% higher than prior month.
• 2.56 million client accounts, 23% higher than prior year and 2% higher than prior month.
• 172 annualized average cleared DARTs¹ per client account.
• Average commission per cleared Commissionable Order³ of $3.17 including exchange, clearing and regulatory fees. Key products:

December 2023	Average		Average Commission per
	Order Size		Cleared Commissionable Order
Stocks	1,074 shares		$2.02
Equity Options	7.1 contracts		$4.36
Futures	3.3 contracts		$4.86

Futures include options on futures. We estimate exchange, clearing and regulatory fees to be 56% of the futures commissions.

Other financial information for Interactive Brokers Group:

• Mark to market on U.S. government securities portfolio⁴ was a loss of $0.3 million for the quarter, and a gain of $8.4 million for the year ended December 31^st.
• GLOBAL⁵: The value of the GLOBAL, reported in U.S. dollars, increased by 0.47% in December and increased by 0.41% for the year ended December 31^st.

In the interest of transparency, we quantify our IBKR PRO clients’ all-in cost of trade execution below.

For the full multimedia release with graph see link:

https://www.interactivebrokers.com/MonthlyMetrics

• Average U.S. Reg-NMS stock trade was $22,859 in December (dividing 2c by 1a in table below).
• In December, IBKR PRO clients’ total cost of executing and clearing U.S. Reg.-NMS stocks through IB was about 2.4 basis points of trade money⁶, as measured against a daily VWAP⁷ benchmark (2.5 basis points net cost for the rolling twelve months).

IBKR PRO Clients' Reg.-NMS Stock Trading Expense Detail
All amounts are in millions, except %
													Previous
	Jan '23	Feb '23	Mar '23	Apr '23	May '23	Jun '23	Jul '23	Aug '23	Sep '23	Oct '23	Nov '23	Dec '23	12 Months
#1a - Number of orders
Buys	5.97	6.37	7.28	4.99	6.13	6.04	5.84	6.56	5.14	6.01	5.44	5.61	71.38
Sells	4.65	4.79	5.37	3.72	4.66	4.62	4.35	4.81	3.67	4.29	4.25	4.48	53.66
Total	10.62	11.16	12.65	8.71	10.79	10.66	10.19	11.37	8.81	10.30	9.69	10.09	125.04
#1b - Number of shares purchased or sold
Shares bought	2,904	2,857	3,399	2,336	2,706	2,607	2,369	2,858	2,132	2,447	2,431	2,596	31,642
Shares sold	2,768	2,711	3,180	2,158	2,606	2,495	2,262	2,720	2,044	2,367	2,296	2,471	30,078
Total	5,672	5,567	6,579	4,495	5,313	5,102	4,631	5,578	4,176	4,814	4,727	5,067	61,720
#2 - Trade money including price, commissions and fees
2a Buy money	$109,220	$122,485	$139,588	$90,813	$114,892	$128,303	$116,426	$129,975	$102,405	$124,119	$119,396	$115,908	$1,413,530
2b Sell money	$108,135	$121,850	$136,889	$91,534	$111,882	$126,129	$113,811	$131,518	$103,953	$125,174	$118,893	$114,742	$1,404,510
2c Total	$217,356	$244,335	$276,476	$182,346	$226,774	$254,432	$230,237	$261,493	$206,358	$249,294	$238,290	$230,650	$2,818,040
#3 - Trade value at Daily VWAP
3a Buy value	$109,252	$122,425	$139,592	$90,785	$114,824	$128,262	$116,395	$129,887	$102,374	$124,109	$119,426	$115,916	$1,413,248
3b Sell value	$108,207	$121,878	$136,917	$91,534	$111,883	$126,175	$113,855	$131,510	$103,980	$125,212	$118,981	$114,806	$1,404,937
3c Total	$217,459	$244,303	$276,509	$182,319	$226,707	$254,438	$230,250	$261,397	$206,353	$249,321	$238,407	$230,722	$2,818,185
#4 - Total trade expense, including commissions and fees, relative to Daily VWAP
4a Buys (2a-3a)	($31.6)	$60.2	($4.6)	$27.5	$68.3	$40.3	$30.5	$88.2	$31.3	$9.9	($30.0)	($8.3)	$281.8
4b Sells (3b-2b)	$72.2	$28.0	$28.4	($0.0)	$1.4	$46.2	$44.2	($8.0)	$26.6	$37.2	$87.3	$63.8	$427.1
4c Total trade expense	$40.6	$88.2	$23.8	$27.4	$69.7	$86.5	$74.7	$80.2	$57.9	$47.2	$57.3	$55.6	$708.9
Trade expense as percentage of trade money
4c/2c	0.019%	0.036%	0.009%	0.015%	0.031%	0.034%	0.032%	0.031%	0.028%	0.019%	0.024%	0.024%	0.025%
#5 - Trade expense categories
5a Total commissions & fees	$25.6	$25.8	$28.4	$19.2	$23.4	$22.7	$20.7	$23.6	$18.3	$21.5	$21.1	$21.8	$272.1
5b Execution cost (4c-5a)	$15.1	$62.4	($4.7)	$8.2	$46.3	$63.8	$54.0	$56.6	$39.5	$25.7	$36.2	$33.7	$436.8
#6 - Trade expense categories as percentage of trade money
Total commissions & fees (5a/2c)	0.012%	0.010%	0.011%	0.011%	0.011%	0.009%	0.009%	0.009%	0.009%	0.009%	0.009%	0.009%	0.009%
Execution cost (5b/2c)	0.007%	0.026%	-0.002%	0.004%	0.020%	0.025%	0.023%	0.022%	0.019%	0.010%	0.015%	0.015%	0.016%
Net Expense to IB Clients	0.019%	0.036%	0.009%	0.015%	0.031%	0.034%	0.032%	0.031%	0.028%	0.019%	0.024%	0.024%	0.025%

The above illustrates that the rolling twelve months’ average all-in cost of an IBKR PRO client U.S. Reg.-NMS stock trade was 2.5 basis points.

Note 1: Daily Average Revenue Trades (DARTs) – customer orders divided by the number of trading days in the period.

Note 2: FDIC insured client bank deposit sweep program balances with participating banks. These deposits are not reported in the Company’s statement of financial condition.

Note 3: Commissionable Order – a customer order that generates commissions.

Note 4: Mark to market gains and losses on investments in U.S. government securities and associated hedges are included in Other Income. In the general course of business, we hold these investments to maturity. As a result, accumulated mark to market gains or losses should converge to zero at maturity. Accounting conventions require broker-dealers, unlike banks, to mark all investments to market.

Note 5: In connection with our currency diversification strategy, we have determined to base our net worth in GLOBALs, a basket of 10 major currencies in which we hold our equity. The total effect of the currency diversification strategy is reported in Comprehensive Income and the components are reported in (1) Other Income and (2) Other Comprehensive Income (“OCI”) on the balance sheet. The effect of the GLOBAL on our comprehensive income can be estimated by multiplying the total equity for the period by the change in the U.S. dollar value of the GLOBAL during the same period.

Note 6: Trade money is the total amount of money clients spent or received, including all commissions and fees.

Note 7: Consistent with the clients’ trading activity, the computed VWAP benchmark includes extended trading hours.

More information, including historical results for each of the above metrics, can be found on the investor relations page of the Company’s corporate web site, www.interactivebrokers.com/ir.

About Interactive Brokers Group, Inc.:

Interactive Brokers Group affiliates provide automated trade execution and custody of securities, commodities, and foreign exchange around the clock on over 150 markets in numerous countries and currencies, from a single unified platform to clients worldwide. We serve individual investors, hedge funds, proprietary trading groups, financial advisors and introducing brokers. Our four decades of focus on technology and automation has enabled us to equip our clients with a uniquely sophisticated platform to manage their investment portfolios. We strive to provide our clients with advantageous execution prices and trading, risk and portfolio management tools, research facilities and investment products, all at low or no cost, positioning them to achieve superior returns on investments. For the sixth consecutive year, Barron’s ranked Interactive Brokers #1 with 5 out of 5 stars in its June 9, 2023, Best Online Brokers Review.

Cautionary Note Regarding Forward-Looking Statements:

The foregoing information contains certain forward-looking statements that reflect the company's current views with respect to certain current and future events and financial performance. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the company's operations and business environment which may cause the company's actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. Any forward-looking statements in this release are based upon information available to the company on the date of this release. The company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized. Additional information on risk factors that could potentially affect the company's financial results may be found in the company's filings with the Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240102612672/en/

Interactive Brokers Group, Inc.: Rob Garfield - media@ibkr.com.

Source: Interactive Brokers Group, Inc.

FAQ

What were Interactive Brokers Group, Inc.'s December Electronic Brokerage monthly performance metrics?

Interactive Brokers Group, Inc. (Nasdaq: IBKR) reported 1.972 million Daily Average Revenue Trades (DARTs), 13% higher than the prior year. Ending client equity was $426.0 billion, 39% higher than the prior year. Client margin loan balances were $44.4 billion, 14% higher than the prior year. Client credit balances were $104.5 billion, including $3.7 billion in insured bank deposit sweeps, 10% higher than the prior year. The company also had 2.56 million client accounts.

What was the average commission per cleared Commissionable Order for Interactive Brokers Group, Inc.?

The average commission per cleared Commissionable Order for Interactive Brokers Group, Inc. was $3.17, including exchange, clearing, and regulatory fees.

What was the mark to market gain/loss on the U.S. government securities portfolio for Interactive Brokers Group, Inc.?

The mark to market loss on the U.S. government securities portfolio for the quarter was $0.3 million, and a gain of $8.4 million for the year ended December 31st.

What was the change in the value of the GLOBAL for Interactive Brokers Group, Inc.?

The value of the GLOBAL, reported in U.S. dollars, increased by 0.47% in December and increased by 0.41% for the year ended December 31st.