S&P revises outlook on IBG LLC and Interactive Brokers LLC

Maria Nikolova

S&P revised the outlook to stable from positive due to uncertainty over the length and severity of COVID-19-related market and economic stress which raises the potential for losses.

S&P Global Ratings on Monday revised the outlook on IBG LLC and its subsidiary Interactive Brokers LLC to stable from positive. At the same time, it affirmed its ‘BBB’ issuer credit rating on IBG LLC and its ‘BBB+’ long-term and ‘A-2’ short-term issuer credit ratings on Interactive Brokers LLC.

S&P explains that it revised the outlook to stable from positive to reflect that although it expects IBG to remain highly profitable and capitalized, uncertainty over the length and severity of COVID-19-related market and economic stress raises the potential for losses, to the extent that S&P is unlikely to raise its ratings on IBG until the COVID-19 threat has receded.

S&P notes that while the firm’s brokerage has been the leader in daily average revenue trades, it is substantially smaller than its main retail peers in terms of total client assets, with $179.8 billion as of April 30, 2020.

The stable outlook reflects our expectation that IBG will maintain very strong capitalization and supportive profitability and liquidity in the face of S&P’s latest COVID-19-related market and economic stress assumptions. S&P expects the firm will maintain its RAC ratio well above 25%, gross stable funding ratio in excess of 110%, and a liquidity coverage metric above 90%.

Let’s recall that Interactive Brokers Group posted diluted earnings per share of $0.60 for the first quarter of 2020, down from $0.64 registered in the corresponding period in 2019, and adjusted diluted earnings per share of $0.69 for this quarter compared to $0.55 for the same period in 2019.

Net revenues for the first quarter of 2020 amounted to $532 million and income before income taxes was $308 million this quarter, compared to net revenues of $558 million and income before income taxes of $339 million for the same period in 2019.

Commission revenue increased $96 million, or 55%, from the year-ago quarter on the back of higher customer trading volume in an environment of high market volatility resulting from the COVID-19 pandemic.

Total equity was $8.1 billion.

Read this next

Executive Moves

Lirunex Limited recruits Waleed Salah as head of MENA sales

Maldives-based brokerage firm Lirunex Limited has secured the services of Waleed Salah, who joined the company in the role of its head of sales for the MENA region.

Executive Moves

Trading 212 parts ways with co-founder Borislav Nedialkov

Trading 212 has a void to fill at its FCA-regulated business in London, following the departure of two key players, Raj Somal and Borislav Nedialkov.

Digital Assets

Binance acquires troubled crypto exchange GOPAX

Binance, the world’s largest digital asset trading platform, has reportedly acquired a majority stake in the troubled South Korea-based cryptocurrency exchange GOPAX.

Digital Assets

Kraken exits Middle East, closes UAE office

Digital currency exchange Kraken will close down its operations in Abu Dhabi, UAE and lay off the majority of its team focused on the Middle East and North Africa.

Industry News

CFTC comments on ION Cleared Derivatives issues after Russian-linked hack

“The ongoing issue is impacting some clearing members’ ability to provide the CFTC with timely and accurate data. As this incident unfolded, it became clear that the submission of data that is required by registrants will be delayed until the trading issues are resolved.”

Industry News

FCA took down 14 times more misleading ads in 2022 thanks to technology

The FCA has made significant improvements to the digital tools it uses to find problem firms and misleading adverts. These improvements have enabled it to work through a much larger number of cases compared with 2021.

Executive Moves

HKEX appoints ex-Goldman Sachs Matthew Cheong to lead platform’s focus on derivatives

“He has worked for a number of the world’s leading investment banks and his experience will be invaluable to HKEX as we continue to enhance our derivatives product offerings and build on our innovative and robust platform business, connecting capital with opportunities.”

Digital Assets

Zodia Custody and SBI Digital Asset Holdings launch JV for crypto asset custodian in Japan

“Zodia Custody is both proud and excited to be working with SBI DAH to help set up SBI Zodia Custody; the first tier 1 crypto asset custodian for institutions in Japan.”

Digital Assets

Paxos opens R&D center in Israel to focus on transaction signing and crypto custody security

“Paxos is looking to expand its team in Israel in 2023 and beyond, giving engineers the opportunity to work on cutting-edge financial products and shape the future of the global economy.”