Breaking: Interactive Brokers to Cease Market Making of Options

The company’s CEO Thomas Peterffy highlights operational challenges.

Interactive Brokers (NASDAQ:IBKR), one of the biggest multi-asset retail brokers in the US, is on the wires with a surprising bit of news. The company announced moments ago that it will stop its options market making activities globally. The firm has been executing its pricing via its Timber Hill companies.

Interactive Brokers is starting a gradual process of phasing out its activities globally. The effort will spread over a couple of months. According to the firm’s official announcement, the broker will continue certain trading activities in stocks and related instruments.

Interactive Brokers was one of the first companies to start automated options market making activity, in the ’80s.

The CEO of Interactive Brokers, Thomas Peterffy, justified the move in a statement: “Today retail order-flow is purchased by large order internalizers and joining them would represent a conflict we do not wish to have.”

“On the other hand, providing liquidity to sophisticated, professional synthesizers of short-term fundamental, technical and big data is not a profitable activity,” Petterfy elaborates.

Optimization Effort in the Electronic Market Era

The management team of Interactive Brokers is currently conducting a review of the broker’s facilities and staffing. Some optimization of the deployment of the company’s resources is expected in the near future.

Interactive Brokers is also planning to increase the share of the US dollar in its currency portfolio that is currently comprising a basket of 15 major currencies. The brokerage will hike the relative weight of the dollar against other currencies to about 70 percent from its current weight of 47 percent.

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