Interactive Brokers Group, Inc.
For the period ended Mar 31, 2025. Filed May 8, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
IBKR$75.82+4.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001381197-24-000143
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001381197-25-000052
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 216 previous paragraphs and 177 current paragraphs.
112 unchanged; 57 reworded; 8 added; 30 removed; 17 previous and 0 current paragraphs rearranged.
Tables are not compared: 14 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
During the quarter ended March 31, 2025 (“current quarter”), world equities markets were mixed, with Canada, Europe, the United Kingdom (“U.K.”) and Hong Kong up compared to the prior quarter, while the United States (“U.S.”), Japan and Australia registered declines. While central banks in most countries cut their policy rates this quarter, including those in Canada, Europe and the U.K., in the U.S. and Hong Kong they maintained their rates, a contributing factor to the diversity in equity markets results.
Current report
Early in the quarter, post-U.S. election enthusiasm helped drive the market to a peak in February. After that, the market declined, with the S&P 500® index closing down 5% from the prior quarter end. The dominance of a small number of technology stocks (the so-called ‘‘Magnificent 7’’), which had driven much of the market’s growth in the previous year, waned as the prices of six of the seven fell significantly more than the S&P 500® index this quarter. Further, inflationary fears reemerged as a result of new tariff policy proposals, their potential impact on world economies, and the possibility of recession.
Current report
Interest Rates. The U.S. Federal Reserve maintained the benchmark federal funds rate during the current quarter, after cutting it three times in the second half of 2024 (in September, November and December), by a cumulative 100 basis points. The U.S. Treasury yield curve remained inverted through the medium term. As noted above, in several countries with developed financial markets, benchmark interest rates declined during the current quarter as central banks’ inclination to encourage growth overcame apprehensions about inflation, despite increasing concern on the uncertainty of U.S. tariff policy.
Current report
Net interest income on margin loan balances rose 14% compared to the prior-year quarter. This increase was due to the 38% growth in margin loan balances in the current active market environment, somewhat offset by the decline in the average federal funds effective rate to 4.33% in the current quarter from 5.33% in the prior-year quarter, and similar rate cuts in other currencies.
Current report
General and administrative expenses increased 24% to $62 million, driven primarily by an increase of $8 million in advertising expenses.
Current report
Commissions
Current report
Other Fees and Services
Current report
Customer bad debt expense, for the current quarter, decreased $4 million, compared to the prior-year quarter, to $1 million.
Removed paragraphs (30)
Previous report
During the quarter ended September 30, 2024 (“current quarter”), world equities markets generally rose compared to the prior quarter, with only Japan registering a decline in its index among the major markets. Within U.S. equities, which led the world with a 34% year-over-year gain in the S&P 500 index, the dominance of a small number of technology stocks (the so-called “Magnificent 7”) weakened, with these stocks responsible for about 12% of the S&P 500 index’s gains during the current quarter, down from 37% in the prior-year quarter and 95% in the second quarter of 2024. Inflationary pressures have eased gradually and, as a result, central banks in several countries cut their policy rates after several quarters of market speculation about central bank policies. However, the U.S. elections and geopolitical uncertainties remain prominent sources of volatility.
Previous report
Interest Rates. The U.S. Federal Reserve cut the benchmark federal funds rate in September 2024, reducing it by 50 basis points after holding it steady since July 2023. Once again, the U.S. Treasury yield curve remained inverted, with long-term rates lower than short-term. Other central banks, including those in Europe, Canada, Hong Kong, the United Kingdom and Switzerland, also lowered rates this quarter, with Europe cutting for the second time, and Canada and Switzerland for the third time, this year. In other countries with developed financial markets, such as Australia and Japan, benchmark interest rates either held steady or increased.
Previous report
Net interest income on customer margin loan balances increased compared to the prior-year quarter despite the average federal funds effective rate remaining stable at 5.26%, as margin loan balances grew in a risk-on environment.
Previous report
General and administrative expenses increased $108 million to $153 million, driven primarily by $87 million related to legal and regulatory matters and a one-time charge of $12 million related to the consolidation of our European subsidiaries.
Previous report
Customer bad debt expense, for the current quarter, increased $7 million, compared to the prior-year quarter, to $7 million, mainly due to customer losses during short periods of extreme market volatility.
Previous report
Nine Months Ended September 30, 2024 (“current nine-month period”) compared to the Nine Months Ended September 30, 2023 (“prior-year nine-month period”)
Previous report
Net Revenues
Previous report
Total net revenues, for the current nine-month period, increased $597 million, or 19%, compared to the prior-year nine-month period, to $3,798 million. The increase in net revenues was due to higher net interest income, commissions, other fees and services, and other income.
Previous report
Commissions, for the current nine-month period, increased $208 million, or 21%, compared to the prior-year nine-month period, to $1,220 million, driven by higher customer volume in options, futures and stocks. Total customer options and futures contract and stock share volumes increased 31%, 7% and 8%, respectively. Total DARTs for the current nine-month period increased 28% to 2.5 million, compared to 1.9 million for the prior-year nine-month period. Average commission per commissionable order for cleared customers, for the current nine-month period, decreased 7% to $2.92, compared to $3.13 for the prior-year nine-month period, due to smaller average order sizes in options, stocks and forex.
Previous report
Other Income
Previous report
Other income, for the current nine-month period, increased $55 million, compared to the prior-year nine-month period, to a gain of $38 million. This increase was mainly comprised of$74 million related to our currency diversification strategy, which gained $3 million in the current nine-month period compared to a loss of $71 million in the prior-year nine-month period; and $50 million from our principal trading and investment activities; partially offset by a $48 million loss on positions taken over as customer accommodation due to a technical issue at the New York Stock Exchange that occurred on the morning of June 3, 2024, as previously disclosed, $8 million related to our strategic investment in Tiger Brokers, and $7 million from our U.S. government securities portfolio.
Previous report
Interest Income and Interest Expense
Previous report
Net interest income (interest income less interest expense), for the current nine-month period, increased $277 million, or 13%, compared to the prior-year nine-month period, to $2,341 million. The increase in net interest income was driven by higher customer margin loans and customer credit balances, and higher benchmark interest rates.
Previous report
Non-Interest Expenses
Previous report
Non-interest expenses, for the current nine-month period, increased $195 million, or 21%, compared to the prior-year nine-month period, to $1,143 million, mainly due to a $89 million increase in general and administrative expense, a $46 million increase in execution, clearing and distribution fees, a $45 million increase in employee compensation and benefits, a $12 million increase in customer bad debt expense, and a $3 million increase in occupancy, depreciation and amortization expenses. As a percentage of total net revenues, non-interest expenses were 30% for both the current nine-month period and the prior-year nine-month period.
Previous report
Execution, Clearing and Distribution Fees
Previous report
Employee Compensation and Benefits
Previous report
Employee compensation and benefits expenses, for the current nine-month period, increased $45 million, or 12%, compared to the prior-year nine-month period, to $436 million, mainly due to inflation and a 2% increase in the average number of employees to 2,951 for the current nine-month period, compared to 2,882 for the prior-year nine-month period. As we continue to grow, our focus on automation has allowed us to maintain a relatively small staff. As a percentage of total net revenues, employee compensation and benefits expenses were 11%for the current nine-month period and 12% for the prior-year nine-month period. As a percentage of total adjusted net revenues, employee compensation and benefits expenses were 11%for the current nine-month period and 12% for the prior-year nine-month period.
Previous report
Occupancy, Depreciation and Amortization
Previous report
Occupancy, depreciation and amortization expenses, for the current nine-month period, increased $3 million, or 4%, compared to the prior-year nine-month period, to $77 million, mainly due to higher costs related to the expansion of our data centers. As a percentage of total net revenues, occupancy, depreciation and amortization expenses were 2% for both the current nine-month period and the prior-year nine-month period.
Previous report
Communications
Previous report
Communications expenses, for the current nine-month period were unchanged at $29 million. As a percentage of total net revenues, communications expenses were 1% for both the current nine-month period and the prior-year nine-month period.
Previous report
General and Administrative
Previous report
General and administrative expenses, for the current nine-month period, increased $89 million, or 54%, compared to the prior-year nine-month period, to $255 million, primarily due to a $58 million increase related to legal and regulatory matters, a one-time charge of $12 million related to the consolidation of our European subsidiaries, and a $12 million increase in advertising expenses. As a percentage of total net revenues, general and administrative expenses were 7% for the current nine-month period and 5% for the prior-year nine-month period.
Previous report
Customer Bad Debt
Previous report
Customer bad debt expense, for the current nine-month period, increased $12 million, compared to the prior-year nine-month period, to $14 million.
Previous report
Income Tax Expense
Previous report
Operating Results
Previous report
Income before income taxes, for the current nine-month period, increased $402 million, or 18%, compared to the prior-year nine-month period, to $2,655 million. Pretax profit margin was 70% for both the current nine-month period and the prior-year nine-month period.
Previous report
Comparing our operating results for the current nine-month period to the prior-year nine-month period using non-GAAP financial measures, adjusted net revenues were $3,833 million, up 19%; adjusted income before income taxes was $2,690 million, up 19%; and adjusted pre-tax profit margin was 70% for the current nine-month period and 71% for the prior-year nine-month period. See the “Non-GAAP Financial Measures” section below in this Item 2 for additional details.
Reworded paragraphs (57)
Previous wording
We are an automated global electronic broker. We custody and service accounts for hedge and mutual funds, exchange-traded funds (“ETFs”), registered investment advisors, proprietary trading groups, introducing brokers and individual investors. We specialize in routing orders and executing and processing trades in stocks, options, futures, forex, bonds, mutual funds, ETFs and precious metals on more than 150 electronic exchanges and market centers in 35 countries and 28 currencies seamlessly around the world. In addition, our customers can use our trading platform to trade certain cryptocurrencies through third-party cryptocurrency service providers that execute, clear and custody the cryptocurrencies. In August 2024, we began offering trading in Forecast Contracts, which are event-based contracts traded on ForecastEx, a CFTC-registered exchange we established.
Current wording
We are an automated global electronic broker. We custody and service accounts for hedge and mutual funds, exchange-traded funds (“ETFs”), registered investment advisors, proprietary trading groups, introducing brokers and individual investors. We specialize in routing orders and executing and processing trades in stocks, options, futures, forex, bonds, mutual funds, ETFs and precious metals on more than 160 electronic exchanges and market centers in 36 countries and 28 currencies around the world. In addition, our customers can use our trading platform to trade certain cryptocurrencies through third-party cryptocurrency service providers that execute, clear and custody the cryptocurrencies. We also offer trading in forecast contracts, which are event-based contracts traded on ForecastEx LLC, a CFTC-registered exchange and clearinghouse we established.
Previous wording
Our customer base is diverse with respect to geography and type. Currently, approximately 82% of our customers reside outside the United States (“U.S.”) in over 200 countries and territories, and over 80% ofnew customers come from outside the U.S. Approximately 56% of our customers’ equity is in institutional accounts such as hedge funds, financial advisors, proprietary trading firms and introducing brokers. Specialized products and services that we have developed successfully attract these accounts. For example, we offer prime brokerage services, including financing and securities lending, to hedge funds; our model portfolio technology and automated share allocation and rebalancing tools are particularly attractive to financial advisors; and our trading platform, global access and low pricing attract introducing brokers.
Current wording
Our customer base is diverse with respect to geography and type. Currently, approximately 84% of our customers reside outside the U.S. in over 200 countries and territories, and a majority ofnew customers comes from outside the U.S. Over half of our customers’ equity is in institutional accounts such as hedge funds, financial advisors, proprietary trading firms and introducing brokers. Specialized products and services that we have developed successfully attract these accounts. For example, we offer prime brokerage services, including financing and securities lending, to hedge funds; our model portfolio technology and automated share allocation and rebalancing tools are particularly attractive to financial advisors; and our trading platform, global access and low pricing attract introducing brokers.
Previous wording
Global trading volumes. Worldwide, equities volumes reported by most major exchanges increased in the current quarter versus the prior-year quarter. In the U.S., according to industry data, average daily volume in exchange-listed equity-based options increased by 12%, futures by 27% and listed cash equities by 10%, compared to the prior-year quarter. Options trading volumes continue to rise with the growing popularity of shorter-dated options contracts. In futures, market volumes increased across all product segments, particularly in interest rate products, with notable percentage increases in commodities such as metals and energy.
Current wording
Global trading volumes. Worldwide, equities volumes at most major trading venues, except for Japan, increased in the current quarter, as most major market indices rose from the prior-year quarter. In the U.S., according to industry data, average daily volume in listed cash equities volume increased by 33%, exchange-listed equity-based options by 21%, and futures by 13%. Options trading volumes have risen with the growing popularity of shorter-dated options contracts. In futures markets, volumes increased across all product segments, particularly in commodities such as the energy and agriculture sectors, as investors sought to mitigate their exposure to ongoing economic and geopolitical uncertainties. Equity index, interest rate and foreign exchange products also increased.
Previous wording
These factors led to strong results across our major product types. Our customer options, equities, futures and foreign exchange volumes were up 35%, 22%, 13% and 8%, respectively.
Current wording
These factors led to strong results across our major product types. Our customers’ options, futures, equities, and foreign exchange volumes were up 25%, 16%, 47% and 35%, respectively, compared to the prior-year quarter.
Previous wording
Note that while U.S. options, futures, cash equities and foreign exchange volumes are readily comparable measures, they reflect most but not all of the global volumes that generate our commission revenue. See “Trading Volumes and Customer Statistics” below in this Item 2 for additional details regarding our executed order volumes, contract and share volumes, and customer statistics.
Current wording
Note that while U.S. options, futures and cash equities volumes are readily comparable measures, they reflect most but not all of the global volumes that generate our commission revenue. See ‘‘Trading Volumes and Customer Statistics’’ below in this Item 2 for additional details regarding our trade volumes, contract and share volumes, and customer statistics.
Previous wording
Volatility. U.S. market volatility, as measured by the average Chicago Board Options Exchange Volatility Index (“VIX®”), increased 13%, from an average of 15.1 in the prior-year quarter to 17.1 in the current quarter, primarily due to a temporary spike in August that has since moderated. Volatility levels remain below the levels reached in 2020 through 2022 as world economic outlook has improved and recession fears have lessened.
Current wording
Volatility. U.S. market volatility, as measured by the average Chicago Board Options Exchange Volatility Index(‘‘VIX®’’), increased by 35%, from an average of 13.7 in the prior-year quarter to 18.5 in the current quarter. While volatility levels remain below the levels reached in 2020 through 2022, they rose in the quarter to their highest level in nearly two years as the world geopolitical and economic outlook grew more uncertain.
Previous wording
Lower U.S. benchmark rates reduce the interest we earn on our segregated cash, the majority of which is invested in short-term U.S. government securities and related instruments. Higher short-term rates and an inverted yield curve have led us to maintain a short duration portfolio, nearly all of which matured within three months at September 30, 2024, to more closely match our asset and liability maturities on our interest-sensitive assets. Further, our margin balances are tied to benchmark rates, so lower rates limit the interest we earn on margin lending to our customers. We continue to offer among the lowest rates in the industry on margin lending, and we believe our low rates are an important feature that attracts customers to our platform.
Current wording
Lower U.S. benchmark rates reduce the interest we earn on our segregated cash, the majority of which is invested in short-term U.S. government securities and related instruments. Relatively higher short-term rates, and uncertainty over future U.S. Federal Reserve rate policy, have led us to maintain a short duration portfolio, substantially all of which matured within three months at March 31, 2025, to more closely match our asset and liability maturities on our interest-sensitive assets. Further, our margin balances are tied to benchmark rates, so lower rates also limit the interest we earn on margin lending to our customers. We continue to offer among the lowest rates in the industry on margin lending, and we believe our low rates are an important feature that attracts customers to our platform.
Previous wording
As an offset, lower rates also reduce our interest expense. For example, in U.S. dollars we pay interest to customers on their qualified cash balances when the federal funds effective rate is above 0.50%, which it has been since May 2022. With benchmark rates at higher levels than in the extended period during and after the pandemic, rate compression is eliminated and we are able to earn our full 0.50% spread. We believe the attractive rates we pay on customer cash are among the highest in the industry and are another important feature that draws customers to our platform.
Current wording
As an offset, lower rates also reduce our interest expense. For example, in U.S. dollars, we pay interest to customers on their qualified cash balances when the federal funds effective rate is above 0.50%, which it is currently. Any rate cuts are passed through to our customers as we maintain a 0.50% spread. We believe the attractive rates we pay on customer cash are among the highest in the industry and are another important feature that draws customers to our platform.
Previous wording
Higher average balances contributed to a 9% rise in net interest income from the prior-year quarter, though our overall net interest margin declined from 2.46% in the prior-year quarter to 2.37% in the current quarter, primarily due to slightly lower yields on our margin loan balances and segregated cash and securities.
Current wording
Higher average balances contributed to a 3% rise in net interest income over the prior-year quarter. The combined effect reduced our net interest margin from 2.41% in the prior-year quarter to 2.10% in the current quarter.
Previous wording
Currency fluctuations. As a global electronic broker trading on exchanges around the world in multiple currencies, we are exposed to foreign currency risk. We actively manage this exposure by keeping our equity in proportion to a defined basket of 10 currencies we call the “GLOBAL” to diversify our risk and to align our hedging strategy with the currencies that we use in our business. Because we report our financial results in U.S. dollars, the change in the value of the GLOBAL versus the U.S. dollar affects our earnings. During the current quarter, the value of the GLOBAL, as measured in U.S. dollars, increased 1.14% compared to its value at June 30, 2024, which had a positive impact on our comprehensive earnings for the current quarter. A discussion of our approach for managing foreign currency exposure is contained in Part I, Item 3 of this Quarterly Report Form 10-Q entitled “Quantitative and Qualitative Disclosures about Market Risk.”
Current wording
Currency fluctuations. As a global electronic broker trading on exchanges around the world in multiple currencies, we are exposed to foreign currency risk. We actively manage this exposure by keeping our equity in proportion to a defined basket of 10 currencies we call the ‘‘GLOBAL’’ to diversify our risk and to align our hedging strategy with the currencies that we use in our business. Because we report our financial results in U.S. dollars, the change in the value of the GLOBAL versus the U.S. dollar affects our earnings. During the current quarter, the value of the GLOBAL, as measured in U.S. dollars, increased 0.75% compared to its value at December 31, 2024, which had a positive impact on our comprehensive earnings for the current quarter. A discussion of our approach for managing foreign currency exposure is contained in Part I, Item 3 of this Quarterly Report on Form 10-Q entitled ‘‘Quantitative and Qualitative Disclosures about Market Risk.’’
Previous wording
Diluted earnings per share were $1.67 for the current quarter, compared to diluted earnings per share of $1.56 for the prior-year quarter. Adjusted diluted earnings per share were $1.61 for the current quarter and $1.55 for the prior-year quarter. The calculation of diluted earnings per share is detailed in Note 4 – “Equity and Earnings per Share” to the unaudited condensed consolidated financial statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Current wording
Diluted earnings per share were $1.94 for the current quarter, compared to diluted earnings per share of $1.61 for the prior-year quarter. Adjusted diluted earnings per share were $1.88 for the current quarter and $1.64 for the prior-year quarter. The calculation of diluted earnings per share is detailed in Note 4 – “Equity and Earnings per Share” to the unaudited condensed consolidated financial statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Previous wording
For the current quarter, our net revenues were $1,365 million and income before income taxes was $909 million, compared to net revenues of $1,145 million and income before income taxes of $840 million in the prior-year quarter. Adjusted net revenues were $1,327 million and adjusted income before income taxes was $871 million, compared to adjusted net revenues of $1,139 million and adjusted income before income taxes of $834 million in the prior-year quarter.
Current wording
For the current quarter, our net revenues were $1,427 million and income before income taxes was $1,055 million, compared to net revenues of $1,203 million and income before income taxes of $866 million in the prior-year quarter. Adjusted net revenues were $1,396 million and adjusted income before income taxes was $1,024 million, compared to adjusted net revenues of $1,216 million and adjusted income before income taxes of $879 million in the prior-year quarter.
Previous wording
Commission revenue increased 31% to $435 million on higher customer trading volumes. Customer trading volume in options, stocks and futures increased 35%, 22% and 13%, respectively.
Current wording
Commission revenue increased 36% to $514 million on higher customer trading volumes. Customer trading volume in stocks, options and futures increased 47%, 25% and 16%, respectively.
Previous wording
Net interest income increased 9% to $802 million on higher customer margin loans and customer credit balances.
Current wording
Net interest income increased 3% to $770 million on higher average customer margin loans and customer credit balances.
Previous wording
Other fees and services increased $20 million, or 38%, to $72 million, driven by increases of $13 million in risk exposure fees, $5 million in payments for order flow from exchange-mandated programs, and $2 million in FDIC sweep program fees.
Current wording
Other fees and services increased 32% to $78 million, led by increases of $9 million in risk exposure fees and $3 million in payments for order flow from exchange-mandated programs.
Previous wording
Execution, clearing and distribution fees expenses increased 18% to $116 million, driven by a higher SEC fee rate and higher customer trading volumes.
Current wording
Execution, clearing and distribution fees expenses increased 20% to $121 million, driven by a higher SEC fee rate, a new FINRA Consolidated Audit Trail (“CAT”) fee initiated during the fourth quarter of 2024, and higher customer trading volumes in stocks, options and futures.
Previous wording
Pretax profit margin was 67% for the current quarter compared to 73% in the prior-year quarter. Adjusted pretax profit margin for the current quarter was 66% compared to 73% in the prior-year quarter.
Current wording
Pretax profit margin was 74% for the current quarter compared to 72% in the prior-year quarter. Adjusted pretax profit margin for the current quarter was 73% compared to 72% in the prior-year quarter.
Previous wording
Total equity as of September 30, 2024 was $16.0 billion.
Current wording
Total equity as of March 31, 2025 was $17.5 billion.
Previous wording
In connection with our currency diversification strategy, as of September 30, 2024, approximately 25% of our equity was denominated in currencies other than the U.S. dollar. In the current quarter, our currency diversification strategy increased our comprehensive earnings by $178 million (compared to a decrease of $93 million in the prior-year quarter), as the U.S. dollar value of the GLOBAL increased by approximately 1.14%, compared to its value as of June 30, 2024. The effects of our currency diversification strategy are reported as (1) a component of “Other income” (gain of $25 million) in the consolidated statements of comprehensive income and (2)other comprehensive income (“OCI”) (gain of $153 million) in the consolidated statements of financial condition and the consolidated statements of comprehensive income. The full effect of the GLOBAL is captured in comprehensive income.
Current wording
In connection with our currency diversification strategy, as of March 31, 2025, approximately 24% of our equity was denominated in currencies other than the U.S. dollar. In the current quarter, our currency diversification strategy increased our comprehensive earnings by $127 million (compared to a decrease of $104 million in the prior-year quarter), as the U.S. dollar value of the GLOBAL increased by approximately 0.75%, compared to its value as of December 31, 2024. The effects of our currency diversification strategy are reported as (1) a component of “Other income” (gain of $20 million) in the consolidated statements of comprehensive income and (2)other comprehensive income (“OCI”) (gain of $107 million) in the consolidated statements of financial condition and the consolidated statements of comprehensive income. The full effect of the GLOBAL is captured in comprehensive income.
Previous wording
Price competition among broker-dealers may continue to intensify.
Current wording
Competition among broker-dealers may continue to intensify.
Previous wording
•New legislation or modifications to existing regulations and rules could occur in the future. Scrutiny of such topics as the use of artificial intelligence (AI) and information security by regulatory and legislative authorities has increased.
Current wording
•New legislation or modifications to existing regulations and rules could occur in the future. Scrutiny in the use of artificial intelligence (AI) and information security by regulatory and legislative authorities has increased.
Previous wording
The impact of another pandemic or other public health emergency will depend on numerous evolving factors that cannot be accurately predicted, including the duration and spread of the pandemic, governmental regulations in response to the pandemic, and the effectiveness of vaccinations and other medical advancements.
Current wording
The impact of another pandemic or a public health emergency will depend on numerous evolving factors that cannot be accurately predicted, including the duration and spread of the pandemic, governmental regulations in response to the pandemic, and the effectiveness of vaccinations and other medical advancements.
Previous wording
We continue to be exposed to the risks and uncertainties of doing business in international markets, particularly in the heavily regulated brokerage industry. Such risks and uncertainties include political, economic and financial instability, and foreign policy changes. For example, tensions between the U.S. and China have escalated in recent years, and changes in Chinese governmental oversight of Hong Kong and in the Chinese and Hong Kong capital markets could result in adverse effects on our business and loss of assets we hold in the region. Additionally, although our direct and indirect exposures to Russia and Ukraine are not material, the war in Ukraine and related sanctions have created substantial uncertainty in the global economy and financial markets. We continue to monitor the war and assess any potential impact to our business, including effects relating to currency control restrictions imposed by the Central Bank of Russia and other governments, and restrictions by the Moscow Stock Exchange (“MOEX”) regarding the sale of assets by non-Russian residents, as well as sanctions imposed by the U.S., the U.K., the European Union and other countries against the MOEX, the Russian clearinghouse (National Clearing Centre, or NCC) and Russian Depository (Non-Bank Credit Institution Joint Stock Company National Settlement Depository, or NSD).
Current wording
We continue to be exposed to the risks and uncertainties of doing business in international markets, particularly in the heavily regulated brokerage industry. Such risks and uncertainties include political, economic and financial instability, and foreign policy changes. For example, tensions between the U.S. and China have escalated in recent years, and changes in Chinese governmental oversight of the Chinese and Hong Kong capital markets could result in adverse effects on our business and loss of assets we hold in the region. Additionally, although our direct and indirect exposures to Russia and Ukraine are not material, the war in Ukraine and related sanctions have created substantial uncertainty in the global economy and financial markets.
Previous wording
•Our remaining market making activities will continue to be impacted by market structure changes, market conditions, the level of automation of competitors, and the relationship between actual and implied volatility in the equities markets.
Current wording
•Our remaining market making activities, while not material, will continue to be impacted by market structure changes, market conditions, the level of automation of competitors, and the relationship between actual and implied volatility in the equities markets.
Previous wording
Total net revenues, for the current quarter, increased $220 million, or 19%, compared to the prior-year quarter, to $1,365 million. The increase in net revenues was due to higher commissions, net interest income, other income, and other fees and services.
Current wording
Total net revenues, for the current quarter, increased $224 million, or 19%, compared to the prior-year quarter, to $1,427. The increase in net revenues was due to higher commissions, other income, net interest income, and other fees and services.
Previous wording
Commissions, for the current quarter, increased $102 million, or 31%, compared to the prior-year quarter, to $435 million, driven by higher customer volume in options, stocks and futures. Total customer options and futures contract and stock share volumes increased 35%, 13% and 22%, respectively. Total DARTs for the current quarter increased 42% to 2.7 million, compared to 1.9 million for the prior-year quarter. Average commission per commissionable order for cleared customers, for the current quarter, decreased 9% to $2.83, compared to $3.11 for the prior-year quarter, due to smaller average order sizes across all product classes and lower average commissions per contract in options.
Current wording
Commissions, for the current quarter, increased $135 million, or 36%, compared to the prior-year quarter, to $514 million, driven by higher customer trading volumes across all product types. Total customer options and futures contract and stock share volumes increased 25%, 16% and 47%, respectively. Total DARTs for the current quarter increased 50% to 3.5 million, compared to 2.4 million for the prior-year quarter. Average commission per commissionable order for cleared customers, for the current quarter, decreased 6% to $2.76, compared to $2.93 for the prior-year quarter, due to smaller average order sizes across all product classes, lower average commissions per contract in options and futures, and greater capture of liquidity rebates passed through to customers.
Previous wording
Other fees and services, for the current quarter, increased $20 million, or 38%, compared to the prior-year quarter, to $72 million, driven by a $13 million increase in risk exposure fees as customers exhibited more risk-on behavior, a $5 million increase in payments for order flow from exchange-mandated programs driven by higher customer trading volumes, and a $2 million increase in FDIC sweep fees due to higher customer balances.
Current wording
Other fees and services, for the current quarter, increased $19 million, or 32%, compared to the prior-year quarter, to $78 million, driven by a $9 million increase in risk exposure fees as customers exhibited more risk-on behavior, a $3 million increase in payments for order flow from exchange-mandated programs driven by higher customer trading volumes, and a $2 million increase in FDIC sweep fees due to higher customer balances.
Previous wording
Other income, for the current quarter, increased $29 million, or 107%, compared to the prior-year quarter, to $56 million. This increase was mainly comprised of$42 million related our currency diversification strategy, which gained $25 million in the current quarter compared to a loss of $17 million in the prior-year quarter; partially offset by $12 million related to our strategic investment in Tiger Brokers, which gained $11 million in the current quarter compared to a gain of $23 million in the prior year quarter.
Current wording
Other income, for the current quarter, increased $47 million, or 261%, compared to the prior-year quarter, to $65 million. This increase was mainly comprised of$22 million related our currency diversification strategy, which gained $20 million in the current quarter compared to a loss of $2 million in the prior-year quarter; and $21 million related to our strategic investment in Up Fintech Holding Limited (“Tiger Brokers”), which gained $11 million in the current quarter compared to a loss of $10 million in the prior-year quarter.
Previous wording
Net interest income (interest income less interest expense), for the current quarter, increased $69 million, or 9%, compared to the prior-year quarter, to $802 million. The increase in net interest income was driven by higher customer margin loans and customer credit balances.
Current wording
Net interest income (interest income less interest expense), for the current quarter, increased $23 million, or 3%, compared to the prior-year quarter, to $770 million. The increase in net interest income was driven by higher customer margin loans and customer credit balances, partially offset by lower benchmark interest rates.
Previous wording
Net interest income on customer balances, for the current quarter, increased $95 million, compared to the prior-year quarter, driven by an $11.8 billion increase in average customer margin loans and an $11.4 billion increase in average customer credit balances. See the “Business Environment” section above in this Item 2 for a further discussion about the change in interest rates in the current quarter.
Current wording
Net interest income on customer balances, for the current quarter, increased $60 million compared to the prior-year quarter, driven by a $17.7 billion increase in average customer margin loans and an $18.5 billion increase in average customer credit balances. See the “Business Environment” section above in this Item 2 for a further discussion about the change in interest rates in the current quarter.
Previous wording
In the current quarter, average securities borrowed balances increased 12%, to $6.2 billion, and average securities loaned balances increased 45%, to $14.3 billion, compared to the prior-year quarter. Net interest earned from securities lending is affected by the level of demand for securities positions held by our customers that investors are looking to sell short. During the current quarter, net interest earned from securities lending transactions decreased $50 million, or 76%, compared to the prior-year quarter, driven by lower demand for selling stocks short, as the stock market rose steadily in the current quarter, and by fewer so-called “hard to borrow” stocks industry wide. As noted above, the rise in benchmark interest rates has shifted a portion of the interest reported as generated by lending securities to interest income on segregated cash (see further explanation above). It should be noted that securities lending transactions entered into to support customer activity may produce interest income (expense) that is offset by interest expense (income) related to customer balances.
Current wording
In the current quarter, average securities borrowed balances decreased 9%, to $4.9 billion, and average securities loaned balances increased 38%, to $16.1 billion, compared to the prior-year quarter. Net interest earned from securities lending is affected by the level of demand for securities positions held by our customers that investors are looking to sell short. During the current quarter, net interest earned from securities lending transactions decreased $16 million, or 62%, compared to the prior-year quarter, driven by fewer so-called “hard to borrow” stocks industry wide. However, as noted above, the rise in benchmark interest rates from near zero in 2022 has shifted a portion of the interest reported as generated by lending securities to interest income on segregated cash (see further explanation above). It should be noted that securities lending transactions entered into to support customer activity may produce interest income (expense) that is offset by interest expense (income) related to customer balances.
Previous wording
We estimate that if the interest earned and paid on cash collateral related to our securities lending transactions were included under “Securities borrowed and loaned, net” in the table below, the total net interest income related to our securities lending activities would have been $156 million in the current quarter, compared to $181 million in the prior-year quarter. Such additional interest attributed to our securities lending activities would be reclassified from net interest income on “Segregated cash and securities, net” and “Customer credit balances, net” in the table below, so it would have no effect on our overall net interest income or net interest margin.
Current wording
We estimate that if the interest earned and paid on cash collateral related to our securities lending transactions were included under “Securities borrowed and loaned, net” in the table below, the total net interest income related to our securities lending activities would have been $186 million in the current quarter, compared to $167 million in the prior-year quarter. Such additional interest attributed to our securities lending activities would be reclassified from net interest income on “Segregated cash and securities, net” and “Customer credit balances, net” in the table below, so it would have no effect on our overall net interest income or net interest margin.
Previous wording
(3)Includes income from financial instruments that has the same characteristics as interest, but is reported in other fees and services and other income in the Company’s condensed consolidated statements of comprehensive income. For the three months ended September 30, 2024 and 2023, $7 million and $6 million were reported in other fees and services, respectively, and $17 and $5 million were reported in other income, respectively.
Current wording
(3)Includes income from financial instruments that has the same characteristics as interest, but is reported in other fees and services and other income in the Company’s condensed consolidated statements of comprehensive income. For the three months ended March 31, 2025 and 2024, $8 million and $6 million were reported in other fees and services, respectively, and $16 and $9 million were reported in other income, respectively.
Previous wording
Non-interest expenses, for the current quarter, increased $151 million, or 50%, compared to the prior-year quarter, to $456 million, mainly due to a $108 million increase in general and administrative expenses, an $18 million increase in execution, clearing and distribution fees, an $18 million increase in employee compensation and benefits, and a $7 million increase in customer bad debt expense. As a percentage of total net revenues, non-interest expenses were 33% for the current quarter and 27% for the prior-year quarter.
Current wording
Non-interest expenses, for the current quarter, increased $35 million, or 10%, compared to the prior-year quarter, to $372 million, mainly due to a $20 million increase in execution, clearing and distribution fees, a $12 million increase in general and administrative expenses, and a $9 million increase in employee compensation and benefits; partially offset by a $4 million decrease in customer bad debt expense and $2 million decrease in occupancy, depreciation and amortization expense. As a percentage of total net revenues, non-interest expenses were 26% for the current quarter and 28% for the prior-year quarter.
Previous wording
Execution, clearing and distribution fees, for the current quarter, increased $18 million, or 18%, compared to the prior-year quarter, to $116 million, mainly driven by a $17 million increase in SEC regulatory fees due to an increase in the SEC fee rate effective May 22, 2024, and higher customer trading volumes. SEC fees, as with other regulatory fees, are passed through to customers. As a percentage of total net revenues, execution, clearing and distribution fees were 8% for the current quarter and 9% for the prior-year quarter.
Current wording
Execution, clearing and distribution fees, for the current quarter, increased $20 million, or 20%, compared to the prior-year quarter, to $121 million, mainly driven by an $18 million increase in SEC regulatory fees due to an increase in the SEC fee rate effective May 22, 2024, and $3 million due to a new FINRA Consolidated Audit Trail (“CAT”) fee initiated in the fourth quarter of 2024, partially offset by greater capture of liquidity rebates due to higher customer trading volumes. SEC and CAT fees, as with other regulatory fees, are passed through to customers. As a percentage of total net revenues, execution, clearing and distribution fees were 8% for both the current quarter and the prior-year quarter.
Previous wording
Employee compensation and benefits expenses, for the current quarter, increased $18 million, or 14%, compared to the prior-year quarter, to $145 million, mainly due to inflation and a 1% increase in the average number of employees to 2,960 for the current quarter, compared to 2,918 for the prior-year quarter. As we continue to grow, our focus on automation has allowed us to maintain a relatively small staff. As a percentage of total net revenues, employee compensation and benefits expenses were 11%for both the current quarter and the prior-year quarter. As a percentage of total adjusted net revenues, employee compensation and benefits expenses were 11%for both the current quarter and the prior-year quarter.
Current wording
Employee compensation and benefits expenses, for the current quarter, increased $9 million, or 6%, compared to the prior-year quarter, to $154 million associated with a combination of staffing increases and inflation. The average number of employees increased 2% to 3,013 for the current quarter, compared to 2,942 for the prior-year quarter. As we continue to grow, our focus on automation has allowed us to maintain a relatively small staff. As a percentage of total net revenues and adjusted net revenues, employee compensation and benefits expenses were both 11%for the current quarter and 12% for the prior-year quarter.
Previous wording
Occupancy, depreciation and amortization expenses, for the current quarter, increased $1 million, or 4%, compared to the prior-year quarter, to $26 million mainly due to higher costs related to the expansion of our data centers. As a percentage of total net revenues, occupancy, depreciation and amortization expenses were 2% for both the current quarter and the prior-year quarter.
Current wording
Occupancy, depreciation and amortization expenses, for the current quarter, decreased $2 million, or 8%, compared to the prior-year quarter, to $24 million, mainly due to lower depreciation and amortization expense. As a percentage of total net revenues, occupancy, depreciation and amortization expenses were 2% for both the current quarter and the prior-year quarter.
Previous wording
Communications expenses, for the current quarter, decreased $1 million, or 10%, compared to the prior-year quarter, to $9 million. As a percentage of total net revenues, communications expenses were 1% for both the current quarter and the prior-year quarter.
Current wording
Communications expenses, for the current quarter, were unchanged from the prior-year quarter, at $10 million. As a percentage of total net revenues, communications expenses were 1% for both the current quarter and the prior-year quarter.
Previous wording
General and administrative expenses, for the current quarter, increased $108 million, or 240%, compared to the prior-year quarter, to $153 million, primarily due to an $87 million increase related to legal and regulatory matters, a one-time charge of $12 million related to the consolidation of our European subsidiaries, and a $5 million increase in advertising expenses. As a percentage of total net revenues, general and administrative expenses were 11% for the current quarter and 4% for the prior-year quarter.
Current wording
General and administrative expenses, for the current quarter, increased $12 million, or 24%, compared to the prior-year quarter, to $62 million, primarily due toan $8 million increase in advertising expenses. As a percentage of total net revenues, general and administrative expenses were 4% for both the current quarter and the prior-year quarter.
Previous wording
Income tax expense, for the current quarter, increased $7 million, or 10%, compared to the prior-year quarter, to $75 million, primarily due to (1) higher income before taxes at our operating subsidiaries outside the U.S. and higher income tax rates in Europe following the adoption of the minimum effective tax rate of 15% on January 1, 2024; (2) higher income before income taxes subject to U.S. income tax at IBG, Inc.; and (3) IBG, Inc.’s higher average ownership percentage of IBG LLC, which rose from 25.2% in the prior-year quarter to 25.7% in the current quarter.
Current wording
Income tax expense, for the current quarter, increased $20 million, or 28%, compared to the prior-year quarter, to $91 million, primarily due to (1) higher income before taxes at our operating subsidiaries outside the U.S. and a higher income tax rate in a foreign jurisdiction following the adoption of the minimum effective tax rate of 15% on January 1, 2025; (2) higher income before income taxes subject to U.S. income tax at IBG, Inc.; and (3) IBG, Inc.’s higher average ownership percentage of IBG LLC, which rose from 25.4% in the prior-year quarter to 25.8% in the current quarter.
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Previous report — wording carried elsewhere
Other fees and services, for the current nine-month period, increased $57 million, or 40%, compared to the prior-year nine-month period, to $199 million, driven by a $40 million increase in risk exposure fees as customers exhibited more risk-on behavior, a $9 million increase in payments for order flow from exchange-mandated programs driven by higher customer trading volumes, and a $7 million increase in FDIC sweep fees due to higher customer balances and benchmark interest rates.
Previous report — wording carried elsewhere
Net interest income on customer balances, for the current nine-month period, increased $357 million, compared to the prior-year nine-month period, driven by a $10.5 billion increase in average customer margin loans, a $7.1 billion increase in average customer credit balances, and an increase in the average federal funds effective rate to 5.31% from 4.92% in the prior-year nine-month period. See the “Business Environment” section above in this Item 2 for a further discussion about the change in interest rates in the current quarter.
Previous report — wording carried elsewhere
The Company measures return on interest-earning assets using net interest margin (“NIM”). NIM is computed by dividing the annualized net interest income by the average interest-earning assets for the period. Interest-earning assets consist of cash and securities segregated for regulatory purposes (including U.S. government securities andsecurities purchased under agreements to resell), customer margin loans, securities borrowed, other interest-earning assets (solely firm assets) and customer cash balances swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. Interest-bearing liabilities consist of customer credit balances, securities loaned, and other interest-bearing liabilities.
Previous report — wording carried elsewhere
Yields are generally a reflection of benchmark interest rates in each currency in which the Company and its customers hold cash balances. Because a meaningful portion of customer cash and margin loans are denominated in currencies other than the U.S. dollar, changes in U.S. benchmark interest rates do not impact the total amount of segregated cash and securities, customer margin loans and customer credit balances. Furthermore, because interest, when benchmark rates are at sufficiently high levels, is paid only on eligible cash credit balances (i.e., balances over $10 thousand or equivalent, in securities accounts with over $100 thousand in equity, and in smaller accounts at reduced rates), changes in benchmark interest rates are not passed through to the total amount of customer credit balances. Finally, the Company’s policies with respect to currencies with near zero or negative interest rates impact the overall yields on segregated cash and customer credit balances as effective interest rates in those currencies move above or below zero.
Previous report — wording carried elsewhere
We earn income on securities loaned and borrowed to support customer long and short stock holdings in margin accounts.
Previous report — wording carried elsewhere
A securities lending transaction generates (1) net interest earned on lending a security, which is based on supply and demand for that security, and (2) interest earned on the cash collateral deposited for the loan of that security, which is based on benchmark interest rates. Interest on this collateral is reported as net interest on segregated cash, since cash collateral from securities lending is held in specially-designated bank accounts for the benefit of customers, in accordance with U.S. customer protection rules. Generally, as benchmark interest rates rise, while the overall revenue generated from a securities lending transaction may not change, the portion derived from interest earned on the cash collateral, which is classified as net interest income on “Segregated cash and securities, net” increases, while the portion classified as “Securities borrowed and loaned, net” decreases.
Previous report — wording carried elsewhere
In the current nine-month period, average securities borrowed balances increased 9%, to $5.8 billion, and average securities loaned balances increased 41%, to $13.2 billion, compared to the prior-year nine-month period. Net interest earned from securities lending is affected by the level of demand for securities positions held by our customers that investors are looking to sell short. During the current nine-month period, net interest earned from securities lending transactions decreased $166 million, or 71%, compared to the prior-year nine-month period, driven by lower demand for selling stocks short, as the stock market rose steadily in the current nine-month period, and fewer so-called “hard to borrow” stocks industry wide. As noted above, the rise in benchmark interest rates has shifted a portion of the interest reported as generated by lending securities to interest income on segregated cash (see further explanation above). It should be noted that securities lending transactions entered into to support customer activity may produce interest income (expense) that is offset by interest expense (income) related to customer balances.
Previous report — wording carried elsewhere
We estimate that if the interest earned and paid on cash collateral related to our securities lending transactions were included under “Securities borrowed and loaned, net” in the table below, the total net interest income related to our securities lending activities would have been $517 million in the current nine-month period, compared to $561 million in the prior-year nine-month period. Such additional interest attributed to our securities lending activities would be reclassified from net interest income on “Segregated cash and securities, net” and “Customer credit balances, net” in the table below, so it would have no effect on our overall net interest income or net interest margin.
Previous report — wording carried elsewhere
Our Stock Yield Enhancement Program provides an opportunity for customers with fully-paid stock to allow us to lend it out. We pay customers a rebate on the cash collateral generally equal to 50% of a market-based rate for lending the shares. We place cash and/or U.S. Treasury securities as collateral securing the loans in the customer’s account, which is held in segregated accounts or at an affiliate acting as collateral agent for the benefit of our customer.
Previous report — wording carried elsewhere
The table below presents net interest income information corresponding to interest-earning assets and interest-bearing liabilities for the periods indicated.
Previous report — wording carried elsewhere
(1)Represents the average amount of customer cash swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. This item is not recorded in the Company'scondensed consolidated statements of financial condition. Income derived from program deposits is reported in other net interest income in the table above.
Previous report — wording carried elsewhere
(2)Interest income and interest expense on customer margin loans and customer credit balances, respectively, are calculated on daily cash balances within each customer’s account on a net basis, which may result in an offset of balances across multiple account segments (e.g., between securities and commodities segments).
Previous report — wording carried elsewhere
(3)Includes income from financial instruments that has the same characteristics as interest, but is reported in other fees and services and other income in the Company’s condensed consolidated statements of comprehensive income. For the nine months ended September 30, 2024 and 2023, $20 million and $14 million were reported in other fees and services, respectively, and $32 and $3 million were reported in other income, respectively.
Previous report — wording carried elsewhere
Execution, clearing and distribution fees, for the current nine-month period, increased $46 million, or 16%, compared to the prior-year nine-month period, to $332 million, mainly driven by a $23 million increase in SEC regulatory fees due to an increase in the SEC fee rate effective May 22, 2024 and higher customer trading volumes. SEC fees, as with other regulatory fees, are passed through to customers. As a percentage of total net revenues, execution, clearing and distribution fees were 9% for both the current nine-month period and the prior-year nine-month period.
Previous report — wording carried elsewhere
We pay U.S. federal, state and local income taxes on our taxable income, which is proportional to the percentage we own of IBG LLC. Also, our operating subsidiaries are subject to income tax in the respective jurisdictions in which they operate.
Previous report — wording carried elsewhere
Income tax expense, for the current nine-month period, increased $37 million, or 21%, compared to the prior-year nine-month period, to $217 million, primarily due to (1) higher income before taxes at our operating subsidiaries outside the U.S. and higher income tax rates in Europe following the adoption of the minimum effective tax rate of 15% on January 1, 2024; and (2) higher income before income taxes subject to U.S. income tax at IBG, Inc., additionally increased by IBG, Inc.’s higher average ownership percentage of IBG LLC, which rose from 24.8% in the prior-year nine-month period to 25.6% in the current nine-month period.
Previous report — wording carried elsewhere
The table below presents information about our income tax expense for the periods indicated.