IBG, Inc.(IBKR) - 2023 Q4 - Annual Report

Customer Base and Global Reach - Company has 2.6 million institutional and individual brokerage customers as of 2023[19] - Company executed trades in 34 countries and 27 currencies across 150+ electronic exchanges and market centers[18] - The company currently services approximately 2.56 million cleared customer accounts, with customers residing in over 200 countries and territories worldwide[81] - Interactive Brokers Group, Inc. (IBG, Inc.) operates as an automated global electronic broker, servicing accounts for hedge and mutual funds, ETFs, registered investment advisors, and individual investors across 34 countries and 27 currencies[8] - The company serves approximately 2.6 million institutional and individual brokerage customers globally[19] Stock and Membership Interests - Company issued 40,111,445 shares of common stock (valued at $1.9 billion) to Holdings in exchange for IBG LLC membership interests from 2011 to 2023[17] - Company owns approximately 25.4% of IBG LLC membership interests, with the remaining 74.6% held by Holdings[15] - IBG, Inc. owns approximately 25.4% of the membership interests of IBG LLC, the holding company for its businesses, with the remaining 74.6% held by IBG Holdings LLC[14][15] - From 2011 through 2023, the company issued 40,111,445 shares of common stock (valued at $1.9 billion) to Holdings in exchange for IBG LLC membership interests[17] Employee and Workforce - Company employs 2,932 employees worldwide as of December 31, 2023[8] - As of December 31, 2023, the company had 2,932 employees across 27 global locations[82] - As of December 31, 2023, the company had 2,932 employees worldwide[8] Trading Platforms and Services - Company's IBKR Pro service offers low-cost access to stocks, options, futures, forex, bonds, mutual funds, ETFs, precious metals, and cryptocurrencies[21] - Company's IBKR GlobalTrader app allows trading of stocks, ETFs, options, and cryptocurrencies across 90+ exchanges and 30+ market centers[20] - IBKR Lite offers unlimited commission-free trades on U.S. exchange-listed stocks and ETFs with no required account minimums or platform fees[23] - IBKR Universal Account allows transactions in 27 currencies across 150 electronic exchanges in 34 countries[23] - Interactive Brokers offers trading platforms including IBKR Trader Workstation (TWS), IBKR Mobile, IBKR Client Portal, IBKR GlobalTrader, and IBKR APIs[19][20][21] - The IBKR Universal Account allows customers to transact in 27 currencies across 150+ electronic exchanges and market centers in 34 countries[23] Technology and Execution - Company's proprietary technology enables high-speed trade execution at low commission rates[19] - Company's IBKR APIs allow customers to build custom trading applications and automate trading processes[21] - The company's proprietary technology enables customers to trade on more than 150 electronic exchanges and market centers across 34 countries[57] - The company's IB SmartRouting system continuously evaluates market conditions and dynamically re-routes orders to achieve optimal execution, increasing the likelihood of best possible executions for customers[78] - The company's proprietary technology infrastructure supports trading across all types of securities, futures, and currencies globally from a single account[59] - The company's software development cycle is rapid, leveraging a highly integrated, object-oriented development environment with modular and reusable code[64] - The company's IB SmartRouting system continuously evaluates fast-changing market conditions and dynamically re-routes orders to achieve optimal execution, increasing the possibility of best possible executions for customers[78] - The company's fully integrated trading and risk management systems transact across all product classes and can assimilate new trading venues and product classes without compromising transaction speed or fault tolerance[62] - The company's software development cycle is rapid due to a highly integrated, object-oriented development environment, with new software releases tracked and tested using proprietary automated testing tools[64] Risk Management and Compliance - The company's risk management systems calculate margin requirements in real-time across all product classes and currencies, automatically liquidating positions if equity falls below margin requirements[67] - The company's automated clearing system captures trades in real-time and performs automated reconciliation, corporate action processing, and inventory management[73] - The company's market making system continuously evaluates securities and futures products, adjusting bids and offers to maintain a low-risk profile[74] - The company's risk management systems calculate margin requirements for each customer on a real-time basis across all product classes and currencies, automatically liquidating positions if equity falls below margin requirements[67] - The company's risk management policies are implemented by a Steering Committee chaired by the CEO, utilizing fully integrated computer systems to perform critical risk-management activities in real-time[66] - The company's operational risk controls are automated, including real-time credit manager software that tests every customer order for sufficient equity and continuously updates margin requirements[73] - The company's clearing system captures trades in real-time and performs automated reconciliation of trades and positions, corporate action processing, and customer account transfer[73] - The company's market making system continuously evaluates securities and futures products, changing bids and offers to maintain an overall hedge and low-risk profile[74] - The company's accounting system operates with automated data feeds from clearing and banking systems, producing financial statements for all parts of the business every day by mid-day on the day following trade date[74] Financial Products and Services - Insured Bank Deposit Sweep Program provides up to $2,750,000 in combined FDIC and SIPC insurance coverage[25] - Mutual Fund Marketplace offers access to over 48,000 mutual funds, including 19,000 no-transaction-fee funds[26] - Customers can trade Bitcoin, Ethereum, Litecoin, and Bitcoin Cash through Paxos Trust Company or Zero Hash LLC[27] - Fractional Trading allows investments in U.S. shares with as little as $1.00[28] - Overnight Trading Hours enable trading of over 10,000 U.S. stocks and ETFs nearly 24 hours a day[32] - The Insured Bank Deposit Sweep Program provides eligible customers with up to $2,750,000 in combined FDIC and SIPC insurance coverage[25] - Customers can trade cryptocurrencies like Bitcoin, Ethereum, Litecoin, and Bitcoin Cash through third-party providers or directly in Hong Kong[27] - Fractional Trading allows customers to invest in U.S. shares with as little as $1.00 and European shares with no minimum[28] - Customers can trade U.S. Spot Gold with efficient pricing starting from one ounce and request physical delivery[31] - The no transaction fee program for ETFs reimburses commissions for shares held for at least 30 days[31] - Overnight trading allows customers to trade over 10,000 U.S. stocks and ETFs nearly 24 hours a day, five days a week[32] - IBKR Pro customers benefit from advanced order routing technology, achieving among the lowest execution and commission costs in the industry[33] - Real-time margin calculations and automated liquidation protect customers from excessive losses[34] - The Stock Yield Enhancement Program allows customers to lend fully-paid stock shares and earn interest on collateral, generally equal to 50% of a market-based rate[36] - The IBKR Refer a Friend Program offers a $200 flat fee for referring customers and up to $1,000 in IBKR stock for new customers[39] Investment Tools and Analytics - IBKR GlobalAnalyst tool helps investors diversify portfolios and discover undervalued companies across 31 currencies[40] - IMPACT by Interactive Brokers allows customers to align investments with 13 impact values and principles[47] - ESG Scores from Refinitiv provide tools for investment decisions based on environmental, social, and governance factors[49] - The IBKR GlobalAnalyst tool helps investors diversify portfolios and discover undervalued companies across 31 currencies[40] - The IMPACT App allows customers to align investments with personal values and offset carbon emissions[47] Employee Programs and Initiatives - The company implemented a global mental health program in 2023, including peer-to-peer and one-on-one sessions, and launched a global Steps Challenge to promote employee fitness[84] - Over 175 leaders completed the New Manager Development Program in 2023, focusing on coaching, feedback, and performance management[87] Environmental and Regulatory Compliance - The company completed its baseline Greenhouse Gas (GHG) assessment in 2023, with renewable energy certificates covering over 95% of its operational footprint[90] - The company's Compliance department has implemented automated systems for trade reporting, anti-money laundering surveillance, and customer account approvals, supported by experienced staff[105] - The company's subsidiaries are subject to stringent AML and "Know Your Customer" obligations under the USA Patriot Act and other regulatory frameworks[108] - Established comprehensive AML and customer identification procedures, with designated AML Compliance Officers for each electronic brokerage subsidiary[109] - Conducts AML screening using a mix of automated and manual reviews to comply with regulations in various jurisdictions[109] - Maintains a robust system for supervisory review of controls over financial reporting under the Dodd-Frank Wall Street Reform and Consumer Protection Act[110] - Developed business continuity plans with backup capabilities for key operations in North America, Europe, and Asia[111] - Enhanced technical infrastructure and remote access capabilities due to the COVID-19 pandemic, allowing most employees to work remotely[111] - International subsidiaries are subject to extensive regulation in various jurisdictions, including Canada, the U.K., Ireland, Switzerland, Hungary, India, Hong Kong, Japan, Singapore, and Australia[112] Financial and Capital Management - As of December 31, 2023, the company's aggregate excess regulatory capital for all operating subsidiaries was $10.2 billion[100] - IB LLC's excess regulatory capital as of December 31, 2023, was $6.496 billion, with a total capital/eligible equity of $7.319 billion[103] Leadership and Management - Thomas Peterffy, founder, has been at the forefront of applying computer technology to automate trading and brokerage functions since 1965[115] - Milan Galik, CEO since October 2019, joined the company in 1990 as a software developer and has served as President since October 2014[117] - Paul J. Brody, CFO since November 2006, has served as CFO of IBG LLC since December 2003[118] - Thomas A. Frank, Executive Vice President and Chief Information Officer since July 1999, joined the company in 1985[119] Additional Services and Programs - The company's Interactive Advisors platform offers Smart Beta Portfolios, combining active fund stock selection techniques with passive ETFs for broad market exposure and potentially higher returns[54] - The company's Streamlined Client Service Program simplifies processes for brokers and advisors, including account updates, trading permissions, and electronic communications[54]