Interactive Brokers’ Results Slump in Third Quarter 2015

Interactive Brokers Group (NASDAQ GS: IBKR), an online broker and market maker, just released somewhat disappointing results for the third quarter (Q3) ending September 30, 2015.

The group reported diluted earnings per share on a comprehensive basis of just $0.23 for the quarter, down from $0.44 in Q2 2015. Still, the figure seems less negative when compared to the diluted loss per share on a comprehensive basis of $0.13 for the same period in 2014.

Net revenues were $359 million and income before income taxes was $202 million this quarter, down from $387 million and $240 million respectively in Q2 2015. Again, the figures look better when compared to net revenues of $171 million and income before income taxes of $40 million for the same period in 2014.

Q3 Business Highlights

Electronic Brokerage segment income before income taxes increased 19% to $184 million, compared to the same period last year, due to higher commissions revenue and net interest income. Customer accounts grew 18% to 322,000 and customer equity increased 13% to $62.1 billion from the year-ago quarter.

Commissions and Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term fees increased 26% from the year-ago quarter to $168 million. Net interest income grew 11% from the year-ago quarter to $102 million. Pretax profit margin was 61% in quarter ending September 30, 2015, down from 63% in the same period last year.

Total DARTs for cleared and execution-only customers increased 28% from the year-ago quarter to 683,000. Cleared DARTs were 620,000, 28% higher than the same period last year.

Market Making segment income before income taxes increased 557% to $46 million, in the quarter ending September 30, 2015 compared to the same period last year, driven by higher Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term and active trading in the late August period. Pretax profit margin increased to 51% in the current quarter from 14% in the same period last year.