Interactive Brokers' third-quarter 2014 adjusted earnings missed
the Zacks Consensus Estimate. Results were adversely affected by
significant trading losses in the Market Making segment and higher
operating expenses. However, strong performance of the Electronic
Brokerage segment along with improvement in daily average revenue
trades (DARTs) acted as the positive factors. The company is well
positioned for future growth given its better-than-peer
positioning, adoption of technology, spreading of the equity
culture and optimization of resource allocation on global
electronic networks. Also, the company's healthy capital base and
liquid balance sheet will facilitate expansion going forward.
However, the increasing competitive environment and Market Making
segment's high sensitivity to fluctuating volatility are bound to
weigh on its performance in the near term.
Headquartered in Greenwich, CT, Interactive Brokers Group Inc.
operates as an automated global electronic market maker and broker
with 937 employees worldwide as of Sep 30, 2014. The company
specializes in routing orders, besides executing and processing
trades in securities, futures, foreign exchange instruments, bonds
and mutual funds on more than 100 electronic exchanges and trading
venues worldwide. Incorporated in 1977, the company operates
through two principal business segments:
Market Making: The company operates the Market Making business
through its Timber Hill subsidiaries. Interactive Brokers provides
continuous bid and offers quotations on over 985,000 tradable
securities and futures related products listed on electronic
exchanges worldwide. The company is a market leader in
exchange-traded equity options and equity-index options and
futures, accounting for approximately 9.0% of equity options traded
Electronic Brokerage: As an electronic broker, the company
executes, clears and settles trades globally for both institutional
and individual customers. From a single account in any major
currency, the customers can access products traded on more than 100
exchanges and market centers across 24 countries and in 21
The two business segments are complementary and benefit from
knowledge and technological synergies as well as from the combined
scale and volume. This enables the company to provide low-cost
services to its customers.
On May 3, 2007, Interactive Brokers priced its initial public
offering (IPO) of the common stock. Prior to the IPO, the company
had conducted its business through a limited liability company
(LLC) structure. In connection with the IPO, the company purchased
10.0% of the membership interest in IBG LLC. As of Sep 30, 2014,
Interactive Brokers' primary assets are its ownership of
approximately 14.1% of the membership interests of IBG LLC. The
remaining 85.9% of the membership interests are held by IBG
Periodically, Interactive Brokers involves itself in strategic
investments and acquisitions. The company has made strategic
investments in electronic trading exchanges including Boston
Options Exchange LLC, OneChicago LLC, ISE Stock Exchange LLC and
CBOE Stock Exchange LLC. Interactive Brokers has also made
investments in Quadriserv Inc., an electronic securities lending
platform provider and Factor Advisors, LLC, an Exchange Traded
Funds (ETF) issuer. The company acquired FutureTrade Technologies
LLC a technology solutions provider to hedge funds and other
institutional investors and its wholly owned subsidiary,
FutureTrade Securities LLC.
As of Sep 30, 2014, Interactive Brokers had $41.6 billion in
total assets, $16.3 billion in cash and cash equivalents (including
segregated cash and securities of $15.3 billion) and $750.8 million
in stockholders' equity.
Interactive Brokers Group, Inc. (IBKR): Read the
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