Interactive Brokers Group Investor Presentation - Third Quarter 2018 - IBKR ...
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Interactive Brokers Group
Investor Presentation
Third Quarter 2018
Disclaimer
The following 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 are based upon information
available to the Company on the date of this presentation. 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.
2
Who we are, Where we are going
We began as a market maker in 1977.
We used this technology and knowledge of markets to launch our brokerage business in 1993.
Today We Are:
One of the largest U.S. electronic brokers as measured by DARTs.
Fastest organically-growing, publicly-traded U.S. electronic broker as measured by client
accounts and client equity.
Broad global reach – Access to over 120 markets in 31 countries.
Seamless access to products worldwide – Trade stocks, options, futures, commodities, FX and
fixed income in up to 23 currencies.
Highly efficient, scalable business model – $1.4M net revenue / employee (4).
576,000 $6.9B 763,000 66% 26%
Client Equity DARTs 1,2 Brokerage Pretax YoY3 Account
Accounts 3 Capital 3 Margin 1 Growth
(1) 3Q18 (2) DARTs are based on client orders (3) 9/30/18 (4) Trailing twelve months to 9/30/18
3Strong Balance Sheet
Since our IPO, we have maintained a strong and growing balance sheet
At May 2007 At September 30, 2018
Long-term debt $0.3 billion $0
Total equity $2.8 billion $6.9 billion
+ $3.9 billion in dividends distributed since IPO
Excess regulatory capital $1.2 billion $5.5 billion
Public shares 40 million 10% 75 million 18%
Private ownership 360 million 90% 339 million 82%
Total 400 million 100% 414 million 100%
4Corporate Strategy
Automation allows IB to be the lowest cost processor in our industry
Majority of senior management are software engineers
From account opening to the entire transaction lifecycle, our processes are automated
As a result, we were able to execute, clear and settle over 1 million trades per day in
3Q18, across multiple product classes and in multiple currencies, at over 120 market
centers in 31 countries with 1,380 (3Q18) employees
Automated, real-time risk management
5 Excludes MtM on Treasuries and extraordinary events: Singapore losses in 2013 and CHF client losses in 2015.Diversifed Enterprise
Brokerage
Brokerage Brokerage
Year To Date
Accounts Client Equity
Commissions by Client
576K $142B $572M
As of September 30, 2018
6Geographic Distribution
Client Accounts Client Equity LTM Commissions
370K 457K 576K $83B $116B $142B $606M $627M $742M
100%
90% 21% 24% 24%
26% 26% 26% 29%
30%
Asia 35%
80%
14%
70% 13%
14% 18% 18%
26% 18%
Europe & 60% 25%
Africa 24%
50%
40%
Americas 65% 63%
30% 60% 58% 56% 53%
48% 45%
20% 41%
10%
0%
Sep-16 Sep-17 Sep-18 Sep-16 Sep-17 Sep-18 Sep-16 Sep-17 Sep-18
7Client Segment Distribution
Client Accounts Client Equity LTM Commissions
370K 457K 576K $83B $116B $142B $606M $627M $742M
100%
Introducing 6% 7% 9%
brokers 15%
90% 20% 19% 21%
Proprietary 26% 17%
30% 17% 15%
trading groups 80% 3% 13%
Financial 12% 10%
3%
advisors 70% 3% 18%
19% 17% 16%
Hedge and 18%
60% 17% 26%
mutual funds 1% 24% 24%
9% 9% 10%
1%
Individual 50% 1%
traders &
investors 9% 9% 9%
40%
30% 57%
52% 49% 50% 50% 50%
20% 37% 36% 36%
10%
0%
Sep-16 Sep-17 Sep-18 Sep-16 Sep-17 Sep-18 Sep-16 Sep-17 Sep-18
8Our Competitive Strengths
Low Cost & Breadth Superior Trading
Best Execution of Product Technology
Low execution costs: Starting rates Clients can trade on over Sophisticated market-maker
decrease with higher volume tiers 120 market centers in designed technology
• U.S. Stocks $0.0005 to $0.0035 31 countries and up to 23
per share currencies Multiple desktop and mobile
• U.S. Options $0.15 to $0.70 trading platforms
per contract1 Seamless electronic market
access to stocks, options, Advanced trading tools
U.S. margin interest tiers range futures, forex, commodities,
from 2.5% to 3.7%2 bonds, funds and ETFs from a 60+ order types and algos
single IB Universal Account®
IBKR’s Smart Order Router is API solutions
designed to achieve best price
execution by routing directly to
market centers. We do not sell
client order flow.3
(1) For more information see ibkr.com/commissions
(2) As of October 1, 2018. See ibkr.com/interest
(3) See ibkr.com/bestexecutionEffect of IBKR’s Low Margin Rates
Industry defined as IBKR, AMTD, SCHW, and ETFC
10Brokerage Expansion
Market leading growth in every key metric
11Competition Metrics
IBKR ETFC AMTD1 SCHW
3-year 3-year 3-year 3-year
3Q2018 Change 3Q2018 Change 3Q2018 Change 3Q2018 Change
3Q18 Brokerage Metrics (in thousands)
Number of accounts 2 576 79% 3,949 23% 11,514 74% 11,423 18%
3
Client equity (in billions) $143 129% $418 76% $1,298 94% $3,564 48%
Average commission per DART (actual ) $3.78 -8% $7.04 -35% $7.35 -38% $7.27 -38%
Average client equity per account $248 28% $106 43% $113 12% $312 25%
Total DARTs 763 12% 266 71% 795 66% 382 26%
DARTs per account (actual, annualized ) 312 -37% 17 39% 17 -5% 8 7%
Number of employees 1,380 31% 4,091 24% 9,183 61% 19,100 24%
Trailing 12 Months' Financials ($ in millions)
Revenues per employee $1.4 $0.7 $0.6 $0.5
Compensation per employee (in thousands) $200 $158 $169 $163
Total pretax profit4 $1,167 $1,352 $1,887 $4,305
Pretax profit margin 63% 49% 35% 44%
(1) Ameritrade bought Scottrade, 3Q17
(2) E*Trade and Charles Schwab are brokerage accounts only
(3) Charles Schwab’s client equity includes all client assets
(4) Interactive Brokers pretax profit is adjusted for currency diversification, one-time gains and Treasury marks-to-market
12Cost Comparison
Rated as “Low Cost Broker” 17 years in a row by Barron’s1
US Margin Loan Rates Comparison2 Commission Rates Comparison3
$25K $300K $1.5M $3.5M Equity Trades Option Trades Futures Trades
exchange &
$6.95 base
E-Trade 10.00% 8.50% 7.00% 7.00% $6.95 regulatory fees plus
+ $0.75 per contract
$1.50
$4.95 base
Fidelity 8.82% 7.57% 5.00% 5.00% $4.95 NA
+ $0.65 per contract
no base cost
Interactive Brokers 2 3.42% 3.08% 2.78% 2.54% $2.20 $1.78
$0.68 per contract
exchange &
$4.95 base
Schwab 8.82% 7.75% NA NA $4.95 regulatory fees plus
+ $0.65 per contract
$1.50
exchange &
$6.95 base
TD Ameritrade 9.75% 8.25% 7.50% 7.50% $6.95 regulatory fees plus
+ $0.75 per contract
$2.25
$7-$20
$7.00 base
Vanguard 8.50% 7.00% 5.25% 5.25%
depends on the NA
number of trades + $1.00 per contract
_______________________________________________________________________________________________________
1 Low Cost Broker 2002 through 2018 according to Barron’s Annual Best Online Brokers - “All Together Now.“ For additional
information, see ibkr.com/awards. Barron’s is a registered trademark of Dow Jones & Co. Inc.
2 IBKR calculates the interest charged on margin loans using the applicable rates for each interest rate tier listed on its website.
For additional information, see ibkr.com/interest
3 Rates were obtained on October 1, 2018 from each firm’s website and are subject to change without notice. Services vary by
firm. The IBKR commission rates shown are the average of the client commissions for trades executed in September 2018 and
are subject to minimums and maximums as shown on the IBKR website. For more information, see ibkr.com/compare
13Integrated Investment Management from One Account
EARN BORROW SPEND INVEST
Earn Market Rate Borrow against your Spend using our Bill Invest in stocks,
Interest on idle cash account whenever Pay to pay any options, futures,
balances and earn needed at our expense, or use our commodities, forex
income on securities by extremely low, market- Debit Mastercard to and fixed income on
lending out fully paid based rates. make purchases over 120 global
shares. anywhere. exchanges at low
cost.2
Directly deposit your
paycheck and instantly
earn high interest.1
Use our Insured Bank
Deposit Sweep
Program to get up to
$2.75 million of SIPC
and FDIC insurance on 1) Credit interest as of 10/1/2018. USD credit interest is paid on balances
over USD 10,000 in securities accounts with Net Asset Value
the cash in your exceeding USD 100,000. For more information, see ibkr.com/interest.
2) According to Barron’s Broker Survey 2018 All Together Now, March
accounts, and still earn 26, 2018. For complete information, see ibkr.com/info.
the same market rate
interest.Recent Enhancements and New Products
IBot – Trade and manage your account wherever you are, simply and
easily, by using text or voice. Now integrated with several popular chatbot
and voice assistants, so clients can access the benefits of their IB
accounts no matter what platform they use.
New Client Portal – Clients can access all the features and services of
their accounts from anywhere. One login will take you to all IBKR web
tools, such as Portfolio Analyst, Account Management, Forum, and more,
in a streamlined view.
Order Management System (OMS) – Our new OMS for Advisors and
institutional clients features an intuitive, easy-to-use interface that moves
seamlessly between desktop and mobile devices. A new pre-trade
compliance tool was added to support the trading and regulatory
requirements of our growing institutional investor client base.
15Investors Marketplace
Introductions to More than Capital
Interactive Brokers clients can reach hundreds of thousands of individual
and institutional investors worldwide, and find service providers among
the over 1,500 listed that can help grow their businesses.
Business
Investing Research Technology Administration
Development
Advisors Research Software Vendors Administrators Advertising Firms
Education & Programming
Hedge Funds Auditing Firms Business Analysts
Coaches Consultants
Compliance
Money Managers News Feeds Careers
Firms
Trading Corporate Access
Brokers Legal Firms
Publications Providers
Tax Firms
16Recognized Industry Leader
IB’s multiple trading platforms, extensive suite of advanced trading tools, algos
and order types continue to earn awards, year after year.
2018 Barron’s Awards1:
Interactive Brokers earned an overall rating of 4.5 and 2018 Fund Technology and WSL Institutional Awards:
Rated #1 – Best Online Broker Best Trading Platform Overall
Rated 4.5 for Best for Options Traders
Best Broker-Dealer Options
Rated 4.6 for Lowest Cost
Rated 4.9 for Best Portfolio Analysis and Reports
Rated 4.7 for Best Trading Experience and Technology
Rated 4.5 for Best for Frequent Traders
Rated 4.8 for Range of Offerings 2018 HFM Week US Hedge Fund Services Awards:
Best Mobile Application
2018 Stockbrokers.com:
Rated #1 for Commissions and Fees
Rated #1 for Offering of Investments 2018 CTA Services Awards:
Rated #1 for Active Trading Best FCM Technology - US
Rated #1 for International Trading
Rated #1 for Professionals
Earned a “Best in Class” rating for Platforms & Tools
Earned a “Best in Class” rating for Options Trading
Earned a “Best in Class” rating for Order Execution
Earned a “Best in Class” rating for Mobile Trading
17 1 Barron’s is a registered trademark of Dow Jones & Co. Inc.You can also read
