Interactive Brokers Group Reports Brokerage Metrics and Other Financial Information for February 2024, includes Reg.-NMS Execution Statistics

Rhea-AI Summary

Interactive Brokers Group, Inc. (IBKR) reported strong performance metrics for February, with 2.443 million DARTs, 15% higher YoY. Client equity reached $448.2 billion, up 35% YoY, and client margin loan balances were $47.4 billion, 21% higher YoY. Ending client credit balances were $102.9 billion, 5% higher YoY.

Insights

Financial Analyst

The reported increase in Daily Average Revenue Trades (DARTs) by Interactive Brokers is a robust indicator of the company's trading volume and, by extension, its potential revenue from trade commissions and fees. A 15% year-over-year growth suggests a strong uptrend in client trading activity, likely reflecting heightened market volatility or increased client engagement. The 11% month-over-month rise could indicate sustained momentum or seasonal factors influencing trading behavior.

Furthermore, the reported 35% year-over-year increase in ending client equity signifies a substantial growth in assets under management (AUM), which is critical for brokerage firms as it correlates with revenue from asset-based fees. A 6% month-over-month increase is also noteworthy, suggesting continued client confidence and potential inflows of new capital or appreciation in asset values.

The growth in client margin loan balances by 21% compared to the previous year indicates an increased willingness by clients to leverage their investments, which can be a double-edged sword. While it may lead to higher interest income for the broker, it also introduces greater risk, especially in volatile markets. A 7% month-over-month increase in these balances warrants attention to clients' risk exposure and the potential impact on the brokerage's financial health if market conditions deteriorate.

The modest 5% year-over-year increase in client credit balances, including insured bank deposit sweeps, suggests a steady but less aggressive growth in client cash holdings. This could reflect a cautious approach by clients in the face of market uncertainty or a preference for investing over holding cash.

Market Research Analyst

The data released by Interactive Brokers reflects broader trends in the electronic brokerage industry, where technology-driven platforms continue to attract traders through lower costs and advanced trading tools. The rise in DARTs may also be indicative of the growing retail investor base, empowered by easy-to-use trading applications and a greater interest in financial markets.

Given the substantial increase in client equity, it's important to consider the competitive landscape of the brokerage industry. Interactive Brokers' performance may be compared with other key players to assess market share dynamics and the effectiveness of their growth strategies in attracting and retaining clients.

The trend in margin loan balances should be analyzed in the context of market conditions. In bullish markets, increased margin use can signal confidence, while in bearish or volatile markets, it may point to higher risk-taking by investors. The implications for the brokerage firm's risk management practices and the potential for margin calls could affect its operations and client relations.

Economist

The reported financial metrics by Interactive Brokers can be seen as a microcosm of investor sentiment and economic activity. High DARTs and increasing client equity and margin loans may reflect overall economic optimism and a propensity for risk-taking among investors. This could correlate with broader economic indicators such as consumer confidence and stock market performance.

Conversely, these metrics can also be a prelude to potential overheating in the market if driven by excessive speculation rather than fundamentals. The increase in client margin loans should be monitored as it may contribute to market volatility, especially if leveraged positions are unwound rapidly during market corrections.

The growth in client credit balances, albeit at a slower pace, may suggest a segment of investors is opting for liquidity, possibly as a hedge against market uncertainty. This behavior can have macroeconomic implications, such as influencing money supply and interest rates, particularly if mirrored across the broader investment community.

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

Brokerage highlights for the month included:

• 2.443 million Daily Average Revenue Trades (DARTs)¹, 15% higher than prior year and 11% higher than prior month.
• Ending client equity of $448.2 billion, 35% higher than prior year and 6% higher than prior month.
• Ending client margin loan balances of $47.4 billion, 21% higher than prior year and 7% higher than prior month.
• Ending client credit balances of $102.9 billion, including $3.9 billion in insured bank deposit sweeps², 5% higher than prior year and about even with prior month.
• 2.69 million client accounts, 24% higher than prior year and 2% higher than prior month.
• 206 annualized average cleared DARTs¹ per client account.
• Average commission per cleared Commissionable Order³ of $2.85 including exchange, clearing and regulatory fees. Key products:

February 2024

Average

Average Commission per

Order Size

Cleared Commissionable Order

Stocks

847 shares

$1.81

Equity Options

6.6 contracts

$4.01

Futures

3.2 contracts

$4.59

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:

• GLOBAL⁴: The value of the GLOBAL, reported in U.S. dollars, decreased by 0.17% in February.

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 $23,111 in February (dividing 2c by 1a in table below).
• In February, IBKR PRO clients’ total cost of executing and clearing U.S. Reg.-NMS stocks through IB was about 2.8 basis points of trade money⁵, as measured against a daily VWAP⁶ benchmark (2.6 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
	Mar '23		Apr '23		May '23		Jun '23		Jul '23		Aug '23		Sep '23		Oct '23		Nov '23		Dec '23		Jan '24		Feb '24		12 Months
#1a - Number of orders
Buys	7.28		4.99		6.13		6.04		5.84		6.56		5.14		6.01		5.44		5.61		6.79		7.24		73.07
Sells	5.37		3.72		4.66		4.62		4.35		4.81		3.67		4.29		4.25		4.48		4.92		5.38		54.52
Total	12.65		8.71		10.79		10.66		10.19		11.37		8.81		10.30		9.69		10.09		11.71		12.62		127.59
#1b - Number of shares purchased or sold
Shares bought	3,399		2,336		2,706		2,607		2,369		2,858		2,132		2,447		2,431		2,596		2,639		2,636		31,156
Shares sold	3,180		2,158		2,606		2,495		2,262		2,720		2,044		2,367		2,296		2,471		2,551		2,499		29,649
Total	6,579		4,495		5,313		5,102		4,631		5,578		4,176		4,814		4,727		5,067		5,189		5,135		60,804
#2 - Trade money including price, commissions and fees
2a Buy money	$139,588		$90,813		$114,892		$128,303		$116,426		$129,975		$102,405		$124,119		$119,396		$115,908		$133,951		$148,224		$1,463,999
2b Sell money	$136,889		$91,534		$111,882		$126,129		$113,811		$131,518		$103,953		$125,174		$118,893		$114,742		$131,649		$143,433		$1,449,608
2c Total	$276,476		$182,346		$226,774		$254,432		$230,237		$261,493		$206,358		$249,294		$238,290		$230,650		$265,601		$291,657		$2,913,607
#3 - Trade value at Daily VWAP
3a Buy value	$139,592		$90,785		$114,824		$128,262		$116,395		$129,887		$102,374		$124,109		$119,426		$115,916		$133,917		$148,162		$1,463,650
3b Sell value	$136,917		$91,534		$111,883		$126,175		$113,855		$131,510		$103,980		$125,212		$118,981		$114,806		$131,705		$143,451		$1,450,008
3c Total	$276,509		$182,319		$226,707		$254,438		$230,250		$261,397		$206,353		$249,321		$238,407		$230,722		$265,622		$291,612		$2,913,657
#4 - Total trade expense, including commissions and fees, relative to Daily VWAP
4a Buys (2a-3a)	($4.6)		$27.5		$68.3		$40.3		$30.5		$88.2		$31.3		$9.9		($30.0)		($8.3)		$34.2		$62.5		$349.8
4b Sells (3b-2b)	$28.4		($0.0)		$1.4		$46.2		$44.2		($8.0)		$26.6		$37.2		$87.3		$63.8		$55.2		$18.0		$400.2
4c Total trade expense	$23.8		$27.4		$69.7		$86.5		$74.7		$80.2		$57.9		$47.2		$57.3		$55.6		$89.4		$80.5		$750.0
Trade expense as percentage of trade money
4c/2c	0.009%		0.015%		0.031%		0.034%		0.032%		0.031%		0.028%		0.019%		0.024%		0.024%		0.034%		0.028%		0.026%
#5 - Trade expense categories
5a Total commissions & fees	$28.4		$19.2		$23.4		$22.7		$20.7		$23.6		$18.3		$21.5		$21.1		$21.8		$23.4		$23.7		$267.8
5b Execution cost (4c-5a)	($4.7)		$8.2		$46.3		$63.8		$54.0		$56.6		$39.5		$25.7		$36.2		$33.7		$66.0		$56.7		$482.0
#6 - Trade expense categories as percentage of trade money
Total commissions & fees (5a/2c)	0.011%		0.011%		0.011%		0.009%		0.009%		0.009%		0.009%		0.009%		0.009%		0.009%		0.009%		0.009%		0.009%
Execution cost (5b/2c)	-0.002%		0.004%		0.020%		0.025%		0.023%		0.022%		0.019%		0.010%		0.015%		0.015%		0.025%		0.019%		0.017%
Net Expense to IB Clients	0.009%		0.015%		0.031%		0.034%		0.032%		0.031%		0.028%		0.019%		0.024%		0.024%		0.034%		0.028%		0.026%

The above illustrates that the rolling twelve months’ average all-in cost of an IBKR PRO client U.S. Reg.-NMS stock trade was 2.6 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: 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 5: Trade money is the total amount of money clients spent or received, including all commissions and fees.

Note 6: 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/20240301480360/en/

Interactive Brokers Group, Inc.

Rob Garfield - media@ibkr.com

Source: Interactive Brokers Group, Inc.

FAQ

What were Interactive Brokers Group, Inc.'s (IBKR) Daily Average Revenue Trades (DARTs) for February?

IBKR reported 2.443 million DARTs for February, which was 15% higher than the previous year.

How much was Interactive Brokers Group, Inc.'s (IBKR) client equity at the end of February?

IBKR's client equity at the end of February was $448.2 billion, a 35% increase from the previous year.

What were Interactive Brokers Group, Inc.'s (IBKR) client margin loan balances at the end of February?

IBKR's client margin loan balances at the end of February were $47.4 billion, a 21% increase from the previous year.

How much were Interactive Brokers Group, Inc.'s (IBKR) client credit balances at the end of February?

IBKR's client credit balances at the end of February were $102.9 billion, including $3.9 billion in insured bank deposit sweeps, a 5% increase from the previous year.