Interactive Brokers 4Q2023 report shows how big options trading has become

Rick Steves

Not only options trading volumes are way up. Execution, clearing, and distribution fees expenses on account of options trading are up as well, naturally.

Interactive Brokers Group, Inc. has disclosed its impressive financial results for the quarter ending December 31, 2023.

The reported diluted earnings per share (EPS) for the quarter stood at $1.48, with adjusted EPS slightly higher at $1.52. In comparison to the year-ago quarter, this marks an increase from $1.31 in reported diluted EPS and $1.30 in adjusted EPS.

Net revenues for the current quarter reached $1,139 million, and when adjusted, they amounted to $1,149 million. This indicates substantial growth compared to the year-ago quarter, where reported net revenues were $976 million and adjusted net revenues were $958 million.

Options up 21%, futures up 4%, stocks down by 22%

Commission revenue experienced a 5% surge, reaching $348 million. Notably, customer trading volume showed mixed results, with options and futures contract volumes up 21% and 4%, respectively, while stock share volume declined by 22%.

Net interest income demonstrated a robust 29% increase, reaching $730 million. This growth is attributed to higher benchmark interest rates, increased customer margin loans, and customer credit balances.

Other income experienced a decrease of $31 million, settling at $6 million. This reduction was mainly influenced by a $20 million impact related to the currency diversification strategy and an $8 million effect linked to the investment in Tiger Brokers.

Execution, clearing, and distribution fees expenses rose by 11% to $100 million, primarily driven by increased customer trading volume in options and futures.

The pretax profit margin for the current quarter stood at 72%, both as reported and as adjusted. In comparison, the reported pretax margin for the year-ago quarter was 71%, with an adjusted margin of 70%. The company’s total equity is reported at a robust $14.1 billion.

Business Highlights:

  • Customer accounts witnessed a remarkable 23% increase, reaching 2.56 million.
  • Customer equity showed substantial growth, increasing by 39% to $426.0 billion.
  • Total DARTs (Daily Average Revenue Trades) increased by 2% to 1.93 million, with cleared DARTs also rising by 2% to 1.73 million.
  • Customer credits increased by 10% to $104.5 billion, while customer margin loans saw a significant uptick of 14%, reaching $44.4 billion.

As part of their currency diversification strategy, the company bases their net worth in GLOBALs, a basket of 10 major currencies. In this quarter, the strategy positively impacted comprehensive earnings by $139 million, as the U.S. dollar value of the GLOBAL increased by approximately 1.05%.

The effects of the currency diversification strategy are reported as components of Other Income (a loss of $9 million) and Other Comprehensive Income (a gain of $148 million).

At FinanceFeeds, our dedicated coverage has meticulously documented the evolving landscape of options trading over the years. This encompasses not only the unveiling of innovative products but also the seamless integration of fintech solutions and the continuous refinement of brokerage offerings. Stay tuned for in-depth insights into the dynamic developments shaping the options trading sphere.

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