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Interactive Brokers CNBC junkies might recognize the ad: Central bank buildings sitting on top of piles of money continuously spitting out an endless supply as the voice asks you to consider its tight forex spreads and low margin rates. If the ad doesn’t strike a chord, you’re probably not Interactive Brokers’ target audience. For more than 30 years, Interactive Brokers’ founder, CEO and 90%-owner Thomas Peterffy has used cutting-edge technology and focused on strict risk-management to build a finely tuned market-making and brokerage machine. The company permits its customers the capability of trading from a single account stocks, options, currencies and derivatives on more than 100 venues worldwide. Global and multi-product access makes IB the first stop for the highly active professional traders that brokerage businesses covet most. With trades per account higher than most of its competitors its trading volumes compare to those of its biggest rivals. Click here to read more. |
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Thomas Peterffy - Innovator of derivative trading Tenacity and perseverance while he automated derivatives trading led the Hungarian-born Thomas Peterffy to earn the title of one of the most influential pioneers on Wall Street while creating a company with trading assets of $1.4 billion. From his humble beginning as a computer programmer and talented in mathematics, Peterffy was soon embraced as an advisor to German-born Mocatta Metals chief and legendary bullion trader, Henry Jarecki. He later stunned traders at the American Stock Exchange when he revealed the world’s first handheld computer used to calculate fair prices of options. Today Interactive Brokers headquartered in Greenwich, Connecticut is an 800-strong company worth in excess of $6 billion spearheaded by programmers and mathematicians and derives one-third of its business overseas outside of its Greenwich headquarters. Yet Mr. Peterffy insists there is still much work to do in the years ahead. His brokerage and market-making company differentiates itself by providing professional traders around-the-clock access to markets around the world. Click here to read more (Key words: Peterffy, Interactive Brokers). |
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Living on the margin, at a discount Wall Street’s lucrative margin-lending business is being shaken up by Interactive Brokers, which allows its customers large or small to take advantage of low margin rates typically reserved for institutions. The broker’s published tiered borrowing rates as low as 0.5% are, “way below the published rates of such large online brokers as Schwab, Fidelity and TD Ameritrade,” according to Barron’s Magazine. Customers at the brokerage firm have taken advantage of the ability to borrow up to 50% of the value of their portfolios at low borrowing costs. Through the 12-month period ending March 2010 Interactive Brokers’ customers had almost tripled their outstanding borrowing from the company to $4.4 billion at a time when overall industry margin balances had grown by 35% to $234 billion. Thanks to real-time portfolio margin regulations, customers under some circumstances can borrow more than 50% of the value of their holdings. Unlike several online brokers and because of its automated real-time credit management system, customers won’t have a three-day window to post additional collateral to their accounts if positions move against them. Margin borrowing is often favored by wealthy investors instead of personal loans or home-equity credit lines due to low rates of interest and frequently more favorable terms. An abundance of collateral can delay repayment indefinitely according to Barron’s. Other customers are posting collateral in order to buy high-dividend-paying stocks and ETFs to take advantage of the positive spread. Interactive Brokers has also highlighted its screening tool of more than 450 stocks paying dividends of 5% or more within the Wall Street Journal and Barron’s Magazine. Click here to read more. |
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Barron's Annual Online Broker Survey 2010 Interactive Brokers ranked highest in the Barron’s 2010 Annual Online Broker Survey for its international offering. Barron’s noted that IB still leads the pack in its cost-conscious access to global markets across five continents. The Survey also notes that IB customers enjoy quite a bit of price improvement -- a 31-cent advantage per 100 shares and 21-cent advantage per options contract -- compared with the industry average over the second half of 2009. Additions to its 2009 offering include Risk Management and Portfolio Analysis tools along with streaming news. Barron’s calls IB’s mobile applications offering streaming data “very usable” and refers to its educational efforts as wide-ranging and well-written. Click here to read more. |
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Alarming Decrease in NYSE Average Trade Size The average trade size on the NYSE continues to shrink according to a study by Mondo Visione. These days orders sent to the exchange average $6,400 compared to $19,400 five years ago. The average order size of 200 shares today compares to 1,600 shares 15 years ago with the likely culprit being the advent of high-frequency trading programs that generate trades in 100 or 200 lots. But for retail investors wanting to split trades into more manageable orders this can come at quite a cost if their broker charges on a per order basis rather than a per share basis. George Spritzer explains how investors might face commissions eight-times as high with many retail brokers compared to executing through Interactive Brokers. Mr. Spritzer says, “Suppose you want to acquire 4,000 shares of a closed-end fund using Fidelity, and submit 20 limit orders of 200 shares each in order to compete with the high frequency trading programs. The commission is $8 an order, or $160 total commission for the 20 orders which is quite costly. The same problem occurs if you use Ameritrade, Schwab, Scottrade or E-Trade. Interactive Brokers charges commissions on a per share basis (0.5 cents a share), so the 20 orders of 200 shares each would have a total cost of only $20.” Online brokers will be under competitive pressure to offer per-share commissions in the event that the trend towards smaller trade size continues. Failure to do so will leave high-frequency trading algorithms picking off trades entered by larger accounts forcing them to incur higher costs because they have to continually pay the full bid/ask spread to complete their orders successfully. It’s not just the outright commission that’s important to busy investors. They must consider a “flat” versus “per share” fee structure and in addition to the bid/ask spread, the average order size is playing an increasingly important role in determining overall trading costs. Click here to read more. |
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China Clears Stock Index Futures Trading In January 2010 China’s State Council approved short selling and margin trading in China’s stock market in a move that will usher in an exciting new era of stock index futures trading in mainland China. Although Chinese rules still exclude Wall Street names from its capital markets Time Weekly asked Steve Kelsey, Managing Director at Interactive Brokers Asia Pacific operations in Hong Kong, why IB was well-suited to help steer local markets through the launch of this new era. In an effort to prepare for an eventual connection with Chinese investors IB recently established a Shanghai office to enhance cooperation with several institutions. “IB has clients in more than 100 countries who are currently trading Hong Kong products,” said Mr. Kelsey, noting that IB’s presence permitted investors to access global markets. Many domestic brokers fail to provide clients with the ability or the opportunity to play globally and access the international markets. Having been the only electronic market maker in Hong Kong at the time Hang Seng futures were launched in 1997, Interactive Brokers gained valuable experience in providing access to associated and complex derivatives including index options and index futures options. Time Weekly (click here for English version transcript of the full article) |
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Essential Sipp Embraces IB Trading Technology A recently launched investment vehicle from Britain’s Sipp operator, Stadia Trustees, seeks to promote the ‘treating customers fairly initiative’ and offer access to cost-efficient electronic trading methods. Stadia has teamed up with online trading provider, Interactive Brokers, to offer its “Essential” Sipp investment product. Stadia Trustees director Tony Hales says, “Through our affiliation with Interactive Brokers, investors will have access to the best electronic trading software which will deliver real benefits and provide peace of mind that we can provide access to the best and most cost-efficient online trading.” For investors well-versed in exchange traded funds and direct-share dealing, investors can access low-cost dealing at £6 a trade. Click here to read more. |
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Margin Expands Regardless of Rate Barron’s asked the same group of brokerage firms it covers in its annual survey for a recent update on margin rates they charge their customers along with attitudes to trading on margin. The study found a “huge gap” in those costs facing investors, which “can make a big difference to an investor’s trading costs.” Interactive Brokers maintained its position as the least expensive trading venue for investors with its 1.63% funding rate regardless of whether the margin balance was $10,000 or $50,000 according to data collected by Barron’s. An investor carrying a $10,000 margin debt for a month would pay $13.58 at Interactive Brokers while the same-size trade at TD Ameritrade would cost $72.92 per month. The difference for a $50,000 balance would amount to $245 per month according to data compiled for the study. Andrew Wilkinson at Interactive Brokers attributes “some of the growth in margin use by our clients to the low financing costs available at IB,” noting an increase of 81% in margin use by customers of the broker. Click here to read more. |
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Futures and Options - Trading Across The Two Markets Remains Riddled in Complexities U.S. investors continue to face challenges of having different regulators in place to govern futures and options trading. Despite their complementary features, varying bankruptcy codes and customer protection rules mean trading of futures and options products has to be performed in separate accounts thus creating challenges for investors seeking to coordinate trading and hedging strategies. Agreement in 2007 between the NYSE, Nasdaq and CBOE approved 12 broker-dealers to offer portfolio-margin accounts permitting certain customers to benefit from cross margining, which considered offsetting trades within an account, which in turn lowered collateral requirements. Greenwich, Conn.-based Interactive Brokers has opened several thousand portfolio margin accounts. Its real-time system automatically institutes margin calls when collateral falls below a certain point, so it requires only the regulatory minimum except for some illiquid securities, according to Steve Sanders, senior vice president of product development. Click here to read more. |
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Interactive Brokers Review and Company Profile Interactive Brokers "Universal Account" is the thoroughbred of trading platforms allowing the user to trade in eighty markets around the world from one account – it’s the perfect trading platform for the professional or the committed amateur. Established in 1977 the company offers the most sophisticated trading platform technology for traders globally, both institutional and individual. Its trading platform gives direct access dealing to stock and bond markets, futures and currency exchanges. Interactive Brokers rates are the lowest around for thee professional trader and the trade implementation is instant and accurate. Certainly Interactive Brokers gets good feedback when reviewed online by their users. At EliteTrader.com IB has a 77% rating out of 348 votes. Click here to read more. |
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The Long and the Short of It Interactive Brokers is the latest company to announce a beta version of its iTWS trading application for the iPhone. Account holders can use iTWS to trade stocks, options, futures, futures options and warrants on over 80 global markets when they make use of the downloadable software available at the App Store on your iPhone. Click here to read more. |
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Brokers Enjoy a Productive Summer Having started to offer futures and options trading on the National Stock Exchange of India in the spring, Interactive Brokers recently launched stock trading for local as well as non-resident Indians. Minimum commissions for stock trading runs at 75 Indian rupees or about $1.55 before securities transaction costs, exchange charges, stamp duty and service tax. IB also rolled out its beta version of PortfolioAnalyst, allowing customers to slice and dice their portfolios and view over different time periods. “Essentially our plan is to create and give away for free the same functionality that is provided by third-party portfolio-management systems at a hefty price,” said Andrew Wilkinson at Interactive Brokers. Click here to read more. |
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Commodities: Best Inflation Hedges For investors concerned by the tidal wave of government money aimed at bailing out the economy and what implications that might have on rising prices, Forbes Magazine suggests investors look to commodity producing companies with a significant amount of overseas sales. Agricultural and industrial commodities have performed well in periods of rising prices, while also having the potential to act as a hedge against the dollar. If your broker doesn’t handle foreign stocks or charges high commissions to do so, consider Interactive Brokers which executes trades on more than 80 exchanges across North America, Europe and Asia. European stock commissions run at 0.1% where investors face the same spreads as locals since IB connects directly to each exchange. For currency conversions on trades below $50,000 IB charges $2.50. Click here to read more. |
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Interactive Brokers bets on brokerage model for growth Thomas Peterffy’s Interactive Brokers is making a strong and conscious effort to position itself as a broker and increase market share in the brokerage business. “We are pushing very hard on growing our brokerage business and have been advertising. Brokerage business is certainly growing much faster than market making business,” Peterffy told Reuters news. Within his brokerage business he said “our clientele is steadily increasing,” since the broker’s relatively less expensive system suits professional traders who need to minimize their transaction costs. Companies like Interactive Brokers, dependent on transaction revenue, have avoided many of the problems faced by other financial firms. The company intends to raise headcount by about 100 employees from its current 730 as it braces to take on more business. “We want to hire more software people, computer programmers and expand [our] sales force,” said Peterffy. He also noted the firm’s plans to expand its Asian presence, where it recently acquired a small brokerage firm in Japan, while it was also opening a Chinese office. Click here to read more. |
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Interactive Brokers plans Push Into International CFD Market Interactive Brokers Group CEO and founder, Thomas Peterffy said he was making plans to enter the fast-growing international market for contract-for-differences, or CFDs, sometime during the next few months. The move could be an important revenue driver for Interactive Brokers, which specializes in serving professional traders. Mr. Peterffy pointed to the U.K. and Autralia as potential entry points for its launch of the equity derivatives. ‘We are working on getting into the CFD market in a few months,’ Mr. Peterffy said. The CFD market has grown strongly on account of preferential tax treatment that undercuts the cost of trading equivalent futures contracts. The products are available in Germany, Switzerland, Italy, Singapore, Hong Kong, South Africa and New Zealand. CFD’s are contracts where buyers pay or receive from the seller a difference in a company share price over time, giving the holder the benefit but not ownership in the stock. While popular in company’s shares CFD’s are also traded on currencies and some commodity products. |
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Interactive Brokers Scores in TAG Study Transaction Audit Group, a third party analytics provider, awarded high marks to one of the world’s largest options brokers, Interactive Brokers, for both price improvement and speed of execution. The independent study looked at market orders below 10,000 shares where IB improved executions in the second half of 2007 by 0.35 cents per share better than the industry average. The broker also executed orders at six times the speed of the industry average at 0.9 seconds compared to the average of 5.6 seconds. Click here to
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Go East Futures Traders, Go East! By the time fund manager-turned-investment-biker Jimmy Rogers sold his New York apartment two years ago and moved to China, a growing number of American retail futures traders have joined his lead and found white hot investment opportunities awaiting them. Kelsey thinks that the launch of index futures on the Shanghai Futures Exchange will increase demand for equity index futures in the region. “While overseas investors will not be able to access this market immediately due to Chinese regulations, they can trade the Hang Seng China Enterprise Index futures (H share futures) listed in Hong Kong,” he says. This index tracks the major Chinese companies that are listed on HKEx. Click here to
read more. |
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Trader Monthly Magazine Ranks Interactive Brokers in Best Prime Broker
and Best
Equity Execution Awards Interactive Brokers has extended its reach into prime brokerage over the last year according to Steve Sanders, SVP of Marketing and Product Development. He notes that IB’s built a portfolio margin system described as “one of the only real-time options on the Street.” Interactive Brokers came a very close second to Goldman in the Best Execution (Equities) category in the 2007 awards. One voter noted IB’s “low cost and good fills” as rationale for siding with the broker. Another added: “Broad range of market interfaces seem to get the best possible price, whether buying or selling.” For the first half of 2007, an independent audit taken by TAG Audit found IB was able to achieve 14.85 percent price improvement on customers’ marketable option orders versus an industry average of 0.57 percent according to Sanders. Click here to
read more. |
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Interactive Brokers, one of the largest online options brokerages, added a real-time risk management platform as it boosts its portfolio analysis capabilities. Dubbed the IB Risk NavigatorSM traders can weigh the risk of their derivatives positions in real-time across all asset classes. According to chairman, Thomas Peterffy, the real-time component is valuable since the trader can view exposure immediately and can adjust the position accordingly. “What-if scenarios let the user hypothetically modify positions to see how changes in the portfolio will affect the risk summary,” he said. IB is offering the risk function for free, while similar analytics can cost up to $500,000 said Peterffy. Click here to read
more. |
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Having made a foray into the prime brokerage space in April of 2007, Interactive Brokers made a bigger push in November to service the needs of its hedge fund customers when it agreed to acquire one of only a handful of remaining independent direct-market-access providers, FutureTrade for an undisclosed sum. The agreement helps IB augment its prime brokerage services to hedge funds and other clients. FutureTrade brings a client base of 200 institutions and 40 software developers. SVP of marketing and product development, Steve Sanders notes, “Given our mission of providing our customers with the best technology at the lowest possible cost we felt the prime broker business was a natural extension of our current business.” Some of FutureTrade’s client base includes existing prime brokerage companies such as Bear Stearns and Credit Suisse, as well as companies who already deal with those prime brokers. According to FutureTrade’s president and chief executive, Murray Finebaum, the union should provide those customers with more prime broker service options. “Customers can continue to route to their current prime brokers, or they now have an alternative prime broker in IB that will provide a real-time portfolio margin system and low costs,” Sanders said. IB’s founder and CEO, Thomas Peterffy expects to integrate the FutureTrade platform with the IB platform within several months. Click here to read
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With just weeks remaining before Barron’s traditional annual review of electronic dealers, updates and improvements are popping up on many brokers’ websites. Among those featuring upgrades is Interactive Brokers, which has made serious strides in upgrading its offering in 2008. One cool new tool is the IB Risk NavigatorSM, which lets customers dissect their portfolio and determine value at risk, profit-and-loss potential as well as various Greek calculations. Clients can look at those risk measurements by underlying holdings as well as by industry and includes profit-and-loss graph and table showing how changes in the market affect individual positions as well as an entire portfolio. The IB Risk Navigator is both intriguing and free to customers. IB has also improved the look and feel of its Trader Work Station. The new Order Wizard categorizes order types and explains why a customer would use them. TWS now integrates over 40 such order types to include icebergs, basket trades and market-if-touched. Other new features include a revamp of the account window, which customers can now customize while the Contract and Securities Search feature is available from within the IB website and not just inside the platform. Overall the IB website has become easier to navigate. Such changes are exactly what Barron’s makes its awards for when the online review is published in the spring. Click here to read
more. |
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By STEVEN M. SEARS THOMAS PETERFFY, FOUNDER AND CHIEF executive of Interactive Brokers Group, is considered by many on Wall Street to be a genius trader. He is also recognized as a key architect of the equity derivatives industry, which is enjoying 30% annual growth rates. Yet, Peterffy and Interactive Brokers, whose pre-tax profit margin in the recently ended third quarter was almost 70%, are practically unknown to investors. Herein lies an opportunity for investors interested in an electronic brokerage and derivatives market-making firm that each day hosts more than 90,000 traders who execute more than 700,000 trades on 70 exchanges, in 24 countries, and in 13 currencies. "As we become better known as the preferred broker for financial professionals, our customer base and trading volume keeps on growing beyond growth in the market," said Peterffy, who has gone from rags to riches since emigrating from Communist-controlled Hungary in 1965. Peterffy will not offer earnings guidance for his company, but he unabashedly contends Interactive Brokers is taking business from competitors, and that no competitor has taken more accounts from Interactive Brokers than it from them. Account transfer records prove the point, and over five years Peterffy said his market making business has nearly doubled while the brokerage business has grown seven fold. Still, the stock price is not reflective of this success, though it has held up well this year. Year-to-date, the stock is flat, compared to a decline of 17% for the Dow Jones Investment Services sector. During the last three months, the stock has gained 5%. Some of the stock's stability is attributable to growing investor recognition that Interactive Brokers benefits from volatile trading. The company has two businesses: an online brokerage firm and a market-making firm in options trading. The online brokerage competes against companies like Charles Schwab, Fidelity Investments, Ameritrade and optionsXpress. Interactive Brokers is a tough competitor, especially for sought after professional traders who demand sophisticated analytical abilities and in return trade heavily. The company's other division is the market making firm, Timber Hill. The unit executes orders for its sister division and otherwise makes money maintaining fair and orderly markets in thousands of different options. In the third quarter, the market-making unit generated 74% of total revenue, compared to 18.2% for the brokerage business. When the markets behave violently, Interactive Brokers makes money because panicked investors generally trade more, and other market makers with less trading capital and less sophisticated pricing models tend to trade less. This means Interactive Brokers' market making unit, Timber Hill, trades with more orders at better prices. The risk to buying Interactive Brokers is that it is essentially a trading firm, albeit a very good one, and earnings can be volatile. Moreover, Peterffy still owns about 85% of the company and there are always concerns that shareholders would be diluted if such a big shareholder decides to sell more stock. The company's initial public offering was in May. If the economy enters a recession, the combination of marketing making and online brokerage businesses should give Interactive Brokers an edge against other brokerage and exchange stocks simply because of is business mixture and model. The true benefit Interactive Broker's offers investors -- and this is more nuanced than fundamental analysis of a stock -- is the business model. The company is built on a technology platform that generates operating leverage, which is rare among online brokerage firms because inevitably staffing at many firms grows to support the system. Consider this: during the recently-ended third quarter, Interactive Brokers third-quarter revenues rose 35% over the second quarter, yet expenses only increased 5.4%. That's operating leverage in action, and it's a magic elixir to corporations and for investors. If properly constituted, as at Interactive Brokers, operating leverage maximizes the benefits of increased revenues without significantly increasing expenses. High degrees of operating leverage are possible at Interactive Brokers because the business relies on a very sophisticated, large computer system that is operated by a small group of people. Consider that the firm's third quarter incremental margin was 94% on a quarter-over-quarter basis and 83% year-over-year as high trading volumes "literally fell to the bottom line," said Rich Repetto, a Sandler O'Neil analyst. Sandler's Repetto recently raised Interactive Brokers' 2007 and 2008 earnings estimates for the company to $1.58 and $1.63, up from $1.32 and $1.58, respectively. He also raised the price target by 21% to $34 from $28. In the recently ended third quarter, Interactive Brokers' net revenues totaled $445.1 million and income before income taxes was $307.9 million for the quarter, compared to net revenues of $339.8 million and income before income taxes of $220.1 million in the same year-ago period. "We believe a higher multiple is justified based on the significant operating leverage demonstrated in 3Q07," Repetto said. With Interactive Brokers, investors have a highly-profitable
business model with international reach. When the cloud
lifts on the financial
sector, the company should shine. Full Disclosure
• Sandler O'Neill was a manager of a securities offering for Interactive Brokers in the past 12 months, and has received investment banking compensation. |
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Having timed its entry to the prime brokerage business to coincide with the SEC’s official launch of portfolio margining accounts in April, Greenwich-based electronic broker announced the acquisition of FutureTrade Technologies along with FutureTrade Securities. Its client base of around 200 institutions includes hedge funds with an average account size of $200 million in assets under management. Thomas Peterffy, chairman and CEO at Interactive Brokers hopes to integrate both trading platforms within four-to-six months. “We expect to be able to provide Interactive Brokers’ routing and execution technology to FutureTrade customers, including our options executions,” said Peterffy. FutureTrade’s existing clients will soon be able to trade a far broader range of assets and markets than at present thanks to IB’s provision of direct electronic access to non-U.S. options markets, futures, forex and fixed income on more than 70 exchanges and trading venues around the world from a single account. Only 12 self-clearing broker-dealers were initially approved to open portfolio margining accounts in April. Interactive Brokers was one and of the 2,000 accounts opened through September 2007, IB had opened 1,300. FutureTrade does not provide prime brokerage services to its clients, some of which manage billions of dollars of assets according to Murray Finebaum, president and CEO at the company. The acquisition aims to provide clients integrated execution and clearing services attractive enough to switch over to IB for prime brokerage. “We do a number of things that are uniquely suited to hedge funds’ workflow in terms of capturing trades, downloading them to prime brokers, and marking positions to market in real time,” said Finebaum. “Interactive Brokers also does a number of those things, but we do it specifically for hedge funds.” Finebaum will help integrate the firms’ trading platforms and build the prime brokerage business. “The FutureTrade platform complements IB’s facilities and accordingly, when the two platforms are fully integrated, all facilities of both platforms will be available to all customers,” Peterffy said. Click here to read more. |
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Thirty years after he bought a set on the American Stock Exchange, Thomas Peterffy sold 40 million shares through an IPO in the 500-person firm he created. In that period the company has grown in stature and now executes 14 percent of the world’s equity option volume and 19 percent of U.S. option execution. The Timber Hill market-making arm was a pioneer in providing global market access, while Interactive’s brokerage arm, now fourteen years old, leveraged that infrastructure to both retail and institutions alike. Today the company offers clients direct market access and advanced trading tools to trade in more than 70 markets where they can trade options, equities, futures, forex, commodities and bonds – all from a single universal account. Interactive Broker’s in-house platform supports the execution and clearing of both market-maker and brokerage customer trades. The company has steadily advanced to allow different asset class trading for its growing customer base. The increase in the popularity of online trading around the globe and the increase in the desire to trade ever-more fashionable instruments has tailored the companies ambitions delivering superior technology and low trading costs to users wishing to trade crude oil futures to stocks and futures in the Pacific Rim. In this question-and-answer session John Hintze asks senior vice president of marketing at Interactive Brokers, Steven J. Sanders a wide-ranging variety of strategic questions to find out where customer trading and volume growth is taking place at the company. As Mr. Sanders explains, growth is occurring everywhere with a specific thrust in overseas business, futures markets and especially vigorous growth in customer interest in currency trading. Over the years the company has listened to the needs of its customer base and has furnished its superior trading technology with tools to make trading more efficient. Those range from the option trader, basket trader and spread trader, which allow customers to execute and view customized combination orders using the Smart Routing technology to find the most advantageous bid and ask for the customers’ orders. Click here to read more. |
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Interactive Brokers, the electronic brokerage company that built up a near 15 percent slice of options market-making around the globe each day, recently launched a further initiative to pass along exchange rebates to customers. Managing Director Steve Sanders notes that, "the options exchanges are experimenting with different pricing structures, and we want to pass through the costs, as well as the rebates, that are now being passed back to brokers." The move allows its clients to trade equity options at commissions between $0.15 and $0.70 cents plus exchange fees. In addition, Interactive Brokers promises to pass on to customers rebates and cost reductions where they exist as a result of qualifying trades. Thanks to initiatives by several options exchange regarding the “make
or take” model, the benefits from changes to this pricing structure
will be handed down to Interactive Broker’s clients through unbundling
of individual option prices. By employing quoting strategies that improves
exchange liquidity, traders can benefit from receiving rebates from the
exchange. Click here to read more. |
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One January morning in 2007, electrical engineering student, Brian Eckerly booted up his laptop before heading out of his apartment for college. For the next eight weeks it remained undisturbed as it received streaming quote data to a brokerage account containing $100,000. From time-to-time during that time, the computer would automatically transact trades in the account that Eckerly had himself programmed. By the end of the period that account was worth $394,190. Although the account contained only phantom money, Eckerly was taking part in Interactive Brokers second annual college trading Olympiad and walked away with a first-prize $100,000, the fruits of his programming success. For Interactive Brokers, the motivation is not financial. Rather the tech-savvy market-making and brokerage firm based in Greenwich, CT, is constantly hunting fresh talent from within the technology arena. “The old trading world required big, aggressive, street-smart folks – now it’s technology skills that count,” explained Steven J. Sanders, senior vice president at Interactive Brokers. “We just don’t ever get good technologists.” The $100,000 play-money is the end game for tech-students once they have built their own trading strategy, coded the software and implemented it to their trading account at the brokerage firm. Each student can trade whatever asset class they choose within this account, ranging from equities, options, currencies bonds and futures. Second place winner in 2007, Konstantinos Tsahas, a master’s degree candidate in Baruch’s program said the competition was like “an eight-week internship from your home.” For him that internship paid a handsome $6,250 per week. Thomas Peterffy, CEO and founder at Interactive Brokers is the industry’s leading proponent of electronic trading and has spent 30 years building his company. Today the company employs an army of software engineers and system administrators, whose aim is to continually improve the firm’s vast trading technology. With $400,000 at stake in prize money, it’s far from an inexpensive way to lure talent, but according to Sanders, “the contest works as a filter that gives us much more than a resume to look at.” The 2006 contest resulted in two programming hires. Sanders expects a bigger turnout each year after the 2007 contest attracted some 204 contestants who used C, C++, Java, Visual Basic and Excel scripts to submit their trading software. By communicating via an application program interface with Interactive Broker’s Trader Workstation software, the trading program was able to retrieve market data and execute trades in the same way that professional traders use the platform to trade complex algorithms. Brain Eckerly took his $100,000 prize money to his new job in Dallas, TX and intends to invest it, noting that this time around, real-money might require a more serious approach to his investment decisions. Click here to read more. |
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During the last decade or so changes to the regulatory environment have forced multiple-exchange listing of options and created a much more liquid arena for institutional investors to hedge portfolios. Some ten years ago around 80 percent of options trading stemmed from retail clients, while a recent industry study indicates more than half of all options trading comes from institutions and notably hedge funds. Add in the advent of rapid-fire electronic trading and investors’ ability to execute more complex options strategies without pushing market prices away from them and you have an ideal situation for explosive volume growth in what has become a key investing class. Options positions allow investors to manage the risk of owning stocks. Put options allow investors to equally offset such positions in the event portfolio managers need to hedge against a perceived adverse outcome. The number one use of options during this growth explosion has been for precisely this reason. Hedge funds are especially key users of the options market since they tend to trade both long and short positions simultaneously. Senior market analyst at Interactive Brokers Group, Andrew Wilkinson, notes the explosion in the popularity of index exchange traded funds. The options volume on these funds is enormous each day and clearly it’s skewed towards the put side. “Spreads are narrow, trading costs are down and trading volumes are through the roof. There is a tremendous amount of liquidity in options. These options are efficient hedging tools for long-only money managers to protect their portfolios from downside risk.” While other well known trades have boosted traded options volume, such as dividend capture and put-interest plays, one industry report from financial services consultant, the Aite Group, shows that volatility strategies are increasingly popular with hedge funds and other investors. Such trades tend to care less about the direction of the market in general and tend to play on a break from the prevailing range – either up or down. Traders can capitalize by banking on movements in options market volatility by positioning accordingly to take advantage. Investors have set aside increasing amounts of capital to play market volatility over the past three years as more traders aim to capitalize on the troughs and peaks of volatile trading. The introduction of portfolio margining for customers may also allow them to put more capital to work than under older margining rules. By careful use of hedging techniques, investors can offset some portfolio risk and use less capital at the same time under certain circumstances. This has encouraged investors to trade more with less of their wealth at risk. Click here to read more. |
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Having built a hugely successful brokerage company based upon easy automated access to trading venues, Interactive Brokers chairman Thomas Peterffy was adamant he wouldn’t sell shares to investors in the traditional Wall Street manner when he recently launched an IPO in stock at the company. Instead he chose to use the Dutch auction process to allocate shares efficiently allowing investors large and small to get in on the act. The Dutch auction process was popularized by Google founders when they floated part of the company. Dutch auctions aren’t so popular on Wall Street where powerful investment houses get to allocate shares at a price they set. During that process they have to satisfy the often conflicting interests of the company coming to the market, investors, clients and themselves. Meanwhile the Dutch auction process ensures that supply and demand is in balance from the outset. The initial rise in shares at Interactive Brokers could be said to confirm that the process it used to establish its share price is more efficient than that of the traditional Wall Street method. Click here to read more. |
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Options-trading specialist firm Interactive Brokers Group Inc. gained the spotlight recently as it raised $1.2 billion in its stock market debut – marking the richest IPO to-date for 2007, as movie theater chain AMC dropped its own IPO in the face of weak pricing pressures. Following a successful online auction for its shares, handled by W.R. Hambrecht, Interactive Brokers sold 40 million shares at $30.01. On its trading debut just over half of the shares traded in the open market with shares at one point rising 10 percent above the auction price. Interest in companies that provide market access has surged recently as cross-border consolidation sweeps the industry as technology replaces the outdated open-outcry system of trading. Click here to read more. |
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It may have taken 30 years for the world’s investment community to hear the message that Interactive Brokers founder and Chief Executive has been sending, but they heard it loud and clear when the company sold 10 percent of its shares in the largest IPO year-to-date. The IPO saw heavy demand when trading began as investors bid for almost four times as many shares than were available as the Greenwich, CT. brokerage company raised $1.2 billion. Interactive Brokers handles 20 percent of the trading volume in North America and offers customers the facility to trade equities, commodity, bonds and currencies all in the same account. The stock debuted with an initial 10 percent jump before settling with a near-5 percent gain at the end of its first day trading. Both options and electronic trading are hot topics these days. Options trading volumes are increasing rapidly with exchange volume at or near record levels. Germany’s Deutsche Boerse bid $2.8 billion for the International Securities Exchange recently while the NYSE Group and the Nasdaq exchanges also began options trading operations. In an interview with reporters immediately after Mr. Peterffy rang the Nasdaq opening bell at the company offices, he note the intense opposition there had been across the industry to adopt electronic trading. He compared the situation to that in pre-industrial England when laborers opposed the introduction of the loom, which became a key technological development in history. Shares in the company were offered via a Dutch auction process rather than the usual investment bank led sale. Mr. Peterffy noted that 80 percent of the successful bidders at the IPO were institutional buyers. He noted that the auction "gives everybody an equal chance to participate." Click here to read more. |
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E-Brokers: Separating The Wheat From The Chaff AAII surveyed its members and found that the most popular 10 brokerages
were used by nearly 90% of respondents. The top two brokerages in that survey
were Interactive Brokers and USAA Brokerage Services . Interactive was No.
1 for price of a trade, execution speed and the reliability of electronic
trades. Commissions at Interactive Brokers run a half a penny per share,
or 50 cents for a 100 share trade, and account minimums are $5,000. USAA
was No. 1 for overall satisfaction and No. 2 in price of a trade, execution
speed and reliability of electronic trades. Click here to read more. |
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Programmers rewrite traders' winning formulas The gradual disintegration of those mobs is one consequence of the rise of electronic trading. I think this will accelerate rapidly in the next bear market in risk, over which liquidity will increasingly be provided by a horde of small market makers, each with the computation and communications power of a mid-size brokerage in the last decade. While the pieces are largely in place for this in the equity markets, the next fat-margined oligopoly to fall will be that of the credit traders. For now, they're concentrated in the big banks, insulated from competition by the moat of counterparty risk. When credit trading is based on central clearing houses rather than dealer-customer trading lines, and every customer has to put up the same risk-adjusted collateral, then that business will also have to be shared with the small professional trader. ............................................... Which is why the
results from a recent trading competition run by Interactive Brokers,
LLC are so interesting. For eight weeks, from January 15 to March
9, the electronic brokerage ran a simulated trading competition, called
the Collegiate Trading Olympiad, open to university students, starting
with a
notional $100,000 (€75,000, £51,000) in capital for each
competitor. Click here to read more. |
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Interactive Brokers Runs Annual Olympiad Trading Program to Recruit Technologists for Electronic Trading Click here to read more. |
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In the 12th annual Barron’s Magazine online broker survey Interactive Brokers held its own earning the highest number of stars awarded to any of the participants. The company performed best in two categories. Interactive Brokers scored highest in the cost category earning 4.8 out of a maximum score of 5.0 thanks to its low-cost commissions. The company also ranked as the best trading venue for investors who want to trade internationally. “Today, it’s possible to buy Swiss stocks or sell Japanese shares from your desktop; you can also go long oil, short a silver contract, trade a butterfly on the S&P 500 or employ computer-generated algorithms to jump from stock-to-stock,” says Barron’s. Interactive Brokers swept aside other brokers with its international offerings, its array of futures products and low fees. Over the past 12 months the company has added access to Swedish, Japanese and Hong Kong stocks. It added floor-traded CME and CBOT futures, NYMEX physical energy futures and soft commodity futures along with CBOT electronic agricultural futures. The company has industry renowned proprietary technology that allows clients to trade options in penny increments. Recently a pilot scheme was launched to test the performance of 13 stocks whose options could be traded in pennies rather than nickels and dimes. Interactive Brokers allows its own customers to trade all equity offerings using penny pricing. Fees at Interactive Brokers are low as are fees charged on margined instruments. Barron’s calls these fees “the lowest among the brokers surveyed this year.” In addition the rates paid on cash are among the highest, which makes the software an obvious choice for the cost-conscious. It also has a new Web-based platform. Click here to read more. |
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Techniques accessible to hedge funds are becoming readily available, creating an unprecedented democratisation of investment management. What is less talked about is a set of developments in technology and regulations that is taking away the competitive edges the funds have. The techniques available to the hedge funds are becoming available to the investing public, or at least its more technically skilled members. This is part of a democratisation of financial management that will, sooner rather than later, cost the hedge fund community its claim on the 2 per cent fees and 20 per cent profit shares that it believes are its right. ........ Steve Sanders of Interactive Brokers LLC, says the proposed changes in portfolio margining rules are even more important to the democratisation of investment management. "If you were a hedge fund you could go to your prime broker and use techniques such as offshore accounts, or 'joint back offices' to get the benefit of 15-20 per cent margins," a big advantage over the 50 per cent rule that has applied to individuals. Click here to read more. |
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CBOE Recruits Banks, Brokers For October Launch Of C2 Interactive Brokers is one of a dozen firms recruited by the CBOE in its long-planned launch of a new all-electronic options exchange named C2 due to launch in October. The planned C2 platform aims to capture more business in heavily traded options contracts priced in penny increments, with a pricing model geared toward high-speed electronic traders. The CBOE hopes that C2 will ultimately house all options trading in one-cent increments making up 80% of overall volume. Click here to read more. |
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Here Come the Third-Party Apps. Online companies including Interactive Brokers are encouraging the development community to build applications linking directly to their trading platforms for investors wishing to automate investing decisions. Application Interface Programming (API) is hardly a new technology but has recently grown significantly as IT programmers find ways to develop tools that can be purchased, downloaded and plugged directly into the users brokerage account. The benefit is that a trading or investment decision can then automate a trade via the account directly onto an exchange without the customer having to ever lift a finger. Such API initiatives permit more flexibility over the look or functionality of broker platforms. Interactive Brokers has a list of third-party firms that utilize its Trader Workstation. Click here to read more. |
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More Brokers Join Price Cutting When a customer’s chat-room complaint landed on the desk of Interactive Brokers’ CEO Thomas Peterffy the result was a shake-up in the pricing menu offered to customers trading North American futures and futures options products. Savvy traders knowledgeable about details of the products they are trading can save money by choosing the broker’s unbundled plan. This plan strips out exchange and regulatory fees, which vary according to who trades where and when as well as the membership status of the trader. Interactive Brokers bundled futures pricing plan simply adds the basic transaction fee in with these exchange and regulatory fees to give a significantly reduced 85 cents per contract commission in comparison to a previously stated range of between $1.24 and $3.75 per contract, used during the Barron’s 2010 Online Broker review. The volume-tiered unbundled plan for those willing to compute fees on their own now ranges between 25 cents and 85 cents per contract. IB clients can trade equity, foreign exchange, fixed income, energy, metals and other commodities futures and futures options worldwide from a single account. Full details can be found here and click on the "US Exchanges" tab. Click here to read more. |
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Online investors are getting smarter Although mobile trading applications will never be able to replace a professional investor’s four or even six-screen trading workstation, they sure are handy for price alerts and setting stop-loss orders. In a world where investors are ever-reliant on information on the go, technologists have developed around 200,000 applications alone for Apple’s iPhone. It’s estimated that more than four billion applications have been downloaded globally so far. Many of Interactive Brokers Canadian active-trading community have already turned to the downloadable apps it makes available on its website for iPhone and Blackberry users enabling them to trade their account and keep abreast of market prices. With security being less of an issue now that smart phone technology providers have migrated to an industry-wide standard of encryption account holders don’t have to worry about someone cracking into their account. Click here to read more. |
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Interactive Brokers aims for Brazil debut in 2011 Famous for its cutting-edge technology platform, Interactive Brokers has spurned the notion of buying a Brazilian broker and has begun the process of establishing itself on the Bolsa Stock Exchange. Instead of buying a domestic brokerage, Interactive Brokers is discussing plans with regulators and aims to offer its trading platform as soon as the second quarter of 2011. Its Trader Workstation was awarded by Barron’s magazine as lowest cost online broker for five-years in a row. Typical of the company, its first brokerage customer will be its market-making owner and leading overseas business house Interactive Brokers Group LLC. The options-specialist aims to establish itself with a capital base of $50 million and offer its trading platform to professional and active traders who seek the benefits of electronic quotations and the addition of liquidity that the all-electronic broker brings. "Brazil is a strong country, with rising volumes. We believe our customers would like to trade on the Brazilian market and the Brazilians wanted to trade in other countries," said director of investor relations at Interactive Brokers, Deborah Liston. "Our target clients are professional investors," the director recalled. The business model, which prioritizes low cost brokerage, strengthens their vocation. "Those who trade high volumes, often benefits most from our platform." Interactive Brokers already claims 130 clients in Brazil who already make us of its trading platform from a single screen to transact on 80 exchanges in 19 countries and 16 currencies. Click here to read more. |
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Interactive Brokers Proves It Never Hurts To Ask Behold the power of Internet message boards: Interactive Brokers (IBKR) says it'll cut fees charged for trading US futures and options, after CEO Thomas Peterffy saw a post on IBKR's website from a customer wondering why brokerage's commissions for derivatives outpaced competitors. New fixed-rate plan charges 85c per contract, while volume-tiered plan ranges from 25c to 85c per contract based on monthly trading activity, plus exchange and regulatory fees. Click here to read more. |
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Shop Around Online During the recent decade Australia has evolved into a nation of active online investors, who tend to sacrifice possible cost advantages of doing business for the convenience of sticking with their banking or mortgage provider. In fact 80% of Australian investors do their online trades with the big three financial providers according to a recent Investment Trends research survey of 1400 individual investors. But the price of familiarity might be costing Australian investors a hefty slice when it comes to commissions paid to place a trade. CBA’s Commsec customers pay A$30.00 in commission while ANZ’s E*Trade charges A$32.50. And while some local discount providers might charge half of that amount, international discount broking powerhouse Interactive Brokers charges a mere A$6.00 for stock transactions. In addition to providing low-cost international access, Interactive Brokers also provides access to popular local CFD markets as well as derivative instruments and foreign currency trading. Click here to read more. |
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Trading Spaces Social networking has found a new avenue with investors embracing social media technology in order to make investment decisions. The phenomenon is catching on and could have the same revolutionary impact within the investing community as did the emergence of online brokerages during the 1990’s. Covestor is on online website that allows users to immediately replicate the trades made by proven professional traders. The system provides such checks as which exchange the security trades on, its liquidity and market capitalization. Covestor provides a revolutionary platform for mimicking professionals’ trades and splits the fee charged to the follower with the trader. Experienced investors can after a one year period apply to manage money through Covestor’s investment advisory arm. Subscribers can set up a brokerage account with any of numerous online discounters. However, Interactive Brokers, which specializes in serving professional investors, is the lowest cost provider by far, charging just $1.08 per trade—a fraction of the $8.95 charged by major discounters. Click here to read more. |
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The Best Way to Buy Stocks The Motley Fool advises online investors to keep an open mind when looking at broker rankings and notes that any listing is likely to be completely subjective. What’s good for one investor might not be appropriate for the next. Certain differences between brokers can be compared including speed of execution, account fees, margin rates and commissions. But in certain areas investors won’t necessarily agree on what comprises the best broker. The Fool cites the Barron’s 2010 Annual Broker Survey noting that the complexity of its trading software ensured Interactive Brokers software received a poor performance in this year’s survey. Based on personal use, the author states “… in terms of functionality, once you climb the learning curve, you may well end up liking it better than the offerings of other brokers. Click here to read more. |
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Stock Tax May Reduce Volume 90%, Interactive Brokers CEO Says U.S. stock market volume might slump by 90 percent if plans to adopt an equity transaction tax proposed by Iowa Senator Tom Harkin and Oregon Representative Peter DeFazio ever comes to fruition. "The mother of all creators of havoc on Wall Street is this looming transaction tax," said Thomas Peterffy, CEO and president of Greenwich, Connecticut based Interactive Brokers. "Trading volumes would plunge by about 90 percent, markets would become illiquid and tens of thousands of people would lose their jobs." DeFazio's proposal would put a tax of 0.25 percent on stock transactions and 0.02 percent on derivatives including futures, options, swaps and credit-default swaps. A transaction of 200 shares at $40 each would result in a $20 tax, compared with a commission of $1 for active traders at Interactive Brokers, Peterffy said. The bill's sponsors have "no understanding whatsoever" about its likely effect, Peterffy said. Click here to read more. |
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Has a New Price War Broken Out in Online Trading? Some onlookers pointed to Charles Schwab’s recent reduction in its online stock and mutual fund trading fees for signs of increasing price competition in the online brokerage industry. The move may have been aimed at bringing trading costs for clients with less than $1 million in household assets to the same level as those exceeding the threshold. Others see ongoing pressure on costs as a way to remain competitive and to avoid a loss of market share. Interactive Brokers SVP Steve Sanders believes that Schwab's new fees still make no sense for active traders or institutions. IB moved to a transparent unbundled-pricing structure a number of years ago whereby the firm explicitly charges (or rebates) exchange and clearing fees, and charges an IB fee based on monthly volume. "The more you trade the less you pay under IB's structure," Sanders says. He notes that IB's pricing for 100 shares is $1 or lower, and that the average trade size these days is 200-400 shares, even for institutions, as nobody likes to expose their trading intentions. Sanders says, "200 shares still costs $8.95 at Schwab, which is OK for the occasional investor, but not for the active trader." Click here to read more. |
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Futures Magazine Top 50 Futures Brokers Futures Magazine announced its 2009 list of top 50 brokers in December. Thomas Peterffy, chairman and CEO of Interactive Brokers, spoke to Futures Magazine to discuss the state of the industry in a year marked by a market crash ahead of a huge turnaround. “Futures regulations looked pretty good because it exempted all those contracts that caused the problem," Peterffy says, referring to the OTC derivatives that fulfilled Warren Buffett’s ominous description of "financial weapons of mass destruction." Interactive Brokers added moved higher by one place in this year’s brokerage ranking. Click here to read more. |
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Prime Broking Draws Smaller Players as Big Ones Rebuild Marquee named investment banks wounded by the losses incurred during the financial crisis are seeing the rise of smaller U.S. brokers who are keen to service prime brokerage needs of small and mid-sized hedge funds. A prime broker charges a fee for financing, trading and settlement of trades. Many large players in the field have curbed their enthusiasm for smaller clients leaving a void for lesser-known players. Brokers such as Interactive Brokers have been working on rolling out their prime brokerage offering. While larger prime brokers are choosy over who they will lend to for fears over losing capital, hedge funds are equally choosy when finding a partner: A collapsed broker means frozen accounts, closing difficult trades and repaying out to investors. Click here to read more. |
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Use the Global Dragnet to Cash in Trawling websites the world over from the U.S. to Asia might save consumers some cash but do they ever think to do the same when buying financial services products? When it comes to heavy fees customers may face for share transactions or unfavorable exchange rates, it could be beneficial to look global. Interactive Brokers offers trading on a wide variety of exchanges, including the main U.S. markets, as well as many European ones such as the London Stock Exchange and LIFFE, and Asian-Pacific exchanges. It charges just $0.005 per US stock, with a minimum of $1 per trade, or 0.1 per cent cent of the trade value (charging a minimum of €4) for continental European markets. A minimum account balance of $10,000 also applies. However, if you pay less than $30 in commissions a month, a monthly account fee of between $10-$20 will apply. Click here to read more. |
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How to Go about Investing in Asia In a recent survey Britain’s MoneyWeek found an investment appetite for Asian markets among its readers. But as it begins to educate an audience new to investing in the region, many readers ask how to invest in such faraway markets in this Internet age. Among popular companies in the U.K. is Interactive Brokers – a discount brokerage firm that has significantly brought down the cost of trading major overseas markets. Other domestic British full-service brokers cost investors far more. Click here to read more. |
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Foreign Stock Trading While several brokerage companies permit clients to trade foreign stocks and currencies, doing so can often involve going through a third-party broker, which can add extra fees and slow down the transaction. Interactive Brokers – a brokerage aimed at active and professional traders – already offers direct foreign trading in 18 markets and plans to add trading in Italian and Brazilian markets soon. Click here to read more. |
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Interactive Brokers FX Trader wins 2009 FOREXDS Highest Broker Satisfaction Trader’s Choice award for the Americas Market research and retail forex information portal, Forex Datasource named Interactive Brokers as Highest ranked for Broker Satisfaction for the Americas region in its inaugural FOREXDS Trader’s Choice Awards. Forex Datasource collected data from forex traders covering broker preferences over a one-year period and focused on categories such as satisfaction with trading platform and broker service. Interactive Brokers FX Trader platform was recognized as one of 12 forex brokers having achieved a top three ranking in at least one continent and Interactive Brokers collects the Highest Broker Satisfaction award in the Regional Broker category. Click here to read more. |
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Interactive Brokers Sees More Registered Reps Becoming Independent Advisors Electronic market-maker and broker, Interactive Brokers has witnessed an acceleration of the trend for Registered Representatives to become Investment Advisors. Registered Representatives with strong customer relationships are being put in a difficult position as many large brokers decide against maintaining smaller balance client accounts. Many of those representatives are taking the plunge and making the decision to go independent according to Interactive Brokers. Click here to read more. |
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Brokerages, Exchanges Tap Automated Stock Lending In true Interactive Brokers fashion, the company is helping to lead the way in diversifying into automated securities lending in order to bring increased efficiency and transparency to the stock loan market while significantly reducing risk. IB is one of the first in the industry to embrace a system to be offered by Automated Equity Finance Markets, the broker-dealer subsidiary of Quadriserv. The stock loan market has typically been plagued by a lack of transparency in transactions – a dangerous game to play following the collapse of Lehman Brothers and Bear Stearns – when the counterparty is occluded. However, Interactive Brokers’ SVP of marketing and product development, Steven Sanders opined that “the trick, of course, will be to get borrowing brokers to go along [because] the opaque nature of lending is more profitable than transparency.” Borrowing brokers will hopefully join the ranks of the AQS system given the outstanding creditworthiness of IB, which welcomes the transparency provided by the AQS electronic auction market for transactions and negotiated trading for stock loans. Click here to read more. |
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International Securities Exchange Leads Investment Round in Quadriserv Inc. Interactive Brokers Group joined the world’s largest equity options exchange, the International Securities Exchange and several other leading institutional investors in a substantial investment to support the AQS securities lending platform. AQS is operated by Automated Equity Finance Markets Inc., a wholly owned subsidiary of Quadriserv. “This investment, led by securities exchange innovators and market leaders, demonstrates critical and widespread industry support for Quadriserv’s mission of bringing transparency and efficiency to the securities lending market,” said Quadriserv’s CEO, Thomas Perna. AQS matches borrowers and lenders in an exchange-like platform using automated liquidity and price discovery mechanisms. Trade anonymity is ensured by the provision of central counterparty guarantees from the Options Clearing Corporation, which processes the trades. Click here to read more. |
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Hung up in Red Tape Some traders keen to exploit index and arbitrage strategies involving the Korean Exchange’s deeply liquid and actively traded KOSPI future have been hung up on finding access to many markets even after its recent CFTC approval. Many brokers have found it hard to access, needing a Korean broker to clear trades with investors needing to switch between dollars and Korean won another hurdle. Today the U.S. equity markets represent less than one-third of global market capitalization compared to around one half just a decade ago, which means that investment opportunities have ripened around the world. Some brokers find ways to provide access to foreign capital markets for their clients. As one example, Interactive Brokers bills itself as the “professional’s gateway to the world markets.” Founded by Wall Street icon Thomas Peterffy in 1977, the company has made electronic connectivity to world markets coupled with advanced options trading technology a cornerstone of its business. Interactive Brokers offers its customers a Universal Account in one of 16 currencies of their choosing, from which they can operate across global markets in more than 80 market centers. Click here to read more. |
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Discount U.S. Trading Firm Interactive Brokers Entering Japan Japan is the latest venue where U.S. based investment services company, Interactive Brokers has announced it will provide customers with real-time electronic access to invest in stocks, bonds, future, options and other financial vehicles. The company already provides electronic access to over 70 global financial markets. Its competitive edge lies in its low fees of 0.005 dollar or less per share for U.S. stocks and other instruments, some not made available by Japanese brokers. Its deep discount approach may prompt domestic brokers to offer reduced commissions. The firm hopes to expand its offering of listed options on the Tokyo Stock Exchange and Osaka Securities Exchange. Click here to read more. |
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Opening doors to Asia markets Interactive Brokers recently acquired Japanese Securities Company, Moriai Securities as it continues to push hard as it enters more Asian markets. Japanese financial institutions will be able to access IB’s dealing technology in early 2009 followed by retail clients at a later time. The company also received the green light to let its customers trade KOSPI 200 index futures recently when the US CFTC approved the product for trading by US investors. The KOSPI is one of Asia’s most liquid markets where an average of 24.5 million contracts traded in the first half of 2008. IB is the only broker we could find in our database that provides customers access to this particular contract. Click here to read more. |
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Gaming Recruitment US broker-dealer Interactive Brokers has adopted a novel way of raising interest in financial technology as it looks for fresh programming talent in its fourth annual College Trading Olympiad. Dealing With Technology sat down to discuss its preparations for the 2009 contest to learn how IB requires students to write trading algorithms that could put them on the company’s radar when they graduate in 2009. IB is hoping it will boost applications to more than the 327 entrants in 2008’s competition. Click here to read more. |
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Interactive Brokers pushes into Asia with direct Kospi link Continuing its push into Asia, Interactive Brokers now enables its US customers direct connectivity to the Korea Exchange’s highly liquid Kospi 200 index futures contract. "We’re looking to expand," said Steve Kelsey, managing director of Interactive Brokers in Hong Kong. "A lot of our competitors have some tick on their balance sheets. We're using this as an opportunity." According to Futures & Intelligence’s data the Kospi 200 index futures traded an average of 4.19m contracts this year, while options on the Kospi averaged 226.8m contracts so far in 2008, making the Kospi’s derivatives the world’s most actively traded. The move is another building block as its advance into Asian markets where the company renamed the Japanese securities company, Moriai Securities it recently purchased affording it a foothold in the country as the renamed interactive Brokers Japan. IB also began trading in Taiwanese instruments this year and seeks to open a Chinese office. Click here to read more. |
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Making a Case for Other Bailout Plans by Peter Applebome Now that Treasury secretary, Henry Paulson has changed plans on exactly how to spend the proceeds of the $700 billion rescue plan, he’s concluded that buying troubled mortgage assets won’t quite do the trick. His search for an alternative probably won’t lead him to Thomas Peterffy, who went from poor Hungarian migrant to online brokerage billionaire at Greenwich-based, Interactive Brokers. Mr. Peterffy provides perhaps the simplest solution when he proposes that the treasury pays mortgage holders $250 per month for five years to help pay meet their monthly payment. As he sees it, the value of mortgage-backed securities would rise thanks to borrowers’ sudden ability to pay. Housing and therefore banks would stabilize, while homeowners would have the incentive and means to keep paying their mortgages. The plan would be less costly than the bailout package but would put family and homeowners first, rescuing banks along the way. Click here to read more. |
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Exchange Trade Currency Products - Offering retail investors access to new investment strategies Exchanges have been long designing currency contracts to attract the self-directed investor and the recent turn in the dollar adds weight to the argument that investors will add currencies as an asset to their portfolios. Interactive Brokers has offered its clients the ability to trade multiple asset classes via its Single Universal Account since 2002 enabling clients to invest directly overseas as well as base their account in any of 10 available currencies. An increasing number of its customers now use its proprietary forex platform. IB is well known for providing rapid access for its customers as it delivers direct market access (DMA) to electronic global exchanges and has built a toolbox to include over 40 order types. Click here to read more. |
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Technology – the Online Finance 40 Ranked number 25 in 2008, Interactive Brokers Chairman and CEO, Thomas Peterffy has risen five places since last year’s Top Technologists ranking. As a trained computer programmer, Mr. Peterffy saw it as inevitable even as an options market maker at the American Exchange in 1977 that securities the market would become all-electronic. “We’re still only half way there. Half the people are still trading by telephone,” said Mr. Peterffy. Half of the Greenwich, CT. company’s 700-plus employees work on technology that gives investors low-cost access to 83 exchanges in securities, foreign exchange and commodities markets in multiple languages and currencies through a single account. Mr. Peterffy said his engineers are now rolling out an institutional order management system for automated staging and execution of all products and order types for traders no matter where they are located. Click here to read more. |
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Are Third-Party Smart Order Routers the Best Option for Options Investors? Seven U.S. options exchanges have created fragmented liquidity and forced online brokers to leverage smart order routing to execute their retail customer orders at the best price and still meet best execution requirements. Smart order routers routinely route orders to the exchange displaying the best price but some third parties are able to favor flow of orders to their own market maker so long as it is displaying a price at least as good as the national best bid or offer (NBBO). Not all smart routers were designed equal according to Steve Sanders, SVP of marketing and product development at Greenwich-based Interactive Brokers. “We've been in this business for 30 years, so everything we know about this options business we built into our smart router. It’s nice to hear that other firms are introducing smart order routers, but what are their price improvement statistics and how do they stack up against the industry?” According to earlier TAG statistics, an independent audit firm hired by IB in 2007 to measure the performance of its options executions, IB price-improved option orders by 114 cents compared to an average industry price-improvement of just 57 cents during the second-half of 2007. Click here to read more. |
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Crossing Borders Some critics argue that providing intricate connectivity to global trading venues doesn’t benefit the US investor who could end up paying a fat commission when making the necessary foreign exchange transaction to pay for a German stock trading in euros. Interactive Brokers looks at three things when deciding where to set up self-clearing operations worldwide. Already linked to more than 70 market centers worldwide, exchanges must offer electronic trading, must provide liquid trading conditions and there must be a level playing field for participants. Interactive Brokers’ customers use a Universal Account when doing foreign currency transactions and they see a tight bid/offer spread prior to doing the deal. As Interactive Brokers is preparing to become a broker in India and its IT staff is well versed in establishing connectivity to exchanges and local clearing houses as well as dealing with cultural nuances. The company can connect to global exchanges within months. But the company will only partner with local brokers to test the water in new markets. “We always want to deliver every trade at the cheapest possible cost. The only way to do that over the long run is to be self-clearing, whether it’s in the US or any other country,” says Steve Sanders, senior vice president, marketing and product development at Interactive Brokers. Click here to read more. |
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Online Offerings to Cure the Summertime Blues Price improvement on certain market orders from customers at Interactive Brokers is just half of the story. Research outfit Transaction Auditing Group (TAG) recently showed IB’s U.S. stock executions for the second half of 2007 were 0.35 cents per 100 shares better than the industry average throughout the period. In addition the online broker executed orders in an average of 0.9 seconds compared to an industry average of 5.6 seconds. However, the report sheds light on the existing practices used within the industry, where the SEC allows firms to count improvement to orders by as little as a hundredth of the penny. IB uses the NBBO (national best bid and offer prices available at the time of execution) as its benchmark for price improvement. Steve Sanders, SVP at Interactive Brokers notes that as a whole the industry “disimproves” on the NBBO. Unlike many firms who internalize orders and improve by a mere fraction in order to report a high percentage of price improved transactions, IB reports the net price improvement and price disimprovement according to Sanders. IB posted the formula it uses on its website at http://individuals.interactivebrokers.com/en/p.php?f=smartRouting&ib_entity=llc. Click here to
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Behaviors to Improve Your Trading The building blocks to becoming a successful trader are to be found in education and learning. Such building blocks include technical and fundamental analysis. Interactive Brokers offers free online webinars, charting software and real-time simulators so that investors can become comfortable enough to succeed. Risk management in the market place begins at home for online traders and for many that means understanding the trading technology at their fingertips as well as the many different order types available. IB offers over 40 different order types and presents risk tools that allow online traders to easily manage market risk. Click here to
read more. |
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With Online Trading, it Pays to Shop Around It’s nice to know that as you gas up your car or buy your groceries there are still bargains to be had. Trading stocks over the Internet is just one example. An obvious benefit of low commissions is that it can help boost your returns. Another consideration is that it helps you focus strictly on the merits of each investment. Low commissions at well-established U.S. firm, Interactive Brokers, appeal largely to professional and active investors. The firm offers a detuned version of its trading platform, called WebTrader, which should be manageable for investors comfortable with online investing. There is a $10,000 minimum account opening balance required and extremely low commissions of just 1 cent per share to buy Canadian stocks, while that on U.S. stocks is just a half penny. |
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Trading International Stocks and ADRs Trading outside of the United States offers savvy investors diversification and cracks open opportunities in emerging markets, not to mention the benefit from favorable exchange rates. For decades, such diversification was only available to large institutions and expensive full-service brokerage houses but thanks to technological advances individual investors can practically trade around the clock and across the globe. While each brokerage company differs in terms of the access it offers, Interactive Brokers is preferred by many if rock-bottom commissions and the ability to access the widest number of exchanges and markets is the goal of the investor. Click here to
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Hedge Fund Technology It used to be the case that hedge funds would turn to their prime brokers for add-on services such as capital introduction. Today the needs of hedge funds have become more critical as they seek to understand the precise impact of a single asset movement and how it impacts an entire portfolio when markets unexpectedly move, more so these days when funds employ multiple asset classes. Interactive Brokers, a global leader in electronic market-making and brokerage services, launched the IB Risk Navigator earlier in 2008, prompted by demands from institutional customers. The company translated the same risk management tools used by its market-making Timber Hill affiliate. IB provides customers with value-at-risk (VAR) tools to monitor actual and forecast hypothetical portfolio impact on exchange traded products. “If it’s possible to create the same type of position using exchange-traded products, you’re much better off,” said Steve Sanders SVP marketing and product development at the brokerage company. Click here to
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Forbes Global 2000 Click here to
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IB Trading Olympiad Winners Announced Click here to
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Global ETF Awards Timber Hill the market-making unit global direct market access provider, Interactive Brokers, was awarded runner-up in the Exchangetradedfunds.com 2008 awards in its Best Market Maker category for both Europe and Asia. Timber Hill (Europe) AG and Timber Hill Securities Hong Kong Ltd. are pleased to receive recognition as part of these awards. The awards recognize those institutions that have contributed and expanded the exchange traded funds industry worldwide. Interactive Brokers provides direct electronic market access to almost 80 markets worldwide. Click here to
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The Power of Speech Market traders have been saying for years that surely it is only a matter of time before all trading is done electronically. That transition has been harder than we might have thought it could have been despite technological advances. Brokers find they must operate in a hybrid environment in which electronic communication coexists with voice communication at different points of the trade cycle. Almost all the business transacted through Interactive Brokers is electronic, but the company is now starting a voice brokerage business. “We would never want the voice brokers to in any way cannibalize electronic business, but it rounds out the offering.” Click here to
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Making Crosses Work The efficiencies of the Penny Option Pilot program continue to stir fierce debate among option traders. Some industry executives claim that the move has created a lack of liquidity and thus forced large trades off the floor and over the counter. Given the recent turmoil in financial markets, which wreaked havoc in several major OTC markets, such a claim seems surprising. Along with the advent of electronic trading, penny pricing has had a profound effect on the on the options industry. Narrower spreads have impacted volume positively, but are also responsible for the demise of some firms reliant on wider spreads. There is no reason to delay the rollout of penny pricing especially because it impinges on in-house profitability of orders that otherwise could be internalized. Click here to
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Retail investors have not been slow to embrace the fast-growing forex market as an alternative asset class. Choosing the asset class has proven to be a no-brainer for many active traders, but the decision to choose a broker is not so easy. In many cases the customer/broker relationship is strained by the fact that some forex broker models result in the customer trading against the broker as counterparty. A more customer friendly and efficient model offers clients direct access to multiple interbank dealers. Naturally, using this model can allow narrower and more competitive spreads. The AITE Group of Boston, MA., estimates that daily retail volume in 2008 will reach $100 billion, up from daily volume of $60 billion as at the end of 2006. Although an asset class in its own right, investors’ needs for integrated access to e-forex traded products such as currency futures and options are also clearly growing. Many individuals find need for currency products these days given the fact there has been growing demand for international equities priced in an array of local currencies. An ability to hedge against local currency risk while exposed to other asset classes is behind the rise in customer demand for all-round access to forex derivatives. Factors that have helped drive investors to the online currency market include government regulation aimed at making markets more transparent as well as huge advances in technology, which permit the ability to send vast amounts of data over the Internet. Growth in currency trading stems from both institutional and retail trader. Both need best execution technology and risk management tools. According to Andrew Wilkinson at Interactive Brokers Group there has been a distinct rise in market volatility, which makes for excellent conditions for traders. Many investors have woken up to the fact that the U.S. dollar has lost a great deal of value. As such those customers have gone in search of ways to protect the value of their portfolios, including a desire to invest in equities priced in non-dollar denominated units. Invariably that requires an ability to convert currencies across the globe in an instant. Customers making the decision on where to open accounts tend to appreciate both education and honesty from their broker. Wilkinson adds, “Our best customer is a long-term customer and that relationship can only be built through trust.” Click here to read more. |
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Now that the options industry has had time to assess the impact of the second round of additional options classes spanning the five months through September 22, the Securities and Exchanges Commission is now analyzing U.S. option exchanges reviews of the pilot test of penny price increments. Opinions are divided over the long-term affects of penny pricing on investors, particularly institutions with large-sized orders to execute. The four exchanges benefiting most from the current market structure voiced concern and recommendation, while NYSE Arca who made pricing and order-execution priorities to meet anticipated market changes, defended its findings and so implicitly, penny pricing. Some industry caution is likely due to the success of the ISE, the all-electronic exchange. By making quotes firm to both broker-dealers and customers alike, the ISE was successful in capturing market share after launching in 2000. Arguably it has the most to lose by a change to the status quo. NYSE Arca has been successful in increasing market share thanks to its adoption of penny pricing. Its market share has risen by 65% to 16.5% of traded equity options through November 2007 compared to 10.6% for 2006. While NYSE Arca prioritizes customer order by price and time, other exchanges rely on size of order quote from competing customers. The penny-quoting “maker-taker” fee models charge investors for taking liquidity and credit them for posting it and better prices. The equity market moved to a similar model post decimalization in 2000. ISE’s model has been widely credited with the huge growth in option trading volume since 2003. Deep liquidity has attracted large institutional block-orders. Neither retail nor institutional investors nor their broker-dealers pay fees. But the liquidity providers, the market-makers do pay a per-order exchange charge as well as an exchange fee to pay brokers for order flow. Click here to read
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Executives at the nation’s options exchanges expect that their methods and ambition to improve the visibility of its options execution will soon be followed by broker-dealers. The exchanges are working with the Securities Industry and Financial Markets Association to produce standard reports detailing the quality of execution. But the efforts might not provide fruit fast enough for the Securities and Exchange Commission. Currently, the various exchange reports don’t stack up for useful comparative purposes according to executive complaints. If some standard report could be agreed upon it might flow down to the broker-dealer industry. But already one broker-dealer has made moves to provide periodic reports. Interactive Brokers commissioned industry number-cruncher firm Transaction Auditing Data (TAG) to measure its execution performance. The auditor compared Interactive Brokers’ trading data and reported on execution-quality. The report showed that IB received price improvements 14.85% of the time on its customers’ marketable US options orders in comparison to an industry average of 0.57%. TAG has also measured the performance of the Boston Options Exchange. Unlike the cash equities industry the SEC has not required the options
industry to produce regular execution-quality reports. That might change
in the months ahead according to industry sources. Click here to read more. |
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According to survey data from The Financial Industry Regulatory Authority (FINRA) some 1,999 portfolio margin securities accounts had been opened within four months of their introduction by September 30, 2007. The demand for such accounts is clearly evident and the likelihood that customers will eventually be able to include futures contracts ensures that growth will only head in one direction over coming years. Earlier data from Connecticut-based Interactive Brokers reported 1,078 accounts containing assets totaling $862 million as of July 31. That means that the company had opened a little more than one half of all portfolio margin accounts in the first three months such accounts had been offered. Allowing customers to hold futures in their portfolio margin securities accounts would enable them to offset their holdings’ risks and further use risk-based analysis to reduce their collateral requirements and afford them increased leverage. At the heart of the debate, however, will be issues over firms’ capital, the protection of the customer and the fate of the customer in the event a brokerage company is forced to declare bankruptcy. Yet the popularity of portfolio margin accounts is on the increase with customers. Out of a total $380 billion in margin debt as of the end of July, some $58 billion was held as portfolio margin debt according to Finra. Regulators are starting to approve assets beyond equities and options for margining purposes. That may over time include futures contracts Click here to read more. |
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Every three years the Bank for International Settlements releases its currency survey covering 54 central banks and monetary agencies around the globe. The highly anticipated survey is closely watched by forex participants to determine emerging industry trends. This year’s survey revealed a huge increase in daily currency transactions to $3.2 trillion per day from $1.9 trillion a year ago. The survey revealed an increase in use by hedge funds, institutional traders and retail investors alike. “I think the bottom line can be summed up in one single word: volatility,” says Andrew Wilkinson of Interactive Brokers. “Traders, and apparently retail traders, too, love volatility. We’ve noticed the rise in volume on currency futures and how that’s feeding through to options activity and liquidity.” U.S. investors continue to look to currency trading as a way of diversifying their investments away from the dollar, which has been losing value. Brokerage companies have used various methods to deliver customer access to online currency trading. Interactive Brokers allows its customers to trade forex from its Universal Account side-by-side with options, equities, futures and bonds using low cost and superior technology. “Foreign exchange is a bit of a ‘Field of Dreams’ in
a sense,” Wilkinson says. “Retail traders have shown an appetite
for risk and brisk movements in underlying instruments. Click here to read more. |
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The first half of 2007 saw U.S. equity indexes rise between 6 and 10%, but investors overseas fared better. Many scored double-digit gains and are at the root cause as to why U.S. investors are looking abroad to buy some of the 50,000 foreign companies available. While access to investing in foreign companies can be achieved through mutual funds, ETFs or even American Depositary Receipts, the point is that buying stocks denominated in foreign currency has boosted returns in many instances. Many major U.S. brokerages offer overseas access but there’s a great deal of difference between the level of both service and cost of trading overseas. Interactive Brokers has offered unparalleled direct access in global stocks via over three dozen overseas exchanges. Using the Universal Account investors can trade global stocks on the same Web page as other instruments from domestic stocks and options to futures, currencies, bonds and commodities. Interactive Brokers offers extremely low commissions from $0.005 to $0.05 per shares depending on trade size and subject to a minimum of $1.00. While many competing domestic brokers offer online broking, some are still restricted to phone execution and in either case fees can be high. Interactive Brokers on the other hand is one of the only U.S.-based online trading sites for global stocks whose Universal Account has no account minimums or trade requirements. Most companies require investors to convert trading capital before buying shares priced in local currency. Interactive Brokers Universal Account allows holders to convert some or all of their trading capital into a foreign currency. Alternatively trades can be settled at the time of purchase by converting dollars into the local currency. That choice remains with the customer. Click here to read more. |
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The launch of portfolio margining possibly marks the largest change to margin rules since the Securities Exchange Act of 1934 was introduced. Customers can take significantly larger positions in their accounts at a lower cost and can, therefore, take on more risk. That increased risk to manage may account for why broker-dealers are slow to adopt the new rules. However, several broker-dealers have been swift out-of the-gate to embrace the new rules and indeed some companies such as Interactive Brokers have been employing real-time portfolio margining all along. Other companies note that sophisticated individual investors along with midsize professional trading groups and hedge funds are typical candidates for account openings. Some also conclude that because capital can be more efficiently deployed across trading strategies some companies may even recruit more trading specialists. Under old Federal Reserve Regulation T rules initial margin requirements stood at 50 percent of invested capital. Thereafter NYSE rules required 25 percent maintenance margin. But the explosion of hedging and speculative instruments, especially traded options has provided traders a way of taking less risky and even market neutral positions. Hence the logical desire and ability to reduce margin requirements. Previously some broker-dealers would construct joint back offices – registered or located offshore where margin requirements were lower. Now, several of these are opting to switch over to the new rules and are trading in their licenses as they adapt to the new landscape. Options firms have most to benefit when it comes promoting the new regime
to their clients. Margin requirements on some strategies have fallen as
much as 92 percent. On a transaction previously requiring margin of around
half a million dollars, an investor would need to hand over less than $40,000
for the same transaction. Click here to read more. |
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Online brokerage companies have added a mix of tools and initiatives to help keep customers ahead of the competition in 2007. Interactive Brokers Group was one of the first brokers ready, willing and able to offer updated rules for the calculation of securities-margin requirements following rule changes announced by the Securities and Exchange Commission. Thanks to Interactive Broker’s real-time margin technology, the company affords its clients to safely increase their leverage in some cases. The company also announced the winners of its second annual Collegiate Trading Olympiad where 204 students participated in an effort to turn a phantom $100,000 trading account into a small fortune. College students were asked to design and write an automatic trading program that would run over an eight-week period earlier this year using program-trading applications in C++, Java and Excel. This year’s winner was Brian Eckerly of Ohio State, who generated $294,190 during the contest. Click here to read more. |
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Interactive Brokers Reports Trading Contest Results Brian Eckerly, 22, who won first place, received $100,000 in prize money. Eckerly recently graduated from Ohio State University with a degree in electrical and computer engineering. Eckerly traded a mix of stocks and options, using S&P 500 ETFs and the options on that, earning a profit of $294,190. Click here to read more. |
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Jumpy Investors Gain Reasons To Look Abroad .................... Jon Wilson, a software consultant in Cedar Rapids, Iowa, says the ability to buy stocks directly on the foreign exchanges was a key factor that prompted him to start trading foreign stocks with Interactive Brokers LLC, a brokerage aimed at professional traders. "It's what buys you real-time transaction capabilities and it's what gets you the least fees," he says. Click here to read more. |
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Options Algorithmic Trades Give Goldman, UBS Edge Over Brokers Click here to read more. |
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FIA Inducts 19 Individuals to Futures Hall of Fame The FIA's Futures Hall of Fame was established to celebrate the accomplishments and recognize the significant contributions that certain individuals have made to the futures and options industry over the course of its history. The 19 individuals honored in this year's ceremony helped lay the foundation for the industry’s extraordinary success and deserve the highest gratitude and respect. The following individuals were inducted into the Hall of Fame:
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GLOBAL INVESTOR: Should You Be Buying Local Shares On Foreign Markets? Of course, no pain, no gain, right? If you are one of the few U.S. investors who trade and sell international stocks on your own, that's a mantra you need to believe. But there may be a few more investors joining the ranks of direct traders in foreign stocks following moves by E-Trade Financial Corp. last week. ................................ Steve Sanders, senior vice president of marketing and product development at Interactive Brokers, said his company has been offering what E-Trade is now introducing for more than five years as well as trading in stock options, futures, foreign exchange and bonds for over 60 markets worldwide. Interactive Brokers courts the professional market while E-Trade is taking square aim at the retail investor. A minimum investment for Interactive Brokers is $5,000 and "the type of customer we try to attract is somebody who does their homework...if you're not a professional, an ADR may be enough," said Sanders. Click here to read more. |
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Stock Trades Without Borders ........ EVEN CHEAPER Click here to read more. |
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Penny Trading Pilot Live: Relatively small scale keeps data challenges manageable High-tech brokerage firm Interactive Brokers (IB) of Greenwich, Conn. sought to blaze a trail in penny options last October by cutting the minimum price difference for U.S. listed options from a nickel to a penny (or $5 per contract to $1 per contract). Interactive Brokers said at the time that it was "jumping the gun, and in a first for the U.S. options industry, will make penny pricing on options available." The firm developed a system to allow customers and liquidity providers to display penny prices and to try to trade against other participants' penny prices displayed in the IB system. Click here to read more. |
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Options Broker Says Industry's Penny Pilot Not Enough Click here to read more. |
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Euro Currency Options on PHLX; Timber Hill Is Specialist The U.S.-dollar-settled euro currency options, which started trading Monday with the symbol XDE, are quoted in terms of U.S. dollars per unit of the underlying currency, and the premium is paid and received in dollars. Timber Hill, an affiliate of Greenwich, Conn.-based Interactive Brokers Group, is the specialist." ... "With the growth of the cash forex market, especially in the retail segment over the last few years, this is a great product to complement cash forex,” said Steven Sanders, managing director of business development at Interactive Brokers. "PHLX years ago offered this on a live trading floor, and it was very popular, but with the introduction of the euro, it died away. Certainly floor-traded forex options is not something the retail market would be interested in, but an electronic forex market is something they would be extremely interested in, so we think this will be a very popular product." Click here to read more. |
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Portfolio Margining Approved by SEC ... "The approval of equities in such accounts gives broker-dealers an opportunity to serve a much broader base of investors. Several high-tech brokerages catering in part to retail investors, including optionsXpress, Penson Worldwide and Interactive Brokers, have already begun preparing their systems to incorporate riskbased models and developing policies and procedures to submit for regulatory approval." ... "One way to ensure creditworthiness is to require a minimum amount of equity in the portfolio margining account. In September, Greenwich, Conn.'s Interactive Brokers was considering a $50,000 minimum, but its margining system's ability to stress-test and even enforce margin calls by liquidating positions in real time may be a mitigating factor. "The stress test may be enough, and we may not require any minimum," said Steve Sanders, managing director of business development at Interactive Brokers." Click here to read more |
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Forgotten Amex Hopes to Erase Bad Memories --- Exchange Aims for IPO in '07, Recovery of Traders' Confidence After Tackling Technology Deficit |
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OPTIONS REPORT: New Margin Rules Affect Options Traders Click here to read more |
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The New Penny Options Options are currently priced in increments of a nickel, which means that a one-tick change in price changes the overall cost of a single contract by $5. (Each contract gives the right to buy or sell 100 shares of underlying stock.) Cutting the increment to a penny means that a one-tick change alters the price by $1. More aggressive exchanges that help a trader get price improvement on a trade -- that is, an increase in the selling price or a decrease in the buying price -- are likely to find even greater flexibility in pricing when a contract is priced in the new, smaller increments. The net result should be a cost saving to investors, as well as an opportunity to turn a profit on smaller price moves." ... "Interactive Brokers (www.interactivebrokers.com) is taking the penny pricing a step further and allowing customers to trade options with each other on most contracts, not just the 13 in the test. Only account-holders can place trades -- but even noncustomers can see what's available, since the exchanges require brokers to make the information publicly available. IB rolled out its penny options-trading system in mid-October, and it's seen a lot of volume and good liquidity, according to Steve Sanders, managing director. "I'm excited about this one," he says. "This is one of those things that really changes the industry." Click here to read more |
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What Free Trading Costs "Stocks of rival online brokers went into a tailspin recently, after
Bank of America announced that it would offer commission-free trading through
Banc of America Investment Services to customers with more than $25,000
in bank deposits. The shares have rebounded, but their dramatic reaction
suggests that this might be an offer many electronic investors and traders
would jump at. But are free trades a free lunch?" Click here to read more |
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Online Discount Brokers: Disintermediation Won't Strike Evenly "A good deal has been said in the past few weeks about the disintermediation
of the online discount brokerage industry. Bank of America (BAC) and Zecco.com
roiled the market with the introduction of the "free trade era," leaving
some concerned about their investments in Ameritrade (AMTD), E*Trade (ET)
and Charles Schwab (SCHW)." Click here to read more |
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Nazareth: Penny Pilot Will Yield Useful Analysis "The options industry is moving rapidly toward penny pricing increments--a development jump-started in May by discussions at the Options Industry Conference in Miami, including a speech on the subject by Elizabeth K. King, associate director of the Securities and Exchange Commission's division of market regulation. The following month, SEC chairman Christopher Cox formally asked the U.S. options exchanges to begin a penny pricing pilot in January, and one prominent firm, Interactive Brokers, has already instituted the practice on its own. SEC commissioner Annette L. Nazareth returned to the subject at the Securities Industry Association's options market structure conference Oct. 24 in New York. These are excerpts from Nazareth's remarks." Click here to read more |
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Bids & Offers: Tech Analyst Sherlund Plans Walk on the Buy
Side; AmEx Launches Corporate Credit Card in China Pennies From Brokerages "LIKE THE STOCK markets a few years ago, traditional floor-based options exchanges are preparing to price their contracts in pennies rather than larger increments. An industrywide experiment with pennies is slated for January, but a few options firms are jumping the gun." "Interactive Brokers said it will offer penny-based prices on trades
via both ISE and BOX, which offers a "price improvement" mini-auction
after a trade is executed between two parties." Click here to read more |
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Interactive Brokers Launches Penny Prices for Options "The Securities and Exchange Commission has approved a 2007 pilot program to reduce minimum price differences on options to one cent, but Interactive Brokers LLC last week sprung out of the gate and introduced a new system offering penny pricing on all options, according to Managing Director Steve Sanders." "The SEC-mandated pilot will begin Jan. 27, 2007 at six U.S. options
exchanges, and will include options listed on 13 underlying stocks. But
Interactive Brokers, citing years of pressure for direct market access providers
and online brokers to cut prices, saw no reason to delay penny pricing any
longer and launched its own penny pricing system on Oct. 24." Click here to read more |
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IB Launches Penny Options Trading "Interactive Brokers, one of the largest discount options brokerages, this week started accepting options orders in pennies in a first-ever such experiment. Most brokerages aren't expected to pick up penny options trading until at least next year. "Our customers don't want to wait, and are demanding trading in pennies now," said Thomas Peterffy, chairman. The electronic options brokerage has been at the forefront of most options trading technology, including smart order routing and hidden, or "iceberg", orders." Click here to read more |
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View From Timber Hill "IN THE OPTIONS MARKET, Timber Hill is credited with being among the first, if not the first, trading firm to use computers to price and trade options. Technology is taken for granted now, but once there was a time when computers were so unusual on the trading floor that other traders thought anyone who used them was wacky. This was a time when trading was dominated by floor-trading cliques who controlled the rules and set the tone." "Now, Timber Hill trading firm has given birth to Interactive Brokers, which among other activities, offers online discount brokerage and access to world capital markets. At the center of Timber Hill (now a unit of Interactive Brokers LLC), is a group of quiet, mild tempered traders who direct trading in a staggering number of securities. Jeff Shaw leads the group, and he agreed to speak with SmartMoney.com to offer some insight into options trading from his perspective." Click here to read more |
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Interactive Brokers ready for penny trading "Interactive Brokers Group, an online broker offering bonds, futures, options and equities, said on Tuesday it is ready for penny trading ahead of the expected January introduction of penny price points in the U.S. options market. Interactive Brokers said it had built a system that will allow option orders
from its customers and liquidity providers to be displayed in a penny price
format, a move that is expected to save customers money. Click here to read more. |
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In comparing fees, look for the * If you're thinking that it's finally time to turn that underused home computer into your own personal stock exchange, the good news is it has never been a better time to invest online. If price rather than service is your major concern, there is an undisputed price leader quietly operating in cyberspace. Interactive Brokers Canada is the undisputed price leader when stacked up against even the most price conscious discount brokerage. Thanks to its U.S. parent's three-decade history, it has far-reaching tentacles (you can trade on 60 exchanges around the world) and rock-bottom pricing. Click here to read more |
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ISE Plans to List Foreign Currency Options; ISE FX Options(TM) Offer New Investment Strategy
International Securities Exchange (ISE) today announced its intent to create and list new foreign currency options, called ISE FX Options(TM). With ISE FX Options, retail and institutional investors will have a new investment strategy that allows them to express their views on the strength or weakness of the U.S. Dollar relative to foreign currencies. Interactive Brokers, currently a primary market maker on the ISE options exchange, will become a market maker in the new ISE FX Options product through its Timber Hill subsidiary. "As usual, ISE continues to further the advancement of electronic trading and Interactive Brokers fully supports these efforts. The new cash-settled currency options are a first for listed electronic trading, and will be welcomed as a complementary product for those traders who already trade the cash and futures forex markets electronically," said Steve Sanders, Managing Director for Business Development at Interactive Brokers. Click here to read more. |
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OCC
News Industry Insight Thomas Peterffy emigrated from Hungary to the United States in 1965. After working for 10 years as a computer programmer, he became a member of The American Stock Exchange (AMEX) in 1977. As an individual floor trader, he founded the firm known today as Interactive Brokers Group, a global electronic broker dealer. As Chief Executive Officer, Mr. Peterffy is active in the day-to-day management of the company. Mr. Peterffy received the Joseph W. Sullivan Award at the 24 th Annual Options Industry Conference in May. OCC News took the opportunity to discuss Mr. Peterffy’s career in the options industry and other issues, including his views on electronic trading. Click here to read more. |
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CBOE Takes on New York
"Steve Sanders, managing director, marketing and business development at Interactive Brokers, says, "Anything that pushes the industry forward is a good thing. We invest in exchanges not specifically for profit but because we’re pushing that electronic envelope will help us offer a new venue for trading to our customers, and the more venues we can offer results in better price execution for our customers." Read more. (http://www.futuresmag.com) |
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Refreshing the Screen BETTER. FASTER. NEW AND IMPROVED. MORE POWERFUL. Software publishers survive by adding features and products to entice you to join their team, maintain your loyalty (if you're already onboard) or come back (if you've signed on with a rival). Here are a variety of software publishers and online brokers striving for your attention—and your business. INTERACTIVE BROKERS (www.interactivebrokers.com) has spruced up its tools for options traders by providing a new service, Options Intelligence Report, as well as volatility trading functionality. Click here to read more |
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Higher Bid for FileNet Is Awaited
"There are certain names that option traders have been conditioned to just assume a takeover," said Steve Sosnick, a trader at the Timber Hill division of Interactive Brokers Group. "This is one of them." -Steve Sosnick, Interactive Brokers |
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AIG Shares Fall on Fear of Drop in Japan Earnings
"After the last earnings release, AIG stock fell roughly 5 percent. And options traders today are positioning themselves as though a similar drop in shares could happen again," said Steve Sosnick, equity risk manager at Timber Hill, a division of Interactive Brokers. "Option volatilities have risen dramatically and put buyers were very aggressive this morning." -Steve Sosnick, Interactive Brokers Read more. (http://www.reuters.com) |
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More Bells Are Ringing
"Steve Sanders, head of business development at Interactive Brokers in Greenwich, Conn., noted that his company has made a number of investments in strategic exchange partnerships to help foster innovation in the securities and commodities industry: the Boston Options Exchange, ISE Stock Exchange, single-stock futures market OneChicago and now CBSX." Read more. (http://www.securitiesindustry.com/) |
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Phelps Dodge Calls Draw a Flurry
Driving up the stock and options on Phelps Dodge Corp. yesterday, traders furiously speculated on what could be in store for the copper miner. … "I definitely saw a significant wave of buying, and it smelled speculative," noted Steve Sosnick, equity risk manager at Timber Hill, a division of Interactive Brokers Group. Read more. (http://www.wsj.com) |
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CBOT Begins Side-By-Side Era Of Benchmark Ag Products
"The electronic side of the market opens up new opportunities for CBOT agriculture markets, as traders that shied away from the open outcry market due the lack of exposure to bid and offers in the pit will be more willing to participate technological changes and automation, and electronic markets." –Steve Sanders, Interactive Brokers Read more. (http:www.dowjones.com) |
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CBOE to Launch Stock Exchange
"We invest in exchanges not specifically for profit reasons but because we’re pushing that electronic envelop," says Steve Sanders, managing director, marketing and business development at Interactive Brokers. "The CBOE Stock Exchange will help us offer a new venue for trading to our customers, and the more venues we can offer results in better price execution for our customers." –Steve Sanders, Interactive Brokers Read more. (http://www.futuresmag.com) |
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CBOE to Try Stock Trading
The Chicago Board Options Exchange on Thursday announced plans to begin trading equities by early 2007 via a hybrid electronic and open outcry trading system. The CBOE Stock Exchange LLC, as the entity will be known, is actually a collaboration between the CBOE and four partners, each of which has taken a monetary stake in the new venture. Those partners are VDM Specialists LLC, Interactive Brokers Group LLC, LaBranche & Co. Inc., and Susquehanna International Group LLP. .... The CBOE's insistence on including open outcry in the new venture is notable given the presence of Interactive Brokers as one of the partners. Interactive Brokers is also a partner in the ISE's all-electronic stock exchange, and Steven J. Sanders, managing director for marketing and business development for Interactive Brokers, said his firm wanted to get involved in both projects specifically as a way to push markets toward electronic trading. "We have stakes in a number of exchanges," Mr. Sanders said, among them OneChicago and the Boston Options Exchange, as well as of course the ISE and CBOE initiatives. "From our point of view, we like to hook up liquidity to our smart router. If we can do a trade faster and cheaper, that's our goal. We invest in these ventures not because we're going to make a lot of money off them, but because we want to push the industry to do things more efficiently. It's another opportunity for us to have a say in that." Read more (www.hedgeworld.com) |
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The
Best E-Broker for You The price of a trade is just the start. Here's what you need to know to choose wisely. Active Investors Click here to read more. |
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Christmas
in July BY HIS OWN ADMISSION, Patrick Christmas is "overqualified on computers and underqualified in finance." But that didn't stop the 26-year-old grad student from turning $100,000 in hypothetical cash into $219,465.93 in 10 weeks, to win the 2006 Program Trading Olympiad run by Interactive Brokers. Click here to read more. |
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Less Than Glorious Post-Fourth of July Fireworks light up the sky, but all that pomp and incandescence can leave the night quieter and darker after the last flare fades. Hope for a summer rally had been kindled by the stock surge that capped the weary month of June, but traders returning from the July 4 break opted for a grimmer view. Good vibes from the holiday and the Discovery liftoff were countered by unsettling news of North Korea's nuclear-missile tests. Crude oil touched a record $75.78. Friday'sreport showing 121,000 new jobs created in June, well short of the 175,000 forecast, might have assuaged inflation fears. Instead, stock sellers viewed it as yet more evidence of an economy cooling too quickly. ... No surprise, then, to see EFPs becoming widespread over the past year as rates rise. At OneChicago, the three-year-old market for trading single-stock futures, EFPs drive a significant part of volume, although the exchange won't disclose specifics. Even so, they are executed manually. Traders must phone or fax in their orders, which are filled in both the stock and futures markets. Interactive Brokers now allows electronic trading of EFPs. The EFP cost is displayed as an interest percentage -- to allow the investor a more direct comparison against broker financing. By IB's reckoning, the average investor who holds, say, one Microsoft share over 60 days -- with the stipulated 25% of the stock's value held in cash as margin -- pays about 32 cents in borrowing costs. Factoring in about nine cents in dividends earned during the period, the total stock financing cost would amount to 23 cents. In comparison, the cost for holding a single-stock future over two months is about 17 cents, plus another penny in commission. But after adding in the two cents in interest earned on margin balance, the final 16 cents-a-share number produces a cost saving of seven cents a share. Similarly, a short-stock holding could earn about 19 cents a share in extra cash, IB estimates. Whether EFPs find widespread favor remains to be seen. But rising rates and the growing liquidity in the single-stock futures market make them attractive, despite some pooh-poohing from brokerages worried that EFPs might hurt their profits. And Interactive Brokers isn't the only firm intrigued by their potential. Marty Doyle, OneChicago's president, says the exchange plans to automate EFP trading -- probably this quarter. Click here to read more. |
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How
To Buy From Afar Buying Locally Listed Shares One company that wants to change the viability of buying shares in foreign markets is Interactive Brokers, of Greenwich, Conn., which offers individual investors stock trading on 25 market centers globally, including the Tokyo, Frankfurt and London stock exchanges. Originally formed in the late 1970s, the company found its footing as an options-trading business called Timber Hill. Interactive Brokers has built direct electronic routing systems to the foreign exchanges it deals with, meaning that it doesn't incur the kind of costs that would make foreign trading prohibitive for a brokerage such as ... For your foreign trades, Interactive Brokers will get you the best conversion rate of five interbank dealers, and charge you a low per-share trading commission. Already, 26% of Interactive's trading volume comes from individual investors. For example, if you wanted to buy 100 shares of Toyota Motor, which trades at 5,890 yen on the Tokyo exchange, you would pay $1.29 for currency conversion and a $16 commission on the buy (at 0.08% of trade value in Japan). Click here to read more. |
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Disruptive
CEOs Combine Vision, Strategy & Technology ... Since 1977, when Thomas Peterffy left a job developing commodities-trading software to become an operations trader on the AMEX, he has refused to accept the status quo of the trading community. Rather, Peterffy has made it his mission to move the industry away from manual processes and closer to automation. Click here to read more. |
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From Rags to Automation Since 1977, when Thomas Peterffy left a job developing commodities-trading software to become an operations trader on the AMEX, he has refused to accept the status quo of the trading community. Rather, Peterffy has made it his mission to move the industry away from manual processes and closer to automation. In the process, the one-time refugee from communist Hungary, who was born in the basement of a Budapest hospital during a 1944 bombing raid by the Russians, has constructed Interactive Brokers Group, a global provider of electronic broker-dealer services. In 1965, Peterffy abandoned his engineering studies in Budapest and moved to New York. Though he spoke no English, he soon landed a job as a draftsman designing highways for an engineering firm, where he one day volunteered to program a new computer. Peterffy says his background in computer programming still powers his ideals today. "I think the way a CEO runs his company is a reflection of his background," says Peterffy. "Business is a collection of processes, and my job is to automate those processes so that they can be done with the greatest amount of efficiency." Click here to read more. |
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A Bad Week For the ICE Shares fall as rival Nymex goes electronic and CFTC considers a tighter rein The Intercontinental Exchange (ICE) took a double beating last week, as the offshore electronic commodities exchange faced the prospect of losing market share on a key energy futures contract as well as the specter of increased regulation. ... Some broker-dealers already saw a decline in ICE's fortunes. Steve Sanders, managing director of business development at Interactive Brokers, a Greenwich, Conn.-based global broker-dealer that facilitates trades through both Nymex and ICE, said he observed a shift in market share among Interactive Brokers customers last week. "Earlier in the year, there were days that ICE's market share was 10-25% on certain products. I noticed in the last two days that it has dropped to below 10%," said Sanders. And last Wednesday, ICE's share was just a little over 8% at Interactive, he added. |
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Nasdaq's Live Floor Show The Nasdaq is more than an electronic stock exchange that allows investors to trade millions of shares a day; increasingly it's a useful trove of data about the sizes and prices of all those transactions. The U.S.' biggest screen-based equity market now offers a variety of data products such as TotalView, which displays every quote and order at every price level on all Nasdaq National and Capital markets stocks available for execution at the Nasdaq Market Center. That way, traders get a better idea of what the actual market is for these stocks. Several online brokers, including Scottrade and a number who utilize the RealTick electronic trading platform, now offer TotalView to their customers. It is otherwise available for $70 a month for professionals and $14 per month for non-professionals. ... Interactive Brokers ( www.interactivebrokers.com ) sponsored a Trading Olympiad for college students earlier this year ("Get With the Program," Nov. 7, 2005) in an effort to identify some of the best and brightest up-and-coming techies. Starting with an account of $100,000 in phantom money, University of Texas graduate student Patrick Christmas earned an additional $120,000 in 10 weeks using computer algorithms he developed for Interactive Brokers' Trader Workstation Application Program Interface. The victorious Christmas won a very real $50,000, which IB will match in a donation to his grad school in Austin. The electronic brokerage paid out a total of $307,000, including $1,000 each to 100 participants. "Anybody who entered and made a penny won $1,000," says executive vice president Steve Sanders. To top it off, the company hired the fifth place winner, Li Zhiyan, of the University of Toronto. Any IB customer can open a paper trading account and test to their heart's content, says Sander. "We simulate whether there would be a fill or not (whether an order would be filled), so when someone puts in a limit order we simulate the fill based on whether that price and volume were available," Sander says. Recently, IB added all of its global products to the paper trading platform as well. New features include Volatility Trader for options traders, and SpreadTrader for futures spread trades. More on these features in a future column. |
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Interactive Brokers Names Top Student Traders Interactive Brokers Group (IBG) named University of Texas graduate student Patrick Christmas the winner of its first annual electronic trading Olympiad. The 10-week trading contest was open to computer science and engineering majors at North American colleges and universities. Each participant started with $100,000 in phantom money and was given access to Greenwich, Conn.-based IBG's Trade Workstation Application Program Interface (API), which simulates trading and IBG makes available to professional traders. Participants used IBG's technology to create their own algorithms and generate orders. Christmas earned $120,000 in profits using his computer algorithms to trade equities. "He had never traded before," says Steve Sanders, IBG's managing director, business development and marketing. "He's a technologist at heart. We find that our most successful people are technologists, not necessarily traders." |
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Cross-Asset Platforms NEW YORK —Discount broker Interactive Brokers Group (IB) is expanding its trading platform so that it accesses floor-traded products from the Chicago Mercantile Exchange ( CME) and the Chicago Board of Trade (CBOT) as well as stocks from Sweden and Japan. The CME, CBOT and other venues can be accessed via IB's Universal Account (UA) platform, which enables the trading of multiple products worldwide from a single account. The platform also displays positions and risk in real-time within a single screen, says Steve Sanders, managing director of development. The offering includes a single-base currency that allows for the trading of products in other currencies. Traders either get a loan against the base currency or convert it. "Most brokers would not want to offer our Universal Account structure because it would mean the end of high mark-ups on non-transparent currency conversions and finance rates, which is where brokers make the bulk of their profits," Sanders says. For instance, Universal Account users will have access to five inter-bank currency dealers, who will route an FX order to the dealer with the best option, he says. Clients can also sidestep the need to buy ADRs. In terms of technology, adding the additional market access for the expanded product service is relatively simple, Sanders says. "Every exchange is different, but our technologists have been doing this for 20 years, so they might have to modify it a little bit, but once you've done a few of these, you get the hang of it," he says. Cross-asset trading is not new to IB, say officials at the firm. For the past four years, the firm has been providing global, direct access to stocks, options, futures, foreign exchange (FX), bonds, and exchange traded funds (ETFs) from a single account, officials say. Chloe Albanesius
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Do Floors Have a Future? The computer-age-old question has a nearly unanimous answer:
Traditional exchanges are losing--but not quite everything The conventional wisdom, expressed recently by University of Southern California finance professor and market microstructure expert Lawrence E. Harris, is that "there will likely be few floor-based markets left in a few years. That's not a new story, but it's moving very quickly in that direction." ... Steve Sanders, managing director of business development and marketing at Greenwich, Conn.-based Interactive Brokers, believes the only reason to keep the floor is to employ the brokers. "If you go to the NYSE or any of the firms with specialists or floor brokers, they'll tell you that for large block orders the human touch does a better job than the computer," he asserted. "But there are all kinds of firms out there trying to replicate what was previously done by a floor trader. The ISE just announced their new electronic exchange [in which Interactive Brokers is a joint-venture partner] that matches at midpoint. You have [buy-side block trading venue] Liquidnet and [Citigroup trading-technology subsidiary] Lava Trading. There are many people addressing what the floor broker does today in more of an electronic manner, but let's face it, only time will tell." http://www.securitiesindustry.com |
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Program Trading Averaged 59.3% NYSE Volume May 8-12 In all markets last week, the NYSE said program trading by member firms averaged about 1.89 billion shares a day. About 54.8% of program trading took place on the NYSE, 0.7% in foreign markets and 44.5% in Nasdaq, the American Stock Exchange and other domestic markets. www.dowjones.com |
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ISE Options Market Shifts Gears: CEO Krell Turns Toward Equities As the first all-electronic options market in the U.S., the International Securities Exchange (ISE) rose to the top of the charts. Launched in May 2000, it quickly challenged the Chicago Board Options Exchange (CBOE) and American Stock Exchange, the historical leaders in options market share, and today ISE is number one in equity options and is close on CBOE's heels in total contracts as reported by the Options Clearing Corp. Last month ISE dropped a shoe that market observers had anticipated since the day David Krell, an options industry veteran who formerly worked for the CBOE and the New York Stock Exchange, joined with three co-founders to create an options market that was not called International Options Exchange. They had their sights on other products as well, and on April 19 the New York company announced plans to handle equities on an all-electronic ISE Stock Exchange. ISE expects the new exchange to begin operations in the third quarter as the latest industry force shaking up the competitive equilibrium of the NYSE and Nasdaq Stock Market. ISE Stock Exchange has the backing of seven firms that put up a total of $32 million to be minority stakeholders: Bear Stearns & Co., Citadel Derivatives Group, Deutsche Bank, Interactive Brokers Group, JP Morgan Chase & Co., Knight Capital Group and Sun Trading. http://www.securitiesindustry.com |
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A Battle Royal A sleek upstart and an entrenched giant are waging all-out war for the soul of the energy trading market "Customers will go where the rates are cheaper, where there is more liquidity," adds Steve Sanders, director of business development at Interactive Brokers, a Greenwich, Conn.-based global broker-dealer that trades a chunk of the world's options and is already hooked into the CME's Globex. "Over the long run, electronic trading will replace floor-based operations. It happened in Europe-those who adapted to electronic trading had a future, and unfortunately those who couldn't did not." http://www.iddmagazine.com |
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New Options Algorithms Threaten Traders Most of the brokerages' order flow has thus far been negotiated and executed manually by traders over the phone, the Internet, and the trading pit, unlike in the equities markets that use algorithms and other order routers to disseminate orders. As options volume continues to grow beyond last year's record 1.5 billion contract mark, there is more competition, and it is becoming harder to achieve the best possible price for large blocks of stock without moving the price significantly, said Steve Sanders, managing director with IB. "The most efficient way to compete is by introducing order types that can handle anonymous executions automatically by breaking up the trade," he added. As a result, trading desks at large brokerages are adapting their hiring patterns. Searches for experienced options traders have already slowed down since last year as firms want to recruit more Ph.D.s and quantitative researchers--not traders--to develop the new technology and run it, said Eric Moskowitz, director with the Options Group, an executive search and consulting firm. "Going forward, we need people with programming skills to serve as pilots watching the [trading] programs," Sanders said. IB, which has 500 options trading employees around the world, has moved many traders to application processing and help centers, he added. BofA and Goldman spokeswomen declined to comment. But manual options trading won't disappear any time soon. Large and lucrative optional value contracts with a lot of spread, such as options on the S&P 500, still trade largely in open outcry, which forces brokerages to maintain some floor staff. Also, electronic trading functionality for trading large block orders against large equity blocks is extremely limited, so firms still need experienced trading staff to negotiate prices, said John Gelbard, senior v.p. of I.A. Englander, one of the largest derivatives brokerages. |
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ISE Announces Equities Exchange; Liquidnet Names Liquidity Partners The next day, a few miles uptown, Liquidnet, another product of the technology boom that directed its energies to transforming inefficient market models, said that nine liquidity providers had signed on as partners for Liquidnet H2O, the new version of its block trading platform for asset managers. The coincidence underscores the maturation of what once seemed to be daring, high-tech upstarts, and how the securities industry now routinely embraces these and other electronic marketplaces and is pushing in the same direction. Rallying behind Liquidnet as "streaming liquidity partners" were Bloomberg Tradebook, Bank of New York Co.'s BNY Brokerage, Instinet, FutureTrade, Miletus Trading, Piper Jaffray, EdgeTrade, UNX and Goldman Sachs Execution & Clearing--a collective vote of confidence in Liquidnet and the vision of its founder and CEO, Seth Merrin. For the new stock exchange that ISE expects to introduce with a product called MidPoint Match (MPM) in the third quarter, these firms put up $32 million in start-up capital and will share a minority ownership position: Bear Stearns & Co., Citadel Derivatives Group, Deutsche Bank, Interactive Brokers Group, JP Morgan Chase & Co., Knight Capital Group and Sun Trading. Some of those names are familiar as backers of other electronic market initiatives, reflecting the desire of some of Wall Street's most powerful institutions to promote innovation and keep regional exchanges such as those in Boston and Philadelphia competitive with the New York Stock Exchange and Nasdaq Stock Market. For example, Citadel Derivatives Group, affiliated with a major Chicago-based hedge fund, has also invested in the Philadelphia Stock Exchange; and Interactive Brokers and JP Morgan are backers of the Boston Options Exchange (BOX). "This is truly a milestone in the ISE's history," Krell, ISE's president and CEO, said during a conference call last week. (His co-founder Katz is COO; Porter, a former chairman of E-Trade and now managing member of Casey Securities, is an ISE director; and Averbuch, also formerly of E-Trade, is president and CEO of market-maker Adirondack Trading Partners.) "As you know," Krell went on, "I've always spoken about strategy to expand into other asset classes and complementary businesses. As part of this strategy we focus on broadening our business into areas that allow us to leverage our management expertise, our infrastructure and business relationships we forged with building our options business." Krell noted that the ISE's investment philosophy is to only enter markets or launch a new business in which the company can create or contribute something unique. "As has always been the case at ISE, any new undertaking that we embark on must pass a very rigorous and disciplined screening process," he explained. "First we must be sure there is demand in the marketplace. Second, we must have some expertise or be able to obtain that expertise. And third, it must be profitable. I can ensure you that ISE Stock Exchange meets all three of these criteria." ISE opened in 2000; within two years its fully electronic operation was challenging the Chicago Board Options Exchange (CBOE) and American Stock Exchange for options supremacy, and it is now the biggest equity options exchange in the world. ISE listed its shares on the New York Stock Exchange in March 2005. The price on the day of the ISE Stock Exchange announcement shot up $3.54, or 8.5 percent, to $45.27. It closed the next day, Thursday, at $44.55, which is $8.31 below the 52-week high. With a market capitalization around $1.7 billion, ISE isn't much of a match for the Chicago Mercantile Exchange's $17 billion or NYSE Group's $11.6 billion, but it's clearly big enough to invest in growth and be a factor in the exchange industry's ongoing consolidation. The magnitude of the stock exchange initiative is bigger than the last transaction ISE announced, on April 6, which was also a partnership: It acquired intellectual property and other assets of Longitude, a New York-based developer of technology for conducting auctions in derivatives based on economic indicators and other nontraditional "events," for an undisclosed price, with Goldman Sachs taking a minority investment position. Need for an Alternative "We have built a fully electronic exchange from the ground up that will promote competition, foster innovation, improve the overall market and transform the way that equities are traded," Krell said in the press announcement. ISE Stock Exchange partner Interactive Brokers has invested not only in the Boston Stock Exchange offshoot BOX, but also recently joined the CME, CBOE and Chicago Board of Trade as a co-owner of the OneChicago single-stock futures market. "Our purpose in investing in exchanges is not to make a profit; our first goal was to try to further the push of efficient electronic markets," said Steve Sanders, managing director of business development at Greenwich, Conn.-based Interactive Brokers. "We are investing in ISE Stock Exchange because we're very excited about this new matching engine that fills at the midpoint"--and to have a say in the exchange's future, he added. ISE expects to introduce the patent-pending MPM, a continuous, instantaneous, fully automated and anonymous matching platform, early in the third quarter. It will execute at the midpoint price of the national best bid and offer throughout the trading day all round-lot orders, large and small, and it is especially suited for orders generated by algorithms, ISE said. MPM will be followed in the fourth quarter by an integrated displayed market offering. "Together these two differentiated offerings will enhance the automated electronic trading strategies that continue to proliferate in today's equities markets," Krell said. Joe Gawronski, COO of Rosenblatt Securities, a New York agency brokerage, noted that the ISE showed its hand as a potential stock market when it applied last fall to be part of both the Consolidated Tape Association and Unlisted Trading Privileges plans for price dissemination. "Joining CTA-UTP telegraphed that new equity products were coming soon," he said. "Also, the choice of the International Securities Exchange name was no accident. I don't think the ISE wanted to limit itself to trading just domestically or to any particular type of instrument like options." Liquidnet, which opened in 2001 as a network for buy-side firms to complete block trades on a direct, peer-to-peer basis, through this year's first quarter traded a cumulative $544 billion in U.S. equities with an average trade value of $1.15 million. The average trade size, in tens of thousands of shares, dwarfs the 400 or fewer on the major stock exchanges, indicating that Liquidnet has succeeded at making trading life easier for its users. Liquidnet H2O, which was rolled out selectively last September and recently went into general release, was designed to "bring together the entire institutional equities market in a single venue," according to Merrin. "Our members' orders can now simultaneously interact with the largest pool of natural liquidity in the industry as well as smaller, execution-bound orders while providing price improvement on every execution." "Our [streaming liquidity] partners get to provide their clients with a better midpoint execution, which is huge for them," explained Steve Greenblatt, VP of corporate strategy at Liquidnet. He expects to add other partners that are now in testing or early stages of discussions. "For our clients, it allows the buy-side trader to maintain total control over his order," he added. "So rather than having to take an order and slice and dice it out into the market, he gets to create an order that he is in control of and soak up the liquidity of small, 300- to 400-share orders floating around the market without sending signals to anybody that he is doing so." Kim Bang, CEO of Bloomberg Tradebook, commented, "By aggregating block indication information with continuous market liquidity, clients have greater potential to extract larger [block] trade sizes with price improvement." Robert Gasser, CEO of executing brokerage and technology provider Nyfix, a Liquidnet competitor, said he thinks Liquidnet is going to have a hard time gaining critical mass. "They certainly do very well in the space they are focused on--the midpoint match," he said. "But now I think they are more aggressively entering our space, and at the end of the day it's going to be tough to do so." |
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UT grad student wins $50,000 in competition Patrick Christmas, a computer sciences graduate student, won for a computer algorithm he wrote. The competition was hosted by Greenwich, Conn.-based Interactive Brokers Group LLC, which offers electronic brokerage services. Christmas started with an account containing $100,000 in phantom money. Using his algorithm, Christmas earned an additional $120,000 in 10 weeks. http://austin.bizjournals.com/austin/stories/2006/04/24/daily7.html |
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ICE Stock Has Fan Base Among Nymex Staffers, Former Execs NEW YORK (Dow Jones)---A handful of senior-level staffers and former executives of the New York Mercantile Exchange (NYM.XX) have been sinking hard-earned cash into the stock of rival energy market IntercontinentalExchange Inc. (ICE), people close to the exchanges say. While Nymex, the world's largest energy exchange, doesn't bar top brass from buying or selling stock of its competitors - so long as staffers comply with insider-trading laws - strong interest in ICE at Nymex is a sign that the rising prominence of the Atlanta-based exchange has become obvious to even its biggest foe. Indeed, people close to both Nymex and ICE say past and present Nymex executives have placed hefty bets on ICE and its electronic energy market since the company went public Nov. 16. Shares of ICE, which is aggressively targeting Nymex's global commodities business, have climbed as high as $73.59 so far this year after debuting at $26 on the New York Stock Exchange. "I have been told a number of senior people at Nymex have bought ICE stock," said one person close to Nymex executives who asked not to be named. The person said one Nymex official openly discussed his investment in ICE at a recent industry event, claiming a number of other senior staffers at the exchange also held ICE stock. Perhaps the most well-known ICE shareholder associated with Nymex is J. Robert Collins, the New York exchange's president from July 2001 to June 2004. Collins, who cut ties with Nymex to start up New York-based energy hedge fund Mother Rock LP, has said he owns several million dollars worth of ICE stock along with Nymex equity of roughly the same value. Other former Nymex executives privately confirmed they held stock in ICE but, in the interest of maintaining their relationships with Nymex, requested their names be withheld. Nymex Execs Largely Mum Not surprisingly, those residing in Nymex's 15th floor executive suite either deny owning ICE shares or decline to discuss the matter, though exchange rules permit them to invest in equities freely. While conflict-of-interest rules forbid Nymex officers to trade futures or options at their exchange, they are allowed to dabble in equities without disclosing their positions. For that reason, Nymex was unable to verify whether executives were trading ICE stock on or around April 7, when Nymex and the Chicago Mercantile Exchange (CME) announced a distribution and revenue-sharing agreement. Shares of ICE shed about 25% of their value in the week leading up to the announcement. Richard Kerschner, Nymex senior vice president of corporate governance and strategic initiatives, said Nymex employees have always been made aware of the illegality of engaging in equities trading based on material nonpublic information, citing U.S. Securities and Exchange Commission rules. At the time of the CME deal, Nymex had no reason to believe its executives were trading stock of any of the exchanges, though it doesn't have a system in place to regularly assess staffers' private trading activities, Kerschner said. That isn't unusual. For its part, the CME also allows executives to invest in equities - including in competing companies - without surveying them, but bars officials from trading on the basis of nonpublic information, CME spokesman Allan Schoenberg said. "Typically, we don't consider it a conflict of interest for employees or board members to own a small investment in customers, vendors or competitors, such as less than 2% of a company's outstanding shares," Schoenberg said. In the week leading up to the CME's historic agreement with Nymex, its stock rallied to new highs. The price of a seat on Nymex, which plans to go public later this year, also hit a record. Hints Of Concern, Dissension Amid the antler-crashing and courtships among major U.S. futures markets, some industry observers think that any speculation by exchange staffers - especially top power brokers - should be done outside their sphere of influence. "In this day and age where there's a lot of scrutiny about conflicts of interest and inside information, the cost for executives of trading other exchanges seems a lot greater than the benefit," said Campbell Harvey, professor of finance at Duke University. "It raises a lot of eyebrows, obviously." Others said such activities could signal a certain degree of executive dissension over corporate strategy at exchanges such as Nymex. For example, ICE's increasingly popular electronic-trading model has bred tensions at Nymex, where pit traders have been shaken by the loss of business to the screen, said Steve Sanders, managing director of Interactive Brokers, an online brokerage firm in Greenwich, Conn. That, in turn, may have led some jittery Nymex executives to hedge their bets by investing in ICE, Sanders said. "Not everybody was in agreement with the Nymex position," he said, referring to the exchange's long-honored commitment to pit trade, where traders shout buy and sell orders. "There was a group that opposed it and was trying to fight it, so I can believe they might have bought ICE stock. If you weren't able to persuade the majority, you'd do the same thing." The recent about-face by Nymex, however, may mean fewer investments by its own in ICE. Under its agreement with the CME, Nymex plans to expand its electronic footprint by offering key energy futures contracts on Globex, the Chicago exchange's round-the-clock online-trading platform. Nymex hopes its revised strategy of offering electronic trading of its marquee energy futures contracts alongside pit trading later this quarter will undercut ICE, which plans to launch Nymex look-alike gasoline and heating oil futures contracts Friday. |
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The Online Finance 40 "Whether tethered or in a hot spot, these leaders are harnessing technology to reach new customers and grow." Thomas Peterffy moved up in the II ranking from a rank of 30 in 2005 to a rank of 23 in 2006. Thomas Peterffy, chairman of Interactive Brokers, insists on efficiency. Mr. Peterffy acknowledges that markets have become more efficient, but also that they still have far to go. "There’s still more need for liquidity, sophisticated dynamic-order routing, long and short position financing and direct access to some foreign markets," says Peterffy. Click here to read more. |
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A
New Kind of Exchange International Securities Exchange, an upstart electronic trading operation that in its short life has taken the lead away from the Chicago Board Options Exchange in options trading, has unveiled its own fully electronic stock exchange operation, ISE Stock Exchange. The move comes as long-established floor-based exchange venues like NYSE Group push to add the electronic trading systems that are increasingly in demand from broker-dealers, hedge funds and other investors. It also comes as long-stagnant regional exchanges get fresh infusions of capital from Wall Street firms that are eager to find more choices for executing their trades. Bear Stearns Cos., JPMorgan Chase, Deutsche Bank, Interactive Brokers Group, Knight Capital Group, Sun Trading and Citadel Derivatives Group have collectively tossed $32 million into ISE's new exchange, which aims to be up and trading by the end of the third quarter. ISE is the majority owner. Click here to read more. |
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Interactive
Brokers Announces Winner of Trading Olympiad Interactive Brokers Group named the winner of its first electronic trading Olympiad for colleges. Patrick Christmas, a graduate student at the University of Texas, started with an account of $100,000 in phantom money and earned an additional $120,000 in 10 weeks using computer algorithms. He developed the algorithms using IBG's Interactive Brokers Trader Workstation Application Program Interface. Christmas was awarded $50,000, and IBG will match that amount as a donation to his college, the University of Texas-Austin. Click here to read more. |
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Hiring the Next Generation of Quants The 10-week contest is open to any graduate student with an undergraduate degree in computer science or engineering, as well as undergraduate seniors and graduate students working toward degrees in those majors. "We're not looking for lucky students - we're looking for students who can put together a trading plan," says Sanders. http://www.wallstreetandtech.com/story/ showArticle.jhtml?articleID=184417510&pgno=2 |
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The
Wallendas Hit Wall Street Thomas Peterffy, the chairman of Interactive Brokers, wants to make single-stock futures trading as common as stock and options transactions, but he has a pretty high mountain to climb. For the average investor, they're a high-wire act product rivaling the Flying Wallendas. The main reason is margin; on paper, they look great. The margin requirements for single-stock futures are substantially less than for stock transactions: 20% as opposed to 50%. A trader looking to short an individual stock by borrowing shares could also avoid hefty interest rate charges on the borrowed stock by shorting a stock future, with its lower margin requirements, instead. |
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Interactive
Brokers Invests in OneChicago Stock Futures Exchange As a result of the transaction, Interactive Brokers joins Chicago Board Options Exchange (CBOE) and Chicago Mercantile Exchange (CME) as major investors in OneChicago. According to the release, Interactive Brokers -- which provides professional traders and investors with direct access to stocks, options, futures bonds and forex on over 50 market centers worldwide -- will combine its key strengths, including broad access to customers, market making expertise and advanced trading technology with those of CBOE, CME and CBOT, to accelerate the market's growing interest in security futures. Thomas Peterffy, chairman of Interactive Brokers, said in the release that Interactive Brokers' professional customers are realizing that stock futures are the low-cost alternative to margin loans or short rebates for financing their positions. "Interactive Brokers has the lowest margin rates in the industry, but by using stock futures on OneChicago, our customers can do even better," Peterffy stated. He added that the firm will work with its Chicago exchange partners to broaden the list of products, order types and facilities offered by OneChicago. Click here to read more. |
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CBOE invites investors to ‘bet the house’ Interactive Brokers chairman, Thomas Peterffy, said professional customers "are realizing that stock futures are the low-cost alternative to margin loans or short rebates." |
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Interactive Brokers Invests in OneChicago |
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Interactive
Brokers Makes Equity Investment in OneChicago The single stock futures exchange OneChicago LLC today said it received an equity investment from retail brokerage Interactive Brokers LLC. OneChicago is a joint venture of the Chicago Mercantile Exchange, the Chicago Board of Trade, and the Chicago Board Options Exchange. Terms of the Interactive Brokers investment were not disclosed, but the transaction makes the broker a "major" investor in OneChicago, according to a statement by the exchange. "We are ready to work with our Chicago exchange partners to broaden the list of products, order types and facilities offered by OneChicago," said Interactive Brokers Chairman Thomas Peterffy in a statement. |
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Barron’s
Review of Online Brokers This year Barron's evaluated trade execution, trading technology, usability, range of offerings, research amenities, portfolio analysis and reports, help and customer access, and cost when ranking the 27 web- and software-based online brokers, although readers made it clear that cost and technology were their two highest priorities for online trading. In the software-based competition, Interactive Brokers again earned the only 5-star rating for cost and garnered a respectable 4.7 for technology. IB was also noted as having a large number of partnerships with non-US exchanges, and extremely low fees for trading non-US stocks and currencies. IB earned an overall rating of 4.5. |
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Interactive
Brokers Strategy: Turning Technology into a Competitive Advantage Cutting edge technology plus low commissions plus a single customer account statement for all assets traded all add up to IBG, the multi-billion dollar enterprise that executes 17% of options worldwide and executes over two million equity options contracts daily. Steve Sanders, Managing Director, attributes IBG's continued technological successes to their ability to build and maintain their own technology front to back using in-house development. "Our technology people have been here for 20 years," explains Sanders "They're not moving around. It's easy for us to change things....We will never be hostage to old technology. If we find a better opportunity to deliver our products at a cheaper price, we're going to go for it." Click here to read more. |
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2006 Readers' Choice Awards Winner (top rank) Forex Brokerages –Interactive Brokers Winner (top rank) Stock Brokerages –Interactive Brokers Interactive Brokers is proud to be regarded so highly by the readers of Stocks & Commodities magazine, stated Steve Sanders, Managing Director, Interactive Brokers. |
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TSE Closed 20 Minutes Early “The [Japanese] market has rallied a tremendous 50% in just eight months," said Steve Kelsey, head of Asia Pacific Sales at Interactive Brokers in Hong Kong. “The market looked extended as you could see turnover was dropping. The market repeatedly tried to break the 16,500 level; however, each rally was made on lower turnover, indicating that bulls were already fully positioned and there was no new buying coming in.” |
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Interesting Brokers Insight “You may want to consider a deep discount broker, like Interactive Brokers (IB) or MB Trading. A search on this board for my posts from last spring will give you a detailed summary of these brokers. IB is the easiest to trade with, since you can trade through their Webtrader from any browser… One drawback of IB is a $10/month minimum commission requirement.” |
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Interactive
Brokers Trading Fees as Low as 1/10th of One US Cent a Share “We are introducing an unbundled price structure for equities trading along with a volume-based sliding scale, which translates into greater discounts for our customers who are active market participants," said IB Managing Director Steve Sanders. Click here to read more. |
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IB Launches Daily Options Market Statistics, Commentary “These statistics are not only important to the options markets but also to the stock and futures markets," said Interactive Brokers Managing Director Steve Sanders. "The key is that derivatives prices have built-in information that reflects the markets' consensus view of the future.” The IB options commentary
includes seven tables of options market statistics, supplemented by a
written summary of the day's highlights. |
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Tokyo, Hong Kong Climb Hong Kong shrugged off the influenza worries. "In Hong Kong, we're getting a surge of liquidity following on the back of the U.S. performance and recent U.S. economic data," said Steve Kelsey, head of Asia Pacific sales at Interactive Brokers. |
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NYT, Tribune Calls Busy “We have seen increased activity in New York Times and Tribune call options. It is likely the result of speculation of further consolidation in the sector after published reports that the Knight Ridder auction process is proceeding well,” said Steve Sosnick, equity risk manager at Timber Hill, a division of Interactive Brokers Group. |
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It’s
not the Pits Interactive Brokers, one of the largest options trading firms, will begin offering clients access to a pit trader at the CME and the Chicago Board Options Exchange later this month, adding the NYMEX later this year. Some clients want a human trader to handle contracts, especially those in the energy markets, says Steve Sanders, Interactive’s managing director for business development. Interactive has been resisting the move, Sanders said. "Our hope is still that everything will go electronic and the pits will disappear," he said. Click here to read more. |
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Calling
All Computer Geeks "We see a dearth of top computer science students interested in financial services," says Steve Sanders, head of IB Group’s business development. “It’s a real struggle to find talented programmers.” Click here to read more. |
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Sales Traders Hit Jackpot with Automation More institutions are bypassing traditional trading desks to cut costs… Knowledgeable sales traders can help bring in more commissions if they differentiate the brokerage’s offering with better service. “Consulting is turning into the main job. It's no longer just pushing the button, it’s education,” said Mike Domka, managing director at Interactive Brokers at a recent automated trading conference. |
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Top 50 Brokers It has led some in the industry to call for a re-examination of the exchanges self-regulatory organization (SRO) status. Steve Sanders, managing director of Interactive Brokers, would like to see a change. "There should only be one organization taking care of the regulation for all the exchanges. It is inefficient to have every exchange have its own group. It would be wonderful to have a utility that oversees everything in the futures and securities industry." |
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A
Breed Apart How a stubborn, penniless refugee defied Wall Street’s conventional wisdom to become a self-made billionaire –and a driving force behind the automation of global securities trading. “Thomas is one of those rare people who doesn’t seek fame or wealth for its own sake but focuses on doing what he considers to be right and necessary," says Philip DeFeo, who was CEO of the Pacific Exchange, one of the many stock and options markets that count Interactive Brokers as a member. “He risked everything to push for more efficient electronic trading networks and helped persuade the financial world these were possible and preferable,”DeFeo says. |
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See!
The Street was Paved with Gold When Thomas Peterffy moved to the United States in the 1960’s, he had little money in his pocket, no knowledge of English and no college degree. But Mr. Peterffy, an immigrant from Hungary, soon found a haven in computers. Over the next decades, Mr. Peterffy, now 61, built a multibillion-dollar business out of computer-based trading. The recent bidding for part of Refco, the commodities and futures brokerage giant, has thrown a rare spotlight on Mr. Peterffy’s private brokerage and market-making firm, Interactive Brokers, based in Greenwich, Conn. We felt that if we mixed this with another model, we would lose what is so special about us and what we are so proud of," Mr. Peterffy said. Click here to read more. |
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Refco Bidder Interactive Brokers Has Withdrawn Bid The departure of Interactive leaves Man Group Plc, the world’s biggest publicly traded hedge fund manager, a group led by the Dubai government and New York-based buyout firm J.C. Flowers & Co. among the remaining bidders for Refco assets. Interactive, based in Greenwich, Connecticut, had made the highest publicly disclosed offer, an $858 million bid for Refco units. The company won't comment on the auction because “it wants to respect the confidentiality agreement through the entire process,” Interactive spokeswoman Isabelle Clary said today in an interview. |
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Get
With the Program Interactive Brokers, which we rated the best software-based broker this year, didn’t earn that designation for resting on its laurels. One interesting innovation the firm has pursued is a competition among current college students studying computer science and engineering, in order to promote technological innovation for trading platforms. “This competition is intended to promote technology, computer science and engineering," says IB Managing Director Steve Sanders. “The students will be writing trading applications that could be used by any of the large firms on the Street.” Click here to read more. |
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Interactive Brokers sees surge in customers “ IB’s deep-discount commissions are truly setting a new industry standard and making it easier for a broad spectrum of customers to enjoy the industry’s leading direct-access global trading platform,” said Steve Sanders, IB managing director for business development. |
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JC Flowers is Back in the Race for Refco’s Assets Connecticut-based Interactive Brokers Group said it has submitted a bid equal to 115% of Refco’s net regulatory capital, or a bid of about $857.9-mil. “We believe that combining Refco’s tremendous marketing capability with Interactive Brokers' technology will result in the preeminent global futures and options broker,” IBG Chairman Thomas Peterffy said. |
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Fast Forward – Refco Initially, it looked as if the firm's futures business, which is still operating, would be snatched up by a consortium led by J.C. Flowers & Co, a private-equity firm. At least six other groups have shown interest in the futures business. The highest known offer is from Interactive Brokers Group, an American broker-dealer, whose bid is worth $858m. It also says it is looking at Refco's broker-dealer arm. |
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Online Broker Says It Is Eyeing Refco’s Assets “We believe that combining Refco’s tremendous marketing capability with Interactive Brokers’ technology will result in the preeminent global futures and options broker,” Peterffy said. |
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Interactive Brokers Would Operate Refco As Separate Unit Interactive, which also has been aggressively courting Refco brokerage customers through newspaper advertisements, has said it is willing to buy the Refco businesses for 115% of their net regulatory capital, or about $857.9 million, based on current estimates. Interactive Chairman Thomas Peterffy said in a prepared statement Wednesday that Refco's customers and sales people would be able to retain their current commission and pay structures, while their trades would be processed through Interactive's “more efficient” systems. |
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Unlikely
Refco Candidate, With Vision When Thomas Peterffy first stepped into the options trading pits at the American Stock Exchange in 1977 the young trader immediately drew attention to himself –and not just because of his Hungarian-accented English. The former computer programmer was carrying a contraption he had designed to trade options contracts electronically –bypassing the face-to-face trading that floor traders had used for years. “People were rather suspicious," says Mr Peterffy, now 61 and chairman of Interactive Brokers, which on Wednesday signed a confidentiality agreement with the collapsed broker Refco over its plan to bid for the group’s futures unit. “But then people realised how much money could be made trading this way –once I got the kinks out of it,”he recalls. Click here to read more. |
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Flowers Halts Bid for Refco Brokerage Unit U.S. broker-dealer Interactive Brokers Group has made the highest known offer. Interactive raised its bid Monday to about $858 million, topping a new bid worth $828 million from a partnership of the Dubai government and Yucaipa Cos. |
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Interactive Brokers Raises Refco Bid Interactive Brokers LLC has raised its offer to 115% of the unit’s net regulatory capital, Steve Sanders, managing director for business development at the Greenwich, Conn.-based options and futures brokerage, said on Tuesday. “The regulated futures unit is still a very sound business,” Sanders said in an interview. “It’s not in a lot of trouble. That’s the capital markets side of Refco. |
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Five More Firms Heat Up Bidding for Refco Futures
brokerage firm Man Financial; Marathon Asset Management LLC; Apollo
Capital Management LLC; and DIGL Inc., a Delaware corporation formed by
Dubai Investment Group LLC and The Yucaipa Cos. LLC, all told US
Bankruptcy Court in Manhattan they are interested in Refco assets. Interactive Brokers, an options trading and brokerage firm, first submitted a bid of $791 million for the assets, then raised the bid yesterday to $858 million. |
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Man Enters Bidding for Scandal-hit Refco Man, the world’s largest listed hedge fund group, may make an offer for Refco's futures brokerage or may target the whole company, including its securities broker business and an unregulated trading arm aimed at sophisticated investors such as head funds. A buyout group led by the Dubai government and the billionaire Ronald Burkle put in a $828m (£468m) bid yesterday but it was topped by Interactive Brokers, which offered $858m last night for Refco's regulated brokerage business. |
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Refco Bidding Heats Up as Merrill Makes Buyout Offer “The judge wants it to move very quickly,” said Arthur Hahn, a lawyer for Greenwich, Connecticut-based Interactive, the largest independent U.S. broker-dealer. Interactive, started 28 years ago by Chairman Thomas Peterffy, 61, is the largest U.S. market-maker in stock options, according to Bill McGowan, a managing director at the closely held company’s Chicago office. |
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One Dropout and New Bids for Refco Unit Interactive Brokers, a broker-dealer based in Greenwich, Conn., currently has the highest bid. “It’s an error to look at this as a private equity deal where private equity investors buy it and shape it and flip it around,” said Thomas Peterffy, chief executive of Interactive Brokers. “You need experience in the commodities business, if not the technology as well.” |
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Interactive Brokers Interested in Refco Securities U.S. broker-dealer Interactive Brokers Group (IBG) has the highest known offer on the table for Refco’s futures unit, at about $858 million, after a group led by J.C. Flowers & Co. suddenly withdrew from the fray on Monday. Whether IBG bids on Refco broker-dealer Refco Securities would depend on what the due diligence process determines, Peterffy said in an interview. |
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Electronic Trading Guru Bids for Refco Two decades on, Peterffy’s privately held Interactive Brokers Group LLC in Greenwich is trying to outbid competitors in the $4.5 trillion-a-day global futures market as he seeks control of Refco Inc., the trader that collapsed Oct. 17 amid a fraud probe. |
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Interactive Brokers Lowers U.S. Equities and Options Fees Unlike other brokers, IB does not have any additional ticket charge. |
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Five More Refco Bidders Emerge |
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Interactive Brokers Lowers Fees The announcement follows last week’s news that IB was cutting fees for trading futures worldwide. “This sets a new industry standard in deep-discounted commissions for professionals,” said Interactive Brokers Group (IBG) Chairman Thomas Peterffy. IBG last week also submitted a bid for the exchange-listed futures business of Refco LLC. |
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Interactive Brokers Lowers U.S. Equities and Options Fees The announcement follows last week’s news that IB was cutting fees for trading futures worldwide. Institutional Investor ranked IBG as the 16th largest U.S. securities firm with capital of about $2 billion. IB also won the top ranking in Barron's annual survey of software-based online broker |
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Flowers Drops $768M Bid for Refco Business The decision by the Flowers group leaves Refco without a “stalking horse” in its effort to sell its regulated futures business. DIGL's bid would have topped the Flowers bid by $60 million. Interactive Brokers, an options trading and brokerage firm that previously bid on the unit, lodged a new bid Monday that would top the DIGL offer by $30 million. |
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Single Buyer Best, Rogers Says “If someone nimble and quick comes in and buys the whole thing, that would be a great thing,” Mr. Rogers said. “But in the world we live in now, if we get legal delays that would be a different thing.” Thomas Peterffy's privately held Interactive Brokers Group LLC in Greenwich, Conn., has bid US$790-million for Refco’s regulated futures-trading unit, competing with a US$768-million bid from New York buyout billionaire Christopher Flowers that was accepted last week. |
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Interactive Brokers Cuts US Equities, Options Fees Unlike other brokers, Interactive Brokers said it does not have any additional ticket charge. Interactive Brokers is the parent of market-making and specialist firm Timber Hill and agency broker Interactive Brokers LLC, which together handle about 19 percent of North American and 16 percent of the world’s listed options volume. |
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Interactive Bids Tops All Offers “ Refco is more desirable to us than to anybody else,” said Thomas Peterffy, chairman of Greenwich, Connecticut-based Interactive Brokers. “It is important that whoever ends up the winning company should be thoroughly versed in the business, financially solid, and has good enough risk management so that no surprises should occur in the near future.” |
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Interactive Brokers Cuts U.S. Equities and Options Fees The move follows the privately-held trading and brokerage firm's announcement last week that it was cutting fees for trading futures worldwide in response to a surge in new customers. Interactive Brokers said it will continue to enhance and upgrade its direct-access global trading platform. |
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Refco: Weak Regulatory, Technology Links Exposed “The point of the campaign wasn't necessarily to get thousands of transfers in the next week--it was from more of a branding perspective to tell people we have a better technology platform, and you're better off with us," said Steve Sanders, IBG managing director of business development. In contrast to his firm's technology, he deemed Refco’s to be antiquated, with much of its trading conducted over the phone. |
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Interactive Brokers Bids for Refco Unit Greenwich, Conn.-based Interactive submitted a $790 million bid late Thursday, Oct. 20, 6% more than the $768 million offer from private equity firm J.C. Flowers & Co., which signed a memorandum of understanding with Refco on the eve of its bankruptcy filing Oct. 17. Gary Mennitt, Martin Nussbaum, Charles Weissman and Glenn Siegel of Deckert LLC in New York are counsel to Interactive, which has not retained an outside financial adviser. |
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Money Manager Hopes for Swift Refco Rescue Thomas Peterffy’s privately held Interactive Brokers Group LLC in Greenwich, Conn., has bid $790-million (U.S.) for Refco's regulated futures-trading unit, competing with a $768-million bid from New York buyout billionaire Christopher Flowers that was accepted last week by Refco. Interactive Brokers is the only bid so far to challenge Mr. Flowers’s J.C. Flowers & Co. LLC. |
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Bidder Wants Quick Approval on Sale Plan New York-based buyout firm J.C. Flowers' bid of 103 percent of the value of Refco’s regulated assets was equal to $768 million. Interactive Brokers Group LLC, the largest closely held broker-dealer in the nation, bid $790 million Thursday. |
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Interactive Brokers Bids for Refco’s Futures Unit Interactive Brokers is “prepared to execute a memorandum of understanding, on the same terms as Flowers,” except for the increased purchase price and the absence of a break-up fee, according to the letter sent to Skadden Arps Slate Meagher & Flom. |
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Interactive Challenges Flowers for Refco Unit Interactive traces its roots
back to 1977, when Thomas Peterffy, the chairman, bought a seat on the
American Stock Exchange and began trading. |
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Peterffy,
Refugee Pioneer of Electronic Trading, Bids for Refco Two decades on, Peterffy’s privately held Interactive Brokers Group LLC in Greenwich, Connecticut, is trying to outbid competitors in the $4.5 trillion-a-day global futures market as he seeks control of Refco Inc., the trader that collapsed on Oct. 17 amid a fraud probe. "He literally started with nothing and has built a multibillion-dollar enterprise," says Sandy Frucher, 59, chairman and chief executive officer of the Philadelphia Stock Exchange, where Interactive Brokers is one of the biggest market-making firms. “He was the first to recognize the power of electronic trading.” Click here to read more. |
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Refco Competitor Submits Bid “We anxiously await the response of Refco,” said Gary Mennitt, an attorney representing Interactive Brokers Group, a closely held Greenwich, Conn., firm reporting assets of about $2 billion. J.C. Flowers and Refco couldn't be reached for comment. |
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Broker-Dealer Submits a Bid for Refco’s Futures Business The Interactive Brokers Group, a broker-dealer, said yesterday that it had submitted a bid for Refco's futures brokerage business that tops an offer from an investor group led by J. Christopher Flowers. This new bid, like any others that are submitted, will become part of an auction held by a bankruptcy court. Refco filed for protection on Monday night. Interactive Brokers, based in Greenwich, Conn., is the parent of the market-making and specialist firm Timber Hill and the agency broker Interactive Brokers, which together handle about 19 percent of options volume in North America and about 16 percent worldwide. It said its bid did not include a breakup fee. |
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Second Refco Bidder Leads to Potential Auction of Assets The interest of a second bidder is expected to drive the price of the embattled company up as a number of other parties could join the bidding war for Refco's regulated businesses, including Refco Overseas, which controls its LME ring dealing operations. |
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Bidders Form Queue in Refco Auction IBG’s offer of around $790m, subject to the amount of Refco’s net capital, is $22m higher than the $768m offered by JC Flowers. |
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Refco Seeks Permission to Sell Assets as Second Bidder Emerges The hearing will be a battleground for competing bidders seeking to buy Refco's regulated business. New York buyout firm J.C. Flowers & Co. on Oct. 17 signed an agreement to buy the business for $768 million. Interactive Brokers Group LLC yesterday countered with an offer valued at $790 million. |
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Refco Competitor Submits Bid That Trumps J.C. Flowers Offer J.
Christopher Flowers and his group of investors have tentatively agreed
to buy Refco's regulated futures unit for about $768 million. That bid
is about 3% above the value of the unit's "net regulatory capital,"
which is a conservative estimate of its book value. Interactive
Brokers' bid adds up to about $790 million, or 6% above the unit's book
value. |
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Interactive Pursues Refco Business Interactive Vice Chairman Nemser claimed in a telephone interview that his firm in the past few days has received “a lot of new accounts” from institutional investors and professional traders on the floors of options and futures exchanges where it has a strong reputation. He wouldn't quantify the new accounts. “We aim to provide a better service to Refco customers and will do that by buying the company or by competing for them in the open market,” Nemser said. “We think the Flowers price is very low and will oppose the MOU vigorously.” |
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Debate Brews Over Whether Refco LLC Salvageable Interactive Brokers Group LLC said Thursday it received a stream of new business after posting an advertisement in The Wall Street Journal and other major financial publications this week specifically targeting Refco customers. “We’ve have gotten between 30 and 50 transfer requests from larger-type customers since placing the ads,” said Steve Sanders, managing director of marketing and business development for Interactive Brokers, based in Greenwich, Conn. Sanders said his company takes low-cost futures commissions and has discounted rates even further for Refco customers. |
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Interactive Pursues Refco Business In Court, Press The said it cut the minimum commissions it charges for futures trades in half and the maximum commission by 8% to lure business. Interactive also is running aggressive ads headlined "Attention Customers of Refco" in The Wall Street Journal, Barron's, The New York Times, The Financial Times, the Chicago Tribune and a Swiss financial publication, a spokeswoman said. |
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Refco Gains Rival Bid for Futures Brokerage Ops Interactive Brokers, a privately-held company based in Greenwich, Conn., said it's offering to pay 106 pct of net regulatory capital, rather than the 103 pct offered by Flowers. The firm also said it will not require a break-up fee. |
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Firm’s Fire Sale Imminent The
names of two bidders surfaced in court: Volume Investment Group and
Interactive Brokers Group LLC, a Connecticut electronic trading firm. |
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Refco Receives Rival Bid for Futures Brokerage Unit Interactive Brokers, a privately held firm in Greenwich, Conn., didn't specify the terms of its proposal but said it would be higher than the preliminary agreement, valued at $768 million, that Refco currently has with a private investor group led by J. Christian Flowers. Interactive Brokers said it's offering to pay 106% of net regulatory capital, rather than the 103% offered by Flowers. |
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IBG Makes A Play On Refco's Futures Business Interactive has $2 billion in capital and about $3.4 billion in customer assets (although the Commodities Futures Trading Commission reports the figure to be substantially lower because the firm sweeps funds into overnight securities accounts). The broker-dealer is trying to top an offer from a group led by former Goldman Sachs banker Christopher Flowers, who late Monday agreed to buy the commodities trading operations for $768 million. |
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Interactive Brokers Bids for Refco’s Futures Business Interactive Brokers is “prepared to execute a memorandum of understanding, on the same terms as Flowers,” except for the increased purchase price and the absence of a break-up fee, according to the letter, sent to Skadden Arps Slate Meagher & Flom. |
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Interactive Brokers Submits Bid for Refco IBG is the parent of market-making and specialist firm Timber Hill and agency broker Interactive Brokers LLC, which together handle about 19 percent of North American and about 16 percent of the world's listed options volume. |
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Interactive Brokers Vie for Investors Refco, which filed for bankruptcy protection this week, agreed to sell its regulated futures trading units for $768 million to J.C. Flowers & Co. The sale is subject to court approval. The mass exodus from Refco is providing a rare window of opportunity for the Greenwich brokerage as it tries to build a bigger name for itself in the world of futures and foreign exchange trading, said Steve Sanders, Interactive Brokers' managing director. “We’ve been getting inquiries since last Monday,” Sanders said. “Today we had 100 calls to transfer over accounts.” |
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Refco Lawyers Push to Speed up Sale Interactive Brokers Group is also interested, according to company attorney Gary Mennitt of Drechert LLP, who appeared at the hearing. Interactive Brokers Group is the parent of market-making and specialist firm Timber Hill and agency broker Interactive Brokers LLC. |
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Bidders Start to Circle over Refco Business Rival bidders would be likely to include a consortium of private equity group Blackstone and the Dubai government's investment arm. Man Group's interest is believed to have cooled. But rivals such as Interactive Brokers are circling. The company took out a full-page ad in the Wall Street Journal inviting Refco account holders to transfer business. |
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Refco Seeks Quick Sale of Unit A consortium of private buyout firms, led by J.C. Flowers & Co. LLP, tentatively agreed late Monday to purchase the subsidiary, Refco LLC, for $768 million, potentially salvaging one of the few divisions in the company that have not filed for bankruptcy. Gary J. Mennitt, a lawyer for Interactive Brokers Group LLC, said at the hearing that the Refco competitor would be interested in bidding on the unit. A group backed by the Dubai government also is reportedly interested. |
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Refco Files for Bankruptcy, to Sell Core Unit The firm's downfall has triggered a rush from its rivals to pick up its business, with Interactive Brokers LLC on Tuesday taking out a full-page advertisement in the Wall Street Journal saying it was ready to accept account transfers from Refco. |
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Picking Up the Pieces: Refco Hedge Fund Clients Move On In the last week the number of sales calls Michael Domka, managing director, sales and marketing at Interactive Brokers LLC began to pick up. He says IB’s global stales staff is making and fielding calls from around the globe from current Refco clients that are either looking to move assets and positions to their existing IB accounts or clients looking to start a new relationship with the firm. |
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Interview with IB Gerald Perez A: Our organisation has set out to become the lowest cost producer for Universal Direct Access in the industry. We have done so by using economies of scale and scope. We plan on doing more marketing in the Middle East. Today we do have a good amount of buy- and sell-side clients in the Middle East which has been growing steadily and luckily our clients are spreading the news in the Gulf States about our offering. |
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Interactive Brokers introduces flat-fee pricing for online trading |
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Algorithms Go Beyond Equities “We’ve certainly been doing it for years with options as options market makers,” he says, noting that Interactive Brokers has always had a multi-product platform spanning stocks, options, futures, FX and bonds. The firm employs algorithmic solutions using the same technology it makes available to customers. “Electronic access to stocks has been much more prevalent than for options and futures over the years,” says Sanders. “Now that those [other asset classes] are catching up, particularly FX, there are certainly ripe areas for the same algorithmic solutions that have been applied in the stock realm.” |
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Interactive Launches Trading Competition The firm, involved in trading technology for 28 years, has launched a contest to encourage computer science and engineering students to use their degrees in the financial world. “It's very hard to recruit good technology talent,” said Steve Sanders, managing director of Interactive Brokers LLC, a unit of IBG that was recently named by Barron's as the top software-based brokerage for investors and traders. “Part of the problem is that many students just don't know that there are lucrative career opportunities in the trading industry, said Sanders. http://www.greenwichtime.com |
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Interactive
Brokers Launches $400,000 Trading Olympiad “The IBG group has been a pioneer of electronic trading since its origin in 1977,”said Interactive Brokers LLC Managing Director Steve Sanders while announcing the competition. IBG is the parent of market-making and specialist firm Timber Hill and agency broker Interactive Brokers LLC, which together handle approximately 19 percent of North American and about 16 percent of the world's listed options volume. IBG is the 16th largest U.S. broker-dealer group with about $2 billion in capital. Click here to read more. |
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IB Launches $400,000 Trading Olympiad Students whose trading technology generates the highest profits will earn: 1st place prize, $50,000, 2nd place prizes, 2 students, $25,000, 3rd place prizes, 10 students, $5,000 each, and placing prizes, 100 students, $1,000 each. “The IBG Group has been a pioneer of electronic trading since its origin in 1977,” said Interactive Brokers LLC Managing Director Steve Sanders while announcing the competition. |
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Interactive Brokers Launches $400,000 Trading Olympiad for Colleges “The past three decades witnessed the great story of a small firm that has grown into a global brokerage services company which accesses over 50 markets around the world,” said Interactive Brokers LLC Managing Director Steve Sanders. “But this is still an ongoing story. We want the new generation to be part of this development.” |
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CBOE Says Proceeding with For-Profit Plan Bill McGowan, managing director of Interactive Brokers LLC, noted CBOE’s new offerings and enhancements in technology have allowed them to remain in the forefront as it competes against five markets for order flow. “During the last couple of years, the CBOE has continued to make progress in changing their technology, including the hybrid system featuring remote market making,” he said. Timber Hill, a division of Interactive Brokers Group, is the largest options specialist in executed volume and has a substantial operation on the CBOE floor. |
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American Express Shares Surge Ahead of Meeting Steve Sosnick, equity risk manager at Timber Hill, a division of Interactive Brokers, said options open interest, or contracts outstanding, in American Express has been “huge.” “The volume is more concentrated in the calls than puts and there appears to be net call buying,” Sosnick said. |
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Interview: Hong Kong Slowly Catching On to Options “Five years from now, there’s no reason why options trading volumes couldn’t be five or 10 times bigger than they are now as investors get more knowledgeable and realize that options are cheaper than warrants and offer more flexibility,” said Friedland who is managing director of Timber Hill Securities Hong Kong, a market-maker for equity and index options in the city. Trading activity is still relatively small but on the rise, said Friedland. |
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Nasdaq Tests Waters of Options Market “I think this is all part of the larger, very substantial paradigm shift that the capital markets in the U.S. are going through,” said Bill McGowan, managing director of global electronic broker Interactive Brokers LLC. “Everyone is hedging their bets and they’re all going to try to come up with a multiplatform model.” McGowan expected to see some “very unique” combinations of exchange as the industry changes. |
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Boston Exchange to Launch Electronic Platform “It is telling the Street and the world… electronics is here and this is the way of the future,” said Bill McGowan, managing director of Interactive Brokers LLC, a global electronic broker, which launched a counter offer for a stake in the PHLX after it announced investments by the banks. |
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PHLX Signs Four Equity Partners Steve Sanders, managing director for business development at Interactive Brokers in Greenwich, Conn., agreed that PHLX needed to make such a move to compete in the rapidly changing options landscape. “I have to give them credit for taking something that was dying and building something new,” Sanders said. “PHLX did a good job of understanding what it takes to survive and what type of model is needed to put together in order to get the volume.” |
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Research in Motion, Intel in Deal “Rumors
have it that RIM will announce a deal with Intel to use their chips,”
Sean Flynn, options trader a Timber Hill, a unit of Interactive
Brokers, told Reuters. “Options volume is heavy with the bias on upside
call buying,” he said. |
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SEC To Provide Reg NMS Guidance “The industry as a whole is facing an overhaul of the entire market system and the SEC needs to clearly define fundamental structure changes,” said William McGowan, managing director of Interactive Brokers. |
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Interactive Brokers Offers to Buy 20% Stake in PHLX The offer came in a letter date Aug. 16 from Interactive Brokers Group Chairman Thomas Peterffy, amid news that four financial services companies acquired a combined 25% stake in the Philadelphia market for $18.75 million, with warrants for additional stakes. |
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Four Banks Buy Stake in Philadelphia Exchange Four banks are buying a combined 25 percent equity stake in the Philadelphia Stock Exchange for a total of $19 million, the fourth-largest U.S. equity options exchange said on Tuesday. Bill McGowan, managing director at Interactive Brokers LLC, a global electronic broker, said that other investment banks could be interested in the Boston Stock Exchange. “I think these firms would be taking their technology, proprietary trading and customer order flow to create another competitive electronic marketplace.” |
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Selling Naked Puts for Fun and Profits Elenbaas collected $400 for selling 20 puts. This excludes trading costs, which he keeps to a minimum with Interactive Brokers, a no-frills online brokerage firm that charges cheap commissions of $1 per option. Because put-selling carries the obligation to buy stock in a declining market, Interactive Brokers requires him to cough up margin. Meanwhile, the brokerage firm also pays him 3% interest for keeping that money in the account. |
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Investors eye GAP options “With a number of companies having been taken private over the past six months, people can't completely discount a rumor like this,” said Jeff Shaw, chief options trader at Timber Hill, a division of Interactive Brokers. |
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Selling
Naked Puts for Fun and Profits Meet Tony Elenbaas, an Annapolis, Md., resident who wrings annual returns of more than 25% from his option trades…And when he ventures into the option market, he is a naked-put seller. Elenbaas collected $400 for selling 20 puts. This excludes trading costs, which he keeps to a minimum with Interactive Brokers, a no-frills online brokerage firm that charges cheap commissions of $1 per option. Because put-selling carries the obligation to buy stock in a declining market, Interactive Brokers requires him to cough up margin. Meanwhile, the brokerage firm also pays him 3% interest for keeping that money in the account. Click here to read more. |
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Boston Options Exchange Says SEC Broker Probe May Be a Boon At least six companies requested information last week on hooking up to the all-electronic BOX, Easley said, a surge in interest he attributes to the SEC probe. About 40 companies are currently connected. The BOX was founded by the Boston Stock Exchange, the Montreal Exchange and Greenwich, Connecticut-based Interactive Brokers Group LLC. |
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ISE Initiates Trading In ISE 250 Index The index’s components have an adjusted capitalization of about $9 trillion. Timber Hill LLC, a unit of Interactive Brokers LLC, will serve as the index’s Primary Market Maker (PMM). The ISE 250 Index will trade on a March expiration cycle in bin 7. |
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Google Volatility Is Pushed Higher On Friday, Google’s in-the-money August 300 calls traded 3,341 contracts and rose 40 cents to $18.40 at the International Securities Exchange. Its August 300 puts traded 1,395 contracts and fell 10 cents to $16 at the ISE. “If you had deep pockets and a lot of guts, you could sell that straddle and come back in a week,” said Jeff Shaw, head trader at Timber Hill, the market-making unit of Interactive Brokers Group. |
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SEC Queries Brokers on Pricing Option Trades Two new options-trading platforms, the International Securities Exchange and the Boston Options Exchange, have started trading option contracts in pennies. The Boston exchange offers the ability to get a better price on a trade and has statistics on its Web site saying it has saved investors $18 million this year through price improvement. “If all brokers used smart-routing software that looked at all the exchanges and also tried to get price improvement when it was available on BOX or someplace else, payment for order flow probably would disappear,” said David Battan, general counsel for Interactive Brokers, which owns 20 percent of the Boston exchange. |
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Move to Pennies Raises Market Data Issue Stocks went immediately to moving in penny increments, but options were held to five- and 10-cent moves for several reasons. “We all know that we are headed toward pennies, but there is a lot of infrastructure work and there has to be a lot of work done on quote mitigation in order to succeed,” said Bill McGowan, managing director of Interactive Brokers LLC. |
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PCX Penny Ruling Sparks Debate Bill McGowan, managing director of Interactive Brokers in Chicago, told FO Week that front end software vendors and data vendors may not be able to handle pennies. Many options firms may not be either. “Talk to Reuters or Bloomberg, anyone providing data feeds, and they’ll tell you that options quoting and options trading equates to only five- to 10-percent of their overall revenue,” McGowan said. “Yet, today, it takes up to 60 percent of their bandwidth. Are they really going to spend more money on this for a five- to 10-percent revenue stream?” |
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PCX decision to trade options in pennies “I think options were heading toward penny increments anyway to match what the cash market is doing. The industry expected this sooner or later,” said Bill McGowan, managing director of Interactive Brokers in Chicago. “First BOX [Boston Options Exchange had PIP, which [allows participants] to trade in pennies. Then, the International Securities Exchange filed for PIM to give it the same right to price-improve in pennies. All the exchanges were migrating over to pennies through price-improvement mechanisms,” McGowan said. |
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CBOT traders’ choice: Sell or float Some CBOT members say that for the right combination of cash and stock, they would opt for a merger and forgo the opportunity to take the CBOT public. “I think (the CBOT) could get the members to approve that,” says William McGowan, managing director at Interactive Brokers LLC in Chicago, which owns memberships at the exchange. |
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EMC shares rise on rumor “There are rumors that Cisco is considering a bid for EMC,” said Jeff Shaw, chief options trader at Timber Hill, a division of Interactive Brokers. “People are placing cheap bets that the rumor may have some truth to it.” |
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BEA options in hot demand Options traders are building bullish positions in BEA Systems Inc. on speculation the business software maker could soon be the next company bought by software giant Oracle Corp. “There were takeover rumors regarding Bea Systems and Oracle was mentioned,” said Steve Sosnick, equity risk manager at Timber Hill, a division of Interactive Brokers. “Anytime there are rumors, you will see call buying.” |
6/29/05 - Charlotte Observer - Interactive Brokers Launches New Interactive Analytics
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Interactive Brokers Launches New Interactive Analytics The new IA, available to all IB customers as part of IB’s Trader |
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IB Launches Interactive Analytics “Our customers are sophisticated traders who need sophisticated tools,” said IB Managing Director Steve Sanders. “IB makes it available as an integral part of its value-added offering.” IB is a unit of the Interactive Brokers Group, the 16th-largest U.S. broker-dealer with $1.9-billion capital. IB is the gateway to trading a broad array of financial instruments – stocks, options, futures, corporate bonds as well as foreign exchange – on over 50 exchanges and marketplaces in 14 countries. |
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CBOT gets offers for “combination” “I’d sure love to see at least some real serious discussions happen along those lines,” says William McGowan, managing director of Interactive Brokers in Chicago. “It would really make Chicago a powerhouse.” Mr. McGowan pointed out that a major sticking point for such a transaction could be the CBOE’s regulation by the Securities and Exchange Commission. The two futures exchanges are governed by the Commodity Futures Trading Commission. |
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Buyers Score with Ameritrade News Steve Sosnick, equity-risk manager at Timber Hill, an options-trading unit of Interactive Brokers, said a good mix of buyers and sellers surfaced in options on Ameritrade in morning trading, as investors awaited confirmation of deal speculation already in the marketplace. “But from noon on, the bias changed,” Mr. Sosnick said, noting that people started buying Ameritrade’s upside calls about two hours before the Omaha, Neb., company’s official announcement. |
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Consolidation in the cards for US Brokers Interactive Brokers Managing Director Bill McGowan remarked that medium-size brokers face steep competition on two fronts: from the bulge-bracket firms, such as Goldman Sachs and Merrill Lynch, and from niche firms that cater to specific groups of market participants with a highly targeted offering. Amid the growing tendency for portfolio diversification, McGowan stressed the appeal of one-stop-shopping firms that offer a wide array of products on multiple markets around the world. |
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Wachovia to add branches “Somebody has been very eager to buy August 30 calls. I heard nothing specific for the reason behind the call buying,” said Steve Sosnick, equity risk manager at Timber Hill, a unit of Interactive Brokers. |
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Screen energy brings in IB The recent moves into electronic trading of energy futures by the International Petroleum Exchange (IPE) and New York Mercantile Exchange (Nymex) have attracted Interactive Brokers, the firm announced last week. IB said it now is offering customers access through its “Universal Account” to energy futures on IPE’s electronic platform and Nymex’s e-miNY crude and natural gas futures. Nymex expects to complete the migration of the products from Chicago Mercantile Exchange system to its ClearPort platform on July 19. |
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Over There, Online Interactive Brokers has a lot to offer investors in foreign shares. Its “Trader Workstation” provides direct access to stocks, options, futures, foreign exchanges and bonds that can be bought and sold in more than 50 markets in 14 countries, with more on the way. IB’s wide range of offerings and low fees earned it the top spot among direct-access brokers in Barron’s 2005 review of online brokers (“Speed or Comfort,” March 7) |
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Systems and Services Now available are light, sweet crude oil e-miNY and natural gas e-miNY contracts from the New York Mercantile Exchange, in addition to Brent crude oil futures and gas oil and natural gas contracts from London's International Petroleum Exchange. |
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Interactive Brokers Adds Energy Futures Greenwich, Conn.-based IB has started trading Brent crude oil futures as well as gas oil and natural gas contracts on London’s International Petroleum Exchange (IPE). The firm will begin trading futures on light, sweet crude oil e-miNY and natural gas e-miNY contracts on the New York Mercantile Exchange (Nymex) on July 19. |
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PHLX says going public is ultimate goal “Smaller exchanges, such as Philadelphia, are looking for strategic partnerships that would allow them to modernize and compete against those giants and help maintain the high degree of competition that is so beneficial to the investing public,” said Interactive Brokers Managing Director Bill McGowan. |
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Interactive Brokers to Launch Trading in Energy Futures “Electronic trading is making strong inroads across all markets, with more and more exchanges adopting the virtual model,” said IB Managing Director Steve Sanders. “Electronic trading supports portfolio diversification, creating new opportunities for investors and professional traders.” |
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EA shares rise as higher sales expected Jeff Shaw, chief
options trader at Timber Hill, a unit of Interactive Brokers Group,
said there was heavy trading in the June options that give the right to
buy or sell EA shares at $55 by Friday. |
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Options report A customer sold about 42,000 put options on the iShares Russell 2000 index fund that tracks the small-capitalization stock benchmark, probably “throwing in the towel” on an existing position before it expires next week, said Jeff Shaw, head of trading at options-trading firm Timber Hill, a unit of Interactive Brokers. |
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Wendy’s shareholders Move to Restructure Trading in Wendy's options, which give the right to buy or sell stock at a preset price within a specified time period, was about five times higher than normal volume early Friday afternoon. Al Thompson, options trader at Timber Hill, a unit of Interactive Brokers Group, said traders “were citing rumors of leveraged buyout interest in Wendy’s.” |
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Interactive Readies Reference Data Upgrade Any reference data on commissions, transactions, CUSIP numbers or other information, noted Steve Sanders, managing director for business development at Interactive Brokers of Greenwich, Conn., can be accessed with the enhancement. Interactive Brokers will support XML formats as a result of the upgrade because its large institutional clients have their own portfolio management application and wanted to upload their reference data into their systems. Sanders declined to reveal the names of the firms. |
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Altria Group Sees Heavy Activity |
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Susquehanna sells exchange business |
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Algorithmic Trading Steve Sanders, managing director of business development and marketing, Interactive Brokers, a global electronic discount brokerage, said: “Access to oil, gas, gold and ETFs… a good algo trader should have access to all these products and be able to trade them in one account to maximize margining opportunities.” |
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Google stock jumps “There is speculation that Google might be added to the S&P 500. If they add it, portfolio managers will have to buy Google, to keep their weightings in line with the S&P,” said Sean Flynn, an options trader at Timber Hill, a unit of Interactive Brokers Group. |
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Ahead of the Curve Approved by the Securities and Exchange Commission (SEC) on April 6 by a narrow 3-2 margin, Regulation National Market System (Reg NMS) contains the most sweeping U.S. financial market reforms since the NMS was mandated by Congress in 1975. Thomas Peterffy, chairman of global direct-access firm Interactive Brokers Group, said the expense of modernizing the U.S. markets will, ultimately, be well worth the effort. “The linking of all markets for qualified securities through communications and data processing facilities will foster efficiency, enhance competition, increase the information available to broker-dealers and investors, and contribute to best execution,” Peterffy predicted. |
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Increasing the options Today, Interactive Brokers Group is a $1.5 billion dollar firm, and one of the world’s leading brokerage services with access to more than 40 market centers in 16 countries. “We have expanded into global markets because of our view that the efficient allocation of risk capital must be a global process. Being at the forefront of this process, we’ll be able to be of maximal benefit to the global economy,” Peterffy explains. |
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Back to the Future Through IB's Universal platform, customers can trade equities, exchange-traded funds, options, futures, foreign exchange and bonds on global markets from a single account in a single currency. Keeping an eye on the evolution of those markets, and how they interconnect, is a priority for IB. Their commentary covers 17 North American exchanges, eight European exchanges, and six Asian exchanges. It's definitely worth a look if you're at all interested in trading international equities. |
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NYSE Deal and PCX Price |
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Ops Pros Speak Out “We built the back-office to be integrated. We have been doing straight-through processing for the past six years. It is the integration of execution and clearing, real-time margining, being able to trade multiple products from one platform, being able to margin between products. “We have always spent whatever it takes. For us, technology and automation is the most important element of our business.” |
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NYSE-Archipelago Deal Shifts Exchange Landscape “With this acquisition, the NYSE becomes an equity options player again,” said Bill McGowan, managing director of Interactive Brokers Group LLC. “They have really accomplished two things: the NYSE has quieted their institutional client base by providing them a true fast-market platform. In addition, they have now provided a platform that you can trade both the cash and derivative markets again side by side,” McGowan said. |
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Electronics and Whiz-Bang New Tools “Back then, the CBOE made a rule that no analytical devices were allowed on the floor,” Peterffy said. Timber Hill, now a subsidiary of Interactive Brokers, went on to automate trade orders to the Nasdaq and then made a major push into computerized trading when Eurex, then known as DTB, was launched in Frankfurt as the first electronic futures exchange in 1990. |
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Shedding its Secrecy Despite this challenge, Susquehanna “has been more focused on floor operations” conducted by human traders, said Steve Sanders, a managing director at Interactive Brokers Group L.L.C., a Greenwich, Conn., electronic-trading pioneer. Interactive Brokers’ Timber Hill L.L.C. displaced Susquehanna in November as the largest trading firm at the PhilEx. “If you can't be the low-cost provider, it gets harder and harder” to compete, Sanders said. |
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Under Pressure Should they ‘greenlight’ it, directed orders will erode the already-waning clout of specialists. “Directed orders diminish the incentive for a specialist, but not their obligations,” says Thomas Peterffy, chairman of Interactive Brokers, whose Timber Hill unit is one of the largest U.S. options specialists. |
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Letting it ride Now more than ever, it takes more than intellectual capital to compete. It also requires actual capital – and lots of it. Firms that have moved up significantly in the rankings include… Interactive Brokers Group, a Greenwich, Connecticut, options market maker and retail brokerage that rises from No 20 to No 16. |
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CBOT goes for profit Bill McGowan, managing director of Interactive Brokers in Chicago, agreed that CBoT should definitely consider any fair offer by CME. McGowan told FO Week, “And I’ve never seen more genuine and well thought out discussions between the Merc and the Board of Trade. They really seem to be in a much better working position than they were a number of years ago.” McGowan added that a merger could also mean substantial benefits for FCMs and other customers. |
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Synchronized indices hide a flurry of equity activity Bill McGowan, managing director at Interactive Brokers, said: “There’s a lot of me-too money out there… funds managers taking the path of least resistance.” He added that investors that have grown risk-averse and are “shell-shocked” after the 1990s bubble are an additional factor that allows money managers to behave this way. |
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Top-of-book trade-through rule prevails Thomas Peterffy, chairman of Interactive Brokers Group and a longtime Reg NMS supporter, hailed the rule’s goals of achieving better access and best execution: “Customers will be assured of getting the best price for their stock orders.” Peterffy, who proposed the “fast-slow” quote system on which the NYSE’s proposed hybrid exchange model is based, explained that the rule will be a boon to liquidity providers. |
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Competition or merger for Canadian exchanges Jean-Francois Bernier, managing director for Interactive Brokers Canada and a former regulator in Quebec, told FO Week the regulatory structure issue and the ongoing battle for financial supremacy in Canada between Montreal and Toronto is very political. “Will [a merger] happen in the near future? I don’t think so. Will it happen sooner or later? Yes, and I think Montreal Exchange is and will continue to entertain discussions with TSX.” |
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BB&T options jump on renewed takeover talk “Every
couple of months the options volume spikes on BB&T and people
assume it is a takeover rumor,” said Steve Sosnick, equity risk manager
at Timber Hill, a subsidiary of Interactive Brokers. |
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Black-Box Trading Raises Risk “If you’re executing with one broker and flipping to another prime broker, from the time that trade is taken up and accepted by the prime broker, somebody has to live with the risk,” explains Steve Sanders, managing director at Interactive Brokers, an electronic brokerage and prime broker that has circumvented the problem with its IB Universal Account. “It lets you trade stocks, options, forex, futures and debt all in one account and we margin it all together,” says Sanders. “At any given moment in time, you can look at your real-time account window and know what you're margin is against all of these products.” |
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US exchanges play waiting game on consolidation Many
exchanges have turned into for-profit entities, setting the stage to
pursue alliances and initial public offerings, as the ISE accomplished
this week. |
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The Online Finance 40 Today’s most sought-after e-brokerage customers are the active and professional traders who generate big commissions – people like Thomas Peterffy. But Ameritrade Holding Corp. has no chance of attracting Peterffy to its premium Apex service, nor will Charles Schwab Corp. lure him to its CyberTrader subsidiary. “My target audience is myself,” says Peterffy, founder of Greenwich, Connecticut-based Interactive Brokers. Catering to demanding individuals and institutions, IB has increased average daily trades over the past year by 20 percent to 400,000 – double Schwab’s total volume. “The key for us is an extremely low cost per trade,” boasts Peterffy. “The lower it gets, the freer people are to trade more.” |
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Greenwich’s Interactive Brokers wins kudos Barron’s said Interactive Brokers was the front-runner in the software-based category because the company gives its customers the ability to trade in multiple currencies at very low cost. |
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Brokerage firm wins kudos for service This is the financial tabloid’s 10th year reviewing online brokers, and the publication said it looked at 30 candidates -- 18 browser-based and 12 software-based services. “We've been working hard on this for a number of years and our hard work has paid off,” said Interactive Brokers' Managing Director Steve Sanders. Barron’s explained it like this. “Investors planning to do some basic trading -- perhaps up to 10 trades a month -- will want to look at the browser-based services, the SUVs of the field. More active traders, by contrast, should probably focus on the software-based models -- the sports cars.” “We are not right for everybody. We are right for the professionals,” Sanders said. |
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Speed or Comfort? Choosing an online broker is a lot like shopping for a car. If it’s power, speed and agility that you're after, nothing will do but a sports car… Among software-based competitors, Interactive narrowly beat Terra Nova Trading, TradeStation, thinkorswim and MB Trading. We looked at commissions for stock and options trades and margin interest rates, assigning higher points to lower costs. For the frequent traders who use software-based brokers, costs are even more important. The only “five” in this category was earned by Interactive Brokers, which has rock-bottom fees and no platform charges. The firm asks you to generate a minimum of $10 per month in transaction fees. |
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Interactive Brokers Ranked No. 1 Software-Based Online Broker by Barron’s Interactive
Brokers LLC (IB) came in as the Number One software-based broker in
Barron’s 2005 annual review of online brokerage firms. |
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Interactive Brokers Ranked No. 1 Software-Based Online Broker by Barron’s Interactive
Brokers LLC (IB) came in as the Number One software-based broker in
Barron’s 2005 annual review of online brokerage firms. A unit of the Interactive Brokers Group that pioneered trading technology for three decades, IB offers Universal Direct-Access Trading and sophisticated trade management tools at highly competitive costs to professional traders and investors worldwide. IB is the gateway to trading a broad array of financial instruments -- stocks, options, futures, corporate bonds as well as forex -- on over 50 exchanges and marketplaces in 14 countries. |
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Deutsche Boerse’s U.S. campaign Seifert will also meet in Boston with Fidelity, which has a stake in all three exchanges. Interactive Brokers Managing Director Bill McGowan said the changing landscape in Europe is unlikely to influence the dynamics of similar alliances in the United States. “It’s the users, or the exchange members, who call the shots.” |
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Lessons from a momentous year Bill McGowan, managing director, Interactive Brokers: “If you look at the changes with eCBOT, is there enough of a differential in technology for someone to change venue? I’m not sure that’s the case. “I think CBOT has got the wake-up call, heard it loud and clear… Now that the door is open, I think they will continue t move forward. As they change their ownership structure they will get more free reign on how they run that organization.” |
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Room to Spare Proposed regulations, technology and competition from other exchanges are changing the way stocks are bought and sold, who sells them when, and where… But the results may make the iconic brick-and-mortar of the exchange obsolete. “We always joke saying that the exchange would make a great bowling alley one day," said Bill McGowan, managing director of Interactive Brokers, a firm whose business model embraces electronic-trading technology. |
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Citigroup Error Sends Nasdaq-100 Option Trade Surging At about 10:57 a.m. New York time, Citigroup’s computers mispriced contracts on the Nasdaq-100 shares, known by their QQQQ symbol, according to Jeff Shaw, head options trader at Timber Hill LLC. At least 500,000 contracts changed hands within seconds because of the error, according to data compiled by Bloomberg. Timber Hill, a Greenwich, Connecticut-based market maker, was the other party in about 120,000 of them, Shaw said. |
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Eurex US Bill McGowan, managing director, Interactive Brokers: “Eurex US has done a lot to change the way CBOT operates. But a lot of people have written off Eurex US already and I’m not so sure that is the right decision. “I think we are all recognizing that loyalty is where you get the better and faster service… The firms engaged Eurex to change the structure at CBOT. |
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Pax is Object of Merrill Pro’s Options Bid Steve Sanders, VP of business development and marketing at IB… notes that clearing is perhaps the “stickiest” relationship between a broker-dealer and a third-party provider, since the clearer holds the broker-dealers transaction records and converting to another back-office is cumbersome. He adds, however, that unless Merrill has developed straight-through processing technology to clear the market making business, it will unlikely to achieve significant economies of scale and the cost and pricing advantages that go with that. |
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Boston Options Exchange sees steady growth BOX said in a statement that market share in its listed option classes is on the rise, a noteworthy feat since it does not pay for order flow. “BOX has proven that an exchange can successfully attract order flow without offering payment for order flow, a practice whose cost is ultimately passed on to customers,” said Steve Sanders, managing director at Interactive Brokers, which co-founded BOX along with the Boston Stock Exchange and the Montreal Exchange. |
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Deep Fears behind a Frosty Exchange Thomas Peterffy, chairman of Interactive Brokers, an early pioneer of electronic trading and online access to multiple exchanges across the equities, options and futures markets, says: “Eventually, exchanges could even enter the brokerage business. Brokers will have to come up with new products and services. It’s a constant battle, a continuous competition – survival of the fittest.” In addition, brokers offer end-users access to margin collateral – funds posted at a clearing house to guarantee against defaults – where exchanges or their clearing houses cannot. Mr Peterffy says: “The Clearing Corporation does not offer hedge funds the same sort of leverage in terms of lending margin money as a brokerage does.” |
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Interactive Brokers Issues Security Tokens |
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Direct-Market-Access Trading Interactive Brokers (IB) is adding bond trading to its direct-access Universal platform and is using smart-routing technology to trade stocks, ETFs, options, futures and FX. |
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A New Way to Trade Spreads? In mid-October, the firm introduced a spread-trading tool that uses proprietary technology to facilitate trade execution. “We’ve been using smart routing for a number of years,” says Steve Sanders of Interactive Brokers. “But the next evolution is inter-market spread smart-routing.” |
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Direct-Access Bond Trading IB customers will be able to enter bond orders on the IB platform just as they do for equities, derivatives or currencies. IB SMARTRouting will seek the best price available among the three debt-trading venues. |
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Interactive Brokers launches Smart-Routing for Spreads The service supports spread trading between options contracts, securities and options contracts, stocks and exchange-traded funds (ETFs), and different stocks. |
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The Busier The Better Interactive Brokers has been busily updating its Traders Workstation, and has increased the number of unique order types to 30, which includes conditional orders and iceberg orders. If one of the 50 markets in 14 countries on which IB customers can place trades doesn’t have built-in support for a particular order type, the IB platform simulates it for the customer. It would be difficult for IB to cut its commissions much further, as it’s already one of the lowest-price brokers around, with pricing of one cent per share. A 100-share order would be $1, a 500-share order $5. Options orders are $1 per contract, and futures run 55 cents to $1.40 per contract |
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Do Try This at Home Interactive Brokers has implemented the Inter-market Smart-Routing for Spread Orders feature. This feature is designed to help offset the main risk inherent in spread trading: when one segment or "leg" of the complex order remains unfilled. The new service supports spread strategies for equities and options traded across multiple U.S. markets between options contracts, securities and options contracts, stocks and exchange-traded funds and different stocks. IB just announced that it is offering direct-access and immediate execution for corporate-bond trading on the New York Stock Exchange (NYSE), the BondDesk ECN and IB's market-making affiliate Timber Hill. Clients will be able to trade bonds from IB's Universal Direct-Access Platform that already offers trading in equities, ETFs, options, futures and foreign exchange in more than 50 markets in 14 countries from one account. |
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SROs Play to Empty Seats “If you’re a member of both the NASD and the NYSE, you can spend literally months between both organizations,” says McGowan. |
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Interactive Brokers to Roll Out Direct Access to Govies Steve Sanders, managing director of marketing and business development, in Greenwich, Conn., said relative cost will be the determining factor in the decision to self-clear or clear through a bank. “If we can't provide direct access at low cost, we do not want to be in the business.” The firm began building its fixed-income offering with the launch of direct access to corporate bonds last month. Corporate bonds are available from the New York Stock Exchange, BondDesk and Timber Hill, the sister company of Interactive Brokers. |
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Spider Options Launch Draws Strong Response A big chunk of the Spider options volume -- 71,971 contracts -- was traded on the all-electronic Boston Options Exchange or BOX, the newest entrant, created last year, in the U.S. options market, according to the OCC. “In terms of market share for Spider options, BOX captured 30 percent,” said a spokeswoman at Interactive Brokers Group, a co-founder and co-owner of BOX. |
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Cheap Seats Provide View of Troubles at Exchange |
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Apple Share Rise Ahead of Macworld Apple options, which give investors the right, but not the obligation, to buy or sell a stock a predetermined price within a set period of time, were also active. “Apple options have been active all week ahead of earnings and Macworld. These two events have prompted a spike in volatility,” said Sean Flynn, a trader at Timber Hill, a unit of Interactive Brokers Group. |
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Archipelago Takes the Ultimate Options Ride “The whole Street realizes there are just too many bricks and mortars,” or traditional floor-based securities exchanges, said Bill McGowan, a managing director at the Greenwich, Conn., firm Interactive Brokers, which directs trades to both the Pacific Exchange and to ArcaEx, the stock-trading system run by Archipelago. “I think it’s much better served by electronic access.” |
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Re-proposing Regulation NMS Applauding the SEC’s action was Thomas Peterffy, chairman of Interactive Brokers Group. “The SEC staff has done a remarkable job with the proposed Regulation NMS, even though some market participants might not like each and every provision. It seems that in order to move forward everybody has to give a little,” says Peterffy, who has been involved in shaping Reg NMS since its inception. IBG, ranked 20th among U.S. broker-dealers in terms of size, is built on an electronic system that executes orders by hunting for the best price through its smart router; it charges low commissions as a result. |
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SEC to Meet Wednesday on Stock Trading Rule “You will get better prices and better execution because your broker will be required to get the best price,” said Isabelle Clary, a spokeswoman for Interactive Brokers which serves retail and institutional investors. Big institutional investors will continue to have to make several trades to move large orders. “If you have a block to work you will have to take everything in the market at a better price,” Clary said. |
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Online Broker Aims to Remove Mystery from Futures Many brokers are also likely to stick with the highly specialised trading community because of the added cost of educating new traders in futures. Mr Sanders says: “It doesn’t pay us to attract customers who come in and lose a lot of money in the short run. Our goal is to find people who are going to stay with us for years and years and consistently make a profit.” |
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Who’s Up, and Down, on the Street The ‘BBB-’ for IBG represents an upgrade from the implied rating of ‘BB+’. IBG’s rating is based on its strong franchise in options and futures brokerage, strong liquidity and capital, and high earnings performance, as well as the lower financial flexibility afforded by its legal status as a partnership and the risks of its business model, which relies on trading revenues earned from its pricing models. |
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U.S. Traders Eye Single-Stock Futures as Hedge “With single-stock futures, the interest rate is determined by the market. With stock, the interest rate is determined by whatever your broker charges on a given day,” said Steve Sanders, managing director of marketing and business development at Interactive Brokers LLC. Sanders explained that, prior to a rising interest rate environment, it has not been a strong selling point as hoped because low rates have pervaded since these products were launched two years ago. |
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Smaller Players Better than Banks The business section of this French-language publication features Interactive Brokers as a strong competitor in the online brokerage field that offers better rates than major banks do. “We bring you the best rates in Canada,” said Jean-Francois Bernier, managing director of Interactive Brokers Canada. |
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Have It Your Way Interactive Brokers offers nine different price-improvement orders, composed of one of three different order types, and one of three auction strategies. IB’s smart order router will look for the best price for each leg of a complex order, regardless of where the best price might be obtained. Most brokers send the entire order to a single marketplace where the best price may not be available for each leg of the order, or declare that multi-leg orders are not eligible for a best price guarantee. |
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Google insider shares set to flood market Insiders often are restricted from selling shares in a company right after an IPO, during a so-called lock-up period. The sheer number of Google shares under the lock-up poses the most risk to investors, analysts said. “Until the lock-up comes off in mid-November, which would allow Google employees and other early investors to sell stock and cash in on the (shares’) meteoric rise, you could continue to see a short squeeze in the stock,” said Jeff Shaw, head options trader at Interactive Brokers Group unit Timber Hill. |
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Spread Execution, Fully Guaranteed “This is something we’ve needed in the market-making and proprietary trading side for an edge in the market; and we feel that if we need it, then so do other professional traders,” said Steve Sanders, managing director at Interactive Brokers, which is the parent of specialist firm Timber Hill. |
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Ten Questions to Ask a Broker As with anything else in life, you do get what you pay for, so often for a serious trader, paying a little bit more on commission greatly improves his overall trading experience. “Too many traders get out there and they trade away, and all their profits are eaten away by trading costs and their losses are increased by trading costs, whether it’s commissions or something else,” Sanders said. |
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Tight US Election Failing to Stir Options Market “We have been in such a tight trading range for so long that people are skeptical of what will be needed for a breakout up or down,” said Jeff Shaw, head options trader at Timber Hill, a unit of Interactive Brokers Group. “Thus options premiums have stayed muted.” |
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A Global Trading Breakthrough A truly “Smart” smart-router today needs to do more than just spot the best price; it must be able to factor in the size, reserve, fees or rules specific to each market. But what a well-design program can achieve in one marketplace, it can achieve everywhere, on any exchange,” said Isabelle Clary, communications director at Interactive Brokers, a direct-access global broker-dealer. |
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IB Introduces New Routing For Spread Orders Across Markets IB said its technology evaluates spread prices in real time, including those offered on ISEspreads, as well as the implied spread prices elsewhere, and routes each leg of the order to the best market for that order. “This technology is so sound that we will undertake the risk of any partially executed spread order,” said Thomas Peterffy, founder and chairman of Interactive Brokers Group. |
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IB Launches New Service for Spread Orders Spread trading - or simultaneously buying one instrument and selling another - has gained in popularity, as part of the growth in algorithmic trading. ”This technology is so sound that we will undertake the risk of any partially executed spread order," said Thomas Peterffy, founder and chairman of Interactive Brokers Group, the parent of global agency broker-dealer IB. |
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Interactive Brokers Gets Best-Broker Ranking in Netherlands Money magazine in the Netherlands gives Interactive Brokers the highest ranking in its survey of Dutch electronic brokers. Money, which is read by active traders and wealthy investors gives Interactive Brokers a rating of 8.2—better than any other competitor. The magazine cites Interactive Brokers’ competitive commissions, its platform geared to serve the active trader community as well as its global reach. IB handily beats major competitors in the region, such as ABN Amro and ING. |
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Timber Hill Asks for Susquehanna’s Book Adoption of the proposed language would protect the exchange’s users and ensure that the exchange retains control of its fee structure. In the alternative, Timber Hill formally requests that the exchange reallocate from Susquehanna to Timber Hill the options classes listed below. |
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Interactive Brokers Enters Susquehanna Fee Battle Interactive Brokers Group has asked two U.S. options exchanges t let its options specialist subsidiary to take over a number of options classes now handled by Susquehanna Investment Group, which recently created a controversy in the industry by introducing new options fees. Interactive Brokers, a direct-access broker-dealer that is a major player in the options trading space, said this would be an alternative solution if the two exchanges do not want to introduce rules that would bar Susquehanna from imposing those fees. Interactive Brokers General Counsel David Battan requested that “the exchange reallocate from Susquehanna to Timber Hill” a number of options classes. |
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Susquehanna Fee Proposal Prompts Swift Reaction from Amex The key concern is for the potential for charging fees on electronic, automatic execution orders. IB argued that when the specialist is using an exchange’s electronic systems and there is no choice but to use the specialist as agent, the specialist cannot simply impose whatever fees they want. “If the SEC does not establish this principle now, they are going to give up control over regulating exchange electronic execution facilities and their fees.” |
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Susquehanna’s fees stir controversy Interactive Brokers is owned by Interactive Brokers Group, which also is the parent of Timber Hill, the largest U.S. options specialist and a Susquehanna competitor. Interactive Brokers general counsel David Battan said that Susquehanna’s fees “violates the quote rule and would impair the integrity of the exchange’s quotes.” |
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Battle over Options Firm Susquehanna’s New Fees Escalates “We believe these fees are unlawful, contrary to exchanges and SEC rules and against the public interest of our customers,” David Battan, general counsel of Interactive Brokers LLC, wrote. Battan said Interactive’s choices are limited because it uses automated systems that route orders to the exchange offering the best quotes, exclusive of fees. |
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Execution Fees for Nasdaq 100 “Cubes” “ This commission, which actually is a fee, could decrease volume on [certain] ETF trading because it will be more expensive,” said Isabelle Clary, a spokeswoman for Interactive Brokers, a global electronic brokerage firm based in Greenwich, Conn. The firm represents both retail and institutional clients to deliver lower execution costs and commissions. She said other ETF specialists could take Susquehanna’s lead and begin charging similar commissions, which would drive up trading costs for more ETFs. |
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Susquehanna Levies Fees for Handling Orders Interactive Brokers has written the CBOE, Amex and Philadelphia Stock Exchange, urging them to stop Susquehanna’s plan. Interactive Brokers has a unit, Timber Hill, that is a major options specialist and Battan said Timber Hill does not plan to charge such fees. |
| September 1, 2010 | Interactive Brokers Group Reports Brokerage Metrics for August 2010 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for August. more |
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| August 2, 2010 | Interactive Brokers Group Reports Brokerage Metrics for July 2010 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for July. more |
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| July 22, 2010 | Interactive Brokers Group Announces 2Q10 Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.09 for the quarter ended June 30, 2010, compared to diluted earnings per share of $0.31 for the same period in 2009. more |
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| July 8, 2010 | Interactive Brokers Group To Host Second Quarter Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) plans to announce its second quarter 2010 financial results on Thursday, July 22, 2010, in a release that will be issued at approximately 4:00 pm (ET). more |
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| July 2, 2010 | Interactive Brokers Group Reports Estimated Currency Translation Effects for Second Quarter 2010 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported the estimated effect of currency rate fluctuations during the second quarter of 2010. more |
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| July 1, 2010 | Interactive Brokers Group Reports Brokerage Metrics for June 2010 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for June. more |
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| June 28, 2010 | Interactive Brokers Announces Launch of Pair Trading Algorithm Interactive Brokers announces the enhancement of its ScaleTrader algorithm to encompass Pairs Trading enabling clients to trade the spread between any two securities. more |
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| June 10, 2010 | Interactive Brokers Offers The Student Trading Lab to High Schools and Universities for 2010-2011 Academic Year Interactive Brokers (IB) is pleased to announce that we will offer our IB Student Trading Lab to colleges and universities for the 2010 – 2011 academic year. The IB Student Trading Lab delivers the power of the IB Trader Workstation (TWS) to users and provides a working partnership between Interactive Brokers and high school and college educators. more |
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| June 1, 2010 | Interactive Brokers Group Reports Brokerage Metrics for May 2010 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for May. more |
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| May 28, 2010 | Interactive Brokers Group to Present at Sandler O’Neill 2010 Global Exchange and Brokerage Conference Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) announces that Chairman and Chief Executive Officer Thomas Peterffy will present at the Sandler O’Neill 2010 Global Exchange and Brokerage Conference on Thursday, June 3, 2010 at 10:30 a.m. EST. more |
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| May 3, 2010 | Interactive Brokers Group Reports Brokerage Metrics for April 2010 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for April. more |
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| April 22, 2010 | Interactive Brokers Group Announces 1Q10 Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.09 for the quarter ended March 31, 2010, compared to diluted earnings per share of $0.30 for the same period in 2009. more |
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| April 14, 2010 | Interactive Brokers Announces Italian Stock Trading Interactive Brokers is pleased to announce the addition of trading in stocks on Borsa Italiana for its clients. Interactive Brokers connects electronically to more than 80 market centers worldwide more |
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| April 12, 2010 | Interactive Brokers Announces Drop in U.S. Futures & Futures Options Fees Interactive Brokers announces a reduction in fees charged to customers for trading U.S. Futures and Futures Options. In keeping with its tradition of being the low cost industry leader, Interactive Brokers is lowering and simplifying its U.S. Futures and Futures Options commission structure. Customers can now choose from two low cost pricing plan more |
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| April 8, 2010 | Interactive Brokers Group To Host First Quarter Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) plans to announce its first quarter 2010 financial results on Thursday, April 22, 2010, in a release that will be issued at approximately 4:00 pm (ET). more |
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| April 1, 2010 | Interactive Brokers Group Reports Brokerage Metrics for March 2010 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for March. more |
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| March 1, 2010 | Interactive Brokers Group Reports Brokerage Metrics for February 2010 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for February. Highlights for the month included: more |
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| February 1, 2010 | Interactive Brokers Group Reports Brokerage Metrics for January 2010
Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for January. more |
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| January 21, 2010 | Interactive Brokers Group Announces 2009 Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.87 for the year ended December 31, 2009, compared to diluted earnings per share of $2.24 in 2008. more |
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| January 7, 2010 | Interactive Brokers Group To Host Fourth Quarter Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) plans to announce its fourth quarter 2009 financial results on Thursday, January 21, 2010, in a release that will be issued at approximately 4:00 pm (ET). The press release will also be available on the company's web site, www.interactivebrokers.com/ir. more |
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| January 4, 2010 | Interactive Brokers Group Reports Brokerage Metrics For December 2009 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for December. more |
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| December 8, 2009 | Interactive Brokers Will Offer Trading on ELX Futures ELX Futures, L.P. (ELX Futures), a new fully electronic futures exchange, announced today that Interactive Brokers Group, Inc. (NASDAQ GS: IBKR), an automated global electronic market maker and broker specializing in routing orders and executing and processing trades in securities, futures and foreign exchange instruments will become a member of the exchange and will offer trading on ELX Futures. more |
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| December 1, 2009 | Interactive Brokers Group Reports Brokerage Metrics For November 2009 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for November. more |
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| November 2, 2009 | Interactive Brokers Group Reports Brokerage Metrics For October 2009 and Announces Upcoming Presentation Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for October and announced that Chairman and Chief Executive Officer Thomas Peterffy will present at the Keefe, Bruyette & Woods 2009 Securities Brokerage and Market Structure Conference on Thursday, November 5, 2009 at 11:15 a.m. EST. more |
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| October 22, 2009 | Interactive Brokers Group Announces 3Q09 Results
Reports Income Before Taxes of $133 Million on $272 Million in Net Revenues, Earnings per Share of $0.20 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.20 for the quarter ended September 30, 2009, compared to diluted earnings per share of $0.65 for the same period in 2008. more |
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| October 8, 2009 | Interactive Brokers Group To Host
Third Quarter Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) plans to announce its third quarter 2009 financial results on Thursday, October 22, 2009, in a release that will be issued at approximately 4:00 pm (ET). more |
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| October 1, 2009 | Interactive Brokers Group Reports Brokerage
Metrics For September 2009 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for September. more |
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| September 2, 2009 | Interactive Brokers Group Reports Brokerage
Metrics For August 2009 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for August. Highlights for the month included: more |
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| August 7, 2009 | Interactive Brokers Group Reports
Brokerage Metrics For July 2009 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for July. Highlights for the month included: more |
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| July 23, 2009 | Interactive Brokers Group Announces 2Q09
Results Reports Income Before Taxes Of $192 Million On $332 Million In Net Revenues, Earnings Per Share Of $0.31 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.31 for the quarter ended June 30, 2009, compared to diluted earnings per share of $0.44 for the same period in 2008. more |
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| July 9, 2009 | Interactive Brokers Group To Host Second Quarter
Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) plans to announce its second quarter 2009 financial results on Thursday, July 23, 2009, in a release that will be issued at approximately 4:00 pm (ET). more |
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| July 7, 2009 | Interactive Brokers Group Reports Brokerage
Metrics For June 2009 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for June. more |
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| June 4, 2009 | Interactive Brokers Group Reports Brokerage
Metrics For May 2009 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported its Electronic Brokerage monthly performance metrics for May. Highlights for the month included... more |
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| June 2, 2009 | Interactive Brokers Group to Present
at Sandler O’Neill 2009 Global Exchange and Electronic Trading
Conference Interactive Brokers Group, Inc. (NASDAQ: IBKR) announces that Chairman and Chief Executive Officer Thomas Peterffy will present at the Sandler O’Neill 2009 Global Exchange and Electronic Trading Conference on Thursday, June 4, 2009 at 11:30 a.m. EST. more |
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| May 21, 2009 | Interactive Brokers Group to Present
at Fox-Pitt Kelton Cochran Caronia Waller Global Securities Industry
Conference Interactive Brokers Group, Inc. (NASDAQ: IBKR) announces that Chairman and Chief Executive Officer Thomas Peterffy will present at the FPKCCW Global Securities Industry Conference today, May 21, 2009 at 10:30 a.m. EST. more |
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| April 27, 2009 | Interactive Brokers Sees More Registered Reps
Becoming Independent Advisors As portfolio values decline across the industry, many large brokers have decided that servicing smaller balance client accounts is no longer profitable, putting Registered Representatives with strong customer relationships in a difficult position. Many of these Registered Representatives are making the decision to go independent and become Registered Investment Advisors. Interactive Brokers has witnessed an acceleration of the trend to independence in 2009. more |
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| April 23, 2009 | Interactive Brokers Group Announces 1Q09 Results Reports Income Before Taxes Of $167 Million On $296 Million In Net Revenues, Earnings Per Share Of $0.30 Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.30 for the quarter ended March 31, 2009, compared to diluted earnings per share of $0.66 for the same period in 2008. more |
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| April 9, 2009 | Interactive Brokers Group To Host First Quarter
Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ: IBKR) plans to announce its first quarter 2009 financial results on Thursday, April 23, 2009, in a release that will be issued at approximately 4:00 pm (ET). more |
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| March 26, 2009 | Interactive Brokers Announces Winner of Olympiad
Highlighting the Need For Future Technology Leaders In The Financial Services
Industry Interactive Brokers Group (IBG), a global leader in electronic market-making and brokerage services, today announced the winner of its fourth annual electronic trading Olympiad for colleges. Since there is a shortage of top-notch technologists, IBG created the Olympiad to highlight the growing need for engineers and computer science professionals in the financial services industry. IBG is awarding $400,000 in prizes to students. more |
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| March 12, 2009 | Interactive Brokers Announces Launch of Online
Indian Brokerage Unit Interactive Brokers has announced that its recent regulatory approval by the National Stock Exchange of India (NSE) allows it to offer private Indian national residents and non-Indian national residents (in conformance with the FEMA Act 2000) market access through its online brokerage platform known as Trader Work Station (TWS). more |
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| January 22, 2009 | Interactive Brokers Group Announces Record
2008 Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $2.24 for the year ended December 31, 2008, compared to pro forma diluted earnings per share of $1.59 in 2007. more |
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| January 21, 2009 | Interactive Brokers Group Changes Fourth Quarter
Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ: IBKR) plans to announce its fourth quarter 2008 financial results on Thursday, January 22, 2009, in a release that will be issued at 7:00 am instead of 4:00 pm (ET). more |
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| January 13, 2009 | Interactive Brokers Group To Host Fourth Quarter Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ: IBKR) plans to announce its fourth quarter 2008 financial results on Thursday, January 22, 2009, in a release that will be issued at approximately 4:00 pm (ET). The press release will also be available on the company's web site, www.interactivebrokers.com/ir. more |
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| December 19, 2008 | Interactive Brokers Group S&P Rating Upgrade to BBB+ Standard and Poor's today announced that it raised its counterparty ratings on IBG LLC (IBG) to 'BBB+' from 'BBB'. The outlook is stable. more |
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| November 6, 2008 | Interactive Brokers Group to Present at Keefe, Bruyette & Woods 2008 Securities Brokerage & Market Structure Conference Interactive Brokers Group, Inc. (NASDAQ: IBKR) announces that Chairman and Chief Executive Officer Thomas Peterffy will present at the Keefe, Bruyette & Woods 2008 Securities Brokerage & Market Structure Conference today, November 6, 2008 at 3:45 p.m. EST. more |
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| October 23, 2008 | Interactive Brokers Group Announces Strong Third Quarter Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.65 for the quarter ended September 30, 2008, compared to diluted earnings per share of $0.53 for the same period in 2007. more |
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| October 21, 2008 | Interactive Brokers Launches Contracts
for Difference in Australia Interactive Brokers announced today the availability of direct market access to Australian Contracts for Difference (CFDs) on the Australian Stock Exchange (ASX) for its customers. The launch means that IB customers can now trade CFDs alongside currencies, stocks, futures and options from within a single universal account. more |
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| October 20, 2008 | Interactive Brokers' Stock and Options Execution
Statistics Outperform Industry Based on independent measurements, the Transaction Auditing Group, Inc., (TAG), a third-party provider of transaction analysis, determined that Interactive Broker's stock executions were forty-seven cents per one hundred shares better than the industry as a whole during the first half of 2008. more |
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| October 10, 2008 | Interactive Brokers Group To Host
Third Quarter Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ: IBKR) plans to announce its third quarter 2008 financial results on Thursday, October 23, 2008, in a release that will be issued at approximately 4:00 pm (ET). more |
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| October 3, 2008 | Fix the Bailout to Help Homeowners - An Open
Letter from Thomas Peterffy, Chief Executive Officer, Interactive Brokers
Group The following Open Letter appeared in Friday’s editions of the New York Times, Wall Street Journal and the Washington Post. Even those political leaders that support the current bailout proposal don’t like it very much. The American people like it less. It creates a complicated bureaucracy, does not directly help homeowners and does not address the foreclosure crisis. more |
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| September 26, 2008 | Interactive Brokers Group Announces Preliminary Financial Estimates for the Quarter to end on September 30, 2008 and Approval of Share Repurchase Program
Interactive Brokers Group, Inc. (NASDAQ GS: IBKR), an automated global electronic market maker and broker, today announced preliminary financial estimates for the quarter to end on September 30, 2008 and further announced that its Board of Directors has approved a share buyback program by its subsidiary IBG LLC, authorizing IBG LLC to repurchase up to 8,000,000 shares of the company's common stock. more |
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| September 9, 2008 | Interactive Brokers Collegiate Trading Olympiad Interactive Brokers Group, a worldwide leader in market making and broker-dealer services, is pleased to announce our fourth annual IB Collegiate Trading Olympiad, where students create and implement a real-time program trading application and attempt to generate the largest profit. This unique forum allows the future leaders in technology to compete for potential jobs and up to $100,000 in prize money. more |
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| July 28, 2008 | Interactive Brokers’ Options Price Improvement Twice That of Industry Based on independent measurements, the Transaction Auditing Group, Inc., (TAG), a third-party provider of transaction analysis, has determined that Interactive Brokers US option executions were improved by one dollar and fourteen cents per contract during the second half of 2007, fifty seven cents better than the rest of the industry. The analysis included all market orders in options with order sizes of one to 50 contracts. more |
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| July 24, 2008 | Interactive Brokers Group Announces Strong
Second Quarter Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.44 for the quarter ended June 30, 2008, compared to pro forma diluted earnings per share of $0.28 for the same period in 2007. more |
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| July 10, 2008 | Interactive Brokers Group To Host
Second Quarter Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ: IBKR) plans to announce its second quarter 2008 financial results on Thursday, July 24, 2008, in a release that will be issued at approximately 4:00 pm (ET). The press release will also be available on the company's web site, www.interactivebrokers.com/ir. more |
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| June 5, 2008 | Interactive Brokers' Price and Speed of Execution for Stocks Tops Industry Based on independent measurements, the Transaction Auditing Group, Inc., (TAG), a third-party provider of transaction analysis, has determined that Interactive Brokers US stock executions were 0.35 of a cent per share better than the industry as a whole during the second half of 2007. Unlike other industry touted statistics that highlight the percent of orders improved but don’t consider the dollar amount of the improvement, TAG’s statistics factor in the amount of the improvement, including executions which had dis-improvement and no improvement. more |
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| May 7, 2008 | Interactive Brokers Group, Inc.
Announces Termination of Follow-On Offering Interactive Brokers Group, Inc. (NASDAQ: IBKR) today announced the termination of its follow-on offering of 50,000,000 shares of its Class A common stock. The shares offered in the offering will be deregistered and the company will not register another public offering of its shares of Class A common stock until at least April 15, 2009. more |
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| April 24, 2008 | Interactive Brokers Offers 50,000,000
Shares at a Minimum Price of $33.50 As described in its IPO registration statement of a year ago, Interactive Brokers Group, Inc. (the "Company") today announced that it filed a registration Form S-1 registration statement with the U.S. Securities and Exchange Commission on April 24, 2008. more |
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| April 24, 2008 | Interactive Brokers Group Announces
Record First Quarter Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.66 for the quarter ended March 31, 2008, compared to pro forma diluted earnings per share of $0.31 for the same period in 2007. more |
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| April 7, 2008 | Interactive Brokers Group To Host
First Quarter Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ: IBKR) plans to announce its first quarter 2008 financial results on Thursday, April 24, 2008, in a release that will be issued at approximately 4:00 pm (ET). The press release will also be available on the company's web site, www.interactivebrokers.com/ir. more |
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| March 18, 2008 | Olympiad Highlights Need For Future
Technology Leaders In The Financial Services Industry Interactive Brokers Group (IBG), a global leader in electronic market-making and brokerage services, today announced the winner of its third annual electronic trading Olympiad for colleges. Since there is a shortage of top-notch technologists, IBG created the Olympiad to highlight the growing need for engineers and computer science professionals in the financial services industry. IBG is awarding $400,000 in prizes to students. more |
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| February 6, 2008 | Interactive Brokers Launches
Direct Access to Mexican and Spanish Trading Products Interactive Brokers (IBKR), a leading direct access online broker of global options, futures, stocks, forex, and bonds is pleased to announce the introduction of Mexican stocks, options and futures along with Spanish stocks offered via its multi-product desktop trading platform the Trader Workstation (TWS). These products will be available to customers by March 1, 2008. more |
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January 24, 2008 |
Interactive Brokers Group Announces Record
2007 Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported pro forma diluted earnings per share of $1.59 for the year ended December 31, 2007, compared to pro forma $1.22 for the same period in 2006. more |
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January 10, 2008 |
Interactive Brokers Group To Host
Fourth Quarter Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ: IBKR) plans to announce its fourth quarter 2007 financial results on Thursday, January 24, 2008, in a release that will be issued at approximately 4:00 pm (ET). The press release will also be available on the company's web site, www.interactivebrokers.com/ir. more |
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November
29, 2007
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FutureTrade / Interactive Brokers Leaps to #1 Ranking for Hedge Fund Executions With the recent agreement to purchase FutureTrade, Interactive Brokers has established itself as the #1 Ranked Broker for Hedge Fund Trade Executions based on the recent 2007 Alpha Magazine Technology Awards. more |
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November 20, 2007
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Interactive Brokers Group Acquires FutureTrade Interactive Brokers Group, a major automated global electronic broker today announced the execution of a Definitive Agreement to acquire FutureTrade Technologies and its wholly-owned subsidiary, FutureTrade Securities for an undisclosed amount of cash. FutureTrade is a leading provider of integrated electronic equity and option trading services. more |
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November 7, 2007
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Interactive Brokers Collegiate Trading Olympiad Interactive Brokers Group, a worldwide leader in market making and broker-dealer services, is pleased to announce our third annual IB Collegiate Trading Olympiad, where students create and implement a real-time program trading application and attempt to generate the largest profit. more |
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November 5, 2007
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Interactive Brokers Group Announces Upcoming
Presentation Interactive Brokers Group, Inc. (NASDAQ: IBKR) will present at the Keefe, Bruyette and Woods 2007 Securities Brokerage & Market Structure conference. more |
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October 25, 2007
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Interactive Brokers Group Announces Third
Quarter Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.53 for the quarter ended September 30, 2007, compared to pro forma $0.40 for the same period in 2006. more |
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October 24, 2007
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Interactive Brokers First-to-Market With
Competitive Dutch Options Price Structure Sustained annual growth in volume, open interest in Dutch options segment demands ultra-competitive pricing for precision trading. Interactive Brokers (IBKR), the online broker of global futures, options and foreign exchange, is announcing an enhanced flat fee structure of EUR 2.25 per contract on Liffe - NYSE Euronext-linked Dutch options. The flat fee carries no minimum to trade, and applies to all Dutch options offered via its multi-product desktop trading platform, Trader Workstation (TWS). more |
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October 11, 2007
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Interactive Brokers Group To Host Third Quarter
Earnings Conference Call Interactive Brokers Group, Inc. (NASDAQ: IBKR) plans to announce its third quarter 2007 financial results on Thursday, October 25, 2007, in a release that will be issued at approximately 4:00 pm (ET). The press release will also be available on the company's web site, www.interactivebrokers.com/ir. more |
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September 24, 2007
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Interactive Brokers Introduces Flat-Commission,
Direct Access, No-Minimum Trading on Aussie Options Interactive Brokers (IBKR), the online broker of global futures, options and foreign exchange, is pleased to offer direct access trading to Australian stocks and options via its award-winning, multi-product desktop trading platform, Trader Workstation (TWS). more |
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August 22, 2007
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14.85% of Interactive Brokers Group
Option Orders Received Price Improvement The Interactive Brokers Group (IBKR) is pleased to announce that during the first half of 2007 it received price improvement on 14.85% of its customers’ marketable US options orders vs. the industry average of 0.57% according to statistics provided by The Transaction Auditing Group (TAG) of New York, NY, a third party provided of transaction audit services. more |
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August 21, 2007
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Interactive Brokers Group Boosts Options
Classes through Acquisition of Kellogg Capital Group's Specialist Unit The Interactive Brokers Group, Inc. (IBKR) has announced that it has acquired the specialist operations of Kellogg Capital Group LLC on the American Stock Exchange. more |
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July 26, 2007
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Interactive Brokers Group Announces Second
Quarter Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported pro forma diluted earnings per share of $0.28 for the quarter ended June 30, 2007, compared to $0.24 for the same period in 2006. On a non-GAAP basis, operating earnings per share, which exclude non-recurring items, amounted to $0.33. more |
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July 24, 2007
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Interactive Brokers Group Launches Direct
Access Australian Stocks and Swedish Stock Options Interactive Brokers Group, Inc. (IBKR), a global leader in electronic market-making and brokerage services, recently expanded Interactive Brokers LLC’s global direct access platform to include Australian Stocks and Swedish Stock Options. This brings the total number of market centers offered under the IB Universal Account to 72 across 17 different countries. more |
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July 12, 2007
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Interactive Brokers Group To Host
Second Quarter Earnings Conference Call
And Announces The
Appointment Of A New Independent Director Interactive Brokers Group, Inc. (NASDAQ: IBKR) plans to announce its second quarter 2007 financial results on Thursday, July 26, 2007, in a release that will be issued at approximately 4:00 pm (ET). The press release will also be available on the company's web site, www.interactivebrokers.com/ir. more |
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July 5, 2007
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Interactive Brokers Group Announces Preliminary
Second Quarter Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR), an automated global electronic market maker and broker, today announced its preliminary financial results for the quarter ended June 30, 2007. more |
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May 29, 2007
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Interactive Brokers Group Announces First
Quarter Results Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, which priced its initial public offering ("IPO") on May 3, 2007, today reported pro forma earnings per share of $0.31 for its quarter ended March 31, 2007, compared to $0.34 for the same period in 2006. more |
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May 21, 2007
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Interactive Brokers to Host First Quarter
Earnings Conference Call Interactive Brokers Group, Inc. (Nasdaq: IBKR) plans to announce its first quarter 2007 financial results on Tuesday, May 29, 2007, in a release that will be issued at approximately 4:00 pm (ET). The company went public on May 3. The press release will also be available on the firm's web site, http://www.interactivebrokers.com/ir. A conference call to discuss the firm's results will be held at 5:30 pm (ET) on that day, May 29. The call will be open to the public. more |
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May 3, 2007
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Interactive Brokers Group, Inc.
Increases Size of and Prices Initial Public Offering
Interactive Brokers Group, Inc. (NASDAQ: IBKR) today announced an increase in the size of the proposed initial public offering of shares of its Class A common stock from 34,500,000 shares to 40,000,000 shares and further announced the pricing of its initial public offering at $30.01 per share. As previously disclosed in the registration statement, all net proceeds from the sale of shares in the offering will be received by the current members of IBG LLC, the current holding company for its electronic market making and brokerage business. more |
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February
27, 2007
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Interactive Brokers Launches Direct
Access Hong Kong Stock and Warrant
Trading Interactive Brokers has recently added the trading of stocks and warrants in Hong Kong to its worldwide direct access platform. Commissions for stocks and warrants are 0.088% of the trade value, with an HKD 18.00 minimum, plus any stamp duty and SFC transaction fees. Interactive Brokers continues to offer the trading of Hong Kong Futures with commissions for the Hang Seng Index and other Hong Kong futures contracts starting at HKD 9.50 and going as low as HKD 2.00 for high volume customers. more |
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| November 27 | Interactive Brokers Group, Inc.
Files Registration Statement for Proposed Initial Public Offering Interactive Brokers Group, Inc. (proposed NASDAQ Global Select Market Symbol: IBKR) today announced that it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission relating to the proposed initial public offering of shares of its Class A common stock. All net proceeds from the sale of shares in the offering will be received by the current members of IBG LLC, the current holding company for its electronic market making and brokerage business. more |
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| October 24 | Penny Priced Options Now Available
in the U.S. In the latest step in cascading transaction costs brought on by technology, as of 1:50 p.m. ET today Interactive Brokers has cut the minimum price difference for U.S. listed options from a nickel to a penny (i.e. $5 per contract to $1 per contract). Online Brokers and Direct Market Access providers have been under pressure to cut prices for several years. The listed options markets have been relatively immune, but no longer. The SEC mandated a penny pilot program beginning on the 27th of January 2007, in which the six U.S. options exchanges will have to reduce the minimum price change from 5 to 1 cent for options listed on 13 underlying stocks. Interactive Brokers is jumping the gun, and in a first for the U.S. options industry, will make penny pricing on options available as of today. more |
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| May 8 | Interactive
Brokers Group Expands Its Multi-asset Worldwide Direct Platform Interactive Brokers Group (IBG), a global leader in electronic market-making and brokerage services, recently expanded its IB Universal Account by adding CME floor-traded products, CBOT floor-traded products, Swedish stocks and Japanese stocks. " Financial experts are often quoted saying 'A multi-asset worldwide direct access platform is something we will see in the future,'" said Steve Sanders, IB’s managing director of development. "However, the fact is that for four years we have been leading the industry with an innovative platform that allows direct access to stocks, options, futures, Forex, bonds, and Exchange Traded Funds (ETFs) worldwide from a single account all from the same Trader Workstation screen." more |
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| April 19 | ISE and Strategic Investors Form ISE Stock Exchange, LLC MidPoint MatchTM To Be First Product The International Securities Exchange (NYSE: ISE) today announced that it is entering the equities market through the launch of the ISE Stock Exchange LLC in partnership with key strategic investors. ISE retains majority ownership and the strategic partners have joint ownership interests in the business. The strategic investors are leading broker-dealers and members of the exchange. They are: ABC, DEF, GHI, JKL and MNO. more |
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| April 11 | Interactive
Brokers Announces Winner Of First Annual Electronic Trading
Olympiad Interactive Brokers Group (IBG), a global leader in electronic market-making and brokerage services, today announced the winner of its first annual electronic trading Olympiad for colleges. Since there is a shortage of top-notch technologists, IBG created the Olympiad to highlight the growing need for engineers and computer science professionals in the financial services industry. IBG is awarding $158,000 in prizes to students and another $150,000 in matching prizes to the students’ colleges. more |
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| March 16 | Interactive
Brokers To Make Significant Equity Investment In OneChicago OneChicago, LLC, the all-electronic security futures exchange offering futures on more than 200 individual stocks, and Interactive Brokers Group LLC, a premier electronic broker dealer, today announced a significant equity investment in the Exchange that will drive further growth in OneChicago’s products. more |
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| January 11 | Interactive
Brokers Lowers Fees for Stocks, Options Trading Interactive Brokers LLC (IB), the technology leader in global brokerage services, is introducing a new pricing structure to trade equities where high-volume customers could be charged as little as $0.001 a share, plus all external fees or rebates that will be passed on to customers. more |
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| January 11 | IB
Launches Daily Options Market Statistics and Commentary Interactive Brokers (IB), the technology leader in global brokerage services, has launched a new daily options commentary providing investors and traders with information that reflects the market's expectations of future price movements. more |
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| January 9 | Interactive
Brokers Lowers Fees for Stocks, Options Trading
Interactive Brokers LLC (IB), the technology leader in global brokerage services, is introducing a new pricing structure to trade equities where high-volume customers could be charged as little as $0.1 cent a share, plus all external fees or rebates which will be passed on to customers. more |
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| November 3 | Interactive Brokers Sees Surge in Customers on Deep-Discount Fees Interactive Brokers LLC (IB), the technology leader in global brokerage services, is witnessing a surge in customers due to new deep-discount commissions to trade U.S. equities and options, UK securities as well as futures worldwide. more |
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| October 26 | Interactive
Brokers Group to Enter Confidentiality Agreement for Refco
Bid Interactive Brokers LLC (IB), the technology leader in global brokerage services, is lowering commissions to trade futures worldwide in response to a surge in new customers. more |
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| October 26 | Interactive
Brokers Details Plan in the Event of a Refco Acquisition Interactive Brokers Group (IBG), the technology leader in global brokerage services, unveiled on Wednesday its plan to integrate Refco Inc.’s exchange-listed futures business in the event of a successful bid for its competitor. more |
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| October 24 | Interactive
Brokers Lowers U.S. Equities and Options Fees Interactive Brokers LLC (IB), the technology leader in global brokerage services, is lowering commissions to trade U.S. equities by 50 percent and U.S. options by 25 percent, effective November 1, 2005. more |
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| October 20 | IB
Lowers Commissions for Trading Futures Worldwide Interactive Brokers LLC (IB), the technology leader in global brokerage services, is lowering commissions to trade futures worldwide in response to a surge in new customers. more |
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| October 20 | Interactive
Brokers Group Bids for Refco's Exchange-Listed Futures Business Interactive Brokers Group (IBG), the technology leader in global brokerage services, has made a bid to purchase Refco’s entities engaged in regulated futures and commodities trading activities. more |
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| September 26 | IB
Launches $400,000 Electronic Trading Olympiad for Colleges Interactive Brokers Group (IBG), a global leader in market-making and brokerage services, is launching the first IB College Trading Olympiad that will allow future leaders in technology to compete for industry recognition as well as $400,000 in prize money. more |
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| June 29 | Interactive
Brokers Launches New Interactive Analytics Global direct-access broker- dealer Interactive Brokers LLC (IB) is launching Interactive Analytics (IA), a set of mathematical risk assessment tools that can help savvy investors and fund managers better manage diversified portfolios. more |
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| June 13 | Interactive
Brokers to Launch Trading in Energy Futures on IPE, Nymex Global direct-access broker Interactive Brokers LLC (IB) is adding major energy futures contracts to its Universal account that allows investors and professionals to trade multiple asset classes electronically in 14 countries. more |
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| April 13 | Interactive
Brokers Group Among Fastest-Growing U.S. Broker-Dealers
in Institutional Investor Ranking Interactive Brokers Group (IBG) vaulted four spots to become the 16th largest U.S. broker-dealer with $1.9 billion in consolidated capital in the annual ranking by Institutional Investor magazine. more |
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| March 7 | Interactive
Brokers Ranked No. 1 Software-Based Online Broker by Barron's Interactive Brokers LLC (IB) came in as the Number One software-based broker in Barron's 2005 annual review of online brokerage firms. IB also was the only broker to score a perfect 5.0 rating in the trading “costs” category due to its low execution and clearing costs worldwide. more |
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| February 7 | Interactive
Brokers Issues Security Tokens to Prevent Fraud To prevent any risk of fraudulent withdrawal of funds, global direct-access broker-dealer Interactive Brokers (IB) is issuing free IB identity tokens to its customers with more than $100,000 in equity. more |
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| December 15 | Interactive
Brokers Launches Direct-Access Bond Trading on NYSE, BondDesk
and Timber Hill In an industry first, Interactive Brokers will offer direct-access and immediate execution for corporate bond trading on the New York Stock Exchange (NYSE), the BondDesk ECN and IB's market-making affiliate Timber Hill, starting on Dec. 21. more |
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| October 12 | IB
Launches Smart-Routing for Equity and Options Spread Orders
Across Markets Interactive Brokers LLC (IB) has launched Inter-market Smart-Routing for Spread Orders, a new service that supports spread strategies for equities and options traded across multiple U.S. markets. more |
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| September 14 | Timber
Hill Asks Options Exchanges to Ban Specialist Fees; Offers
to Handle SIG's Options Classes for Free In a bid to keep investors' trading cost low, Interactive Brokers Group (IBG) has asked two U.S. exchanges more |
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| March 8 | Interactive
Brokers Introduces Lower Futures Commissions For Professional Customers. New “Unbundled” Commission Structure Is A First For The Industry Interactive Brokers LLC (“IB”) has begun offering a new “unbundled” futures commission structure more |
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| November 24 |
Interactive Brokers Canada Announces
the Appointment of Jean-François Bernier as SVP and Managing Director Interactive Brokers Canada Inc. (“IB Canada”), a subsidiary of the global electronic brokerage and trading firm Interactive Brokers Group LLC (“IB Group”), more |
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| November 24 | Interactive Brokers Canada annonce
la nomination de Jean-François Bernier au poste de premier vice-président et directeur général Interactive Brokers Canada Inc. (“IB Canada”), filiale de la maison de courtage et société commerciale électronique mondiale Interactive Brokers Group LLC more |
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| August 21 | Interactive Brokers Adds Multiple
Global Products & Announces Financial Advisor and Introducing Broker
Accounts Interactive Brokers (IB) www.interactivebrokers.com, a global electronic brokerage firm, now offers its customers the ability to electronically more |
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| March 18 | Interactive Brokers Now Offers
Universal Stock Futures on Euronext-Liffe Interactive Brokers’non-US customers may now electronically trade EURONEXT-LIFFE’s Universal Stock Futures more |
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| March 5 | Electronically Trade IBEX 35 Futures
Through IB for an Introductory Low Rate Interactive Brokers’customers may now link directly to MEFF (the Spanish Derivatives Market) to electronically trade the mini IBEX-35, IBEX-35 futures more |
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Andrew Wilkinson
Phone: 203-913-1369
Email: media@interactivebrokers.com
Interactive Brokers conducts its broker/dealer and proprietary trading businesses on over 80 market destinations worldwide. In its broker dealer agency business, IB provides direct access ("on line") trade execution and clearing services to institutional and professional traders for a wide variety of electronically traded products including stocks, options, futures, forex, bonds and funds worldwide. In its proprietary trading business IB engages in market making for its own account in about 6,500 different electronically traded products.
- Interactive Brokers Group, LLC was founded by its Chairman and CEO Thomas Peterffy. Over the last 33 years, it has grown internally to become one of the premier securities firms with $4.8 billion in equity capital.
- Interactive Brokers' headquarters are in Greenwich Connecticut, and it has about 800 employees in its offices in the USA, Switzerland, Canada, Hong Kong, UK, Australia, Hungary, Russia, India, China and Estonia. IB is regulated by the SEC, FINRA, NYSE, SFA and other regulatory agencies around the world.
- Group affiliates execute over 1,000,000 trades per day.
- Interactive Brokers Group has always been at the forefront of trading innovation, starting with the invention of the first floor-based handheld computer in 1983.
- Interactive Brokers Group is rated Investment Grade by S&P.
- Interactive Brokers was awarded the highest star ratings from Barron's; 4.8 stars for lowest cost and 4.5 stars overall.