Interactive Brokers has announced that it will be raising the interest rate on top-tier USD based loans by five basis points. The change will be applied to any loans exceeding $3 million, and will take effect on January 22. The interest on such loans will increase from its previous mark 1.67% to 1.72%.
Meanwhile, smaller loans will not be affected, and their interest rate levels will remain unchanged.
Thomas Peterffy, Interactive Brokers Group Chairman and CEO, justified the company’s decision: “IBKR is increasing the interest rate charged on our largest loans as our total margin loans outstanding are about to exceed $30 billion. The company is taking this conservative step to slow the growth of margin loans.” Mr. Peterffy’s comments explain the reasoning behind Interactive Brokers’ announcement, as an attempt to limit the rapidly rising loans outstanding held by the company.
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The announcement also indicated that Interactive Brokers will incur a decrease in Q4 earnings of roughly $84 million, due to the Tax Cuts and Jobs Act that was recently implemented. Additionally, the company saw relatively mild DARTs figures for the month of December 2017, placing further pressure on its efforts for improved profitability.
Interactive Brokers’ Approach to Cryptocurrencies
Mr. Peterffy has made headlines over the past couple of months, expressing his concerns over demand for cryptocurrencies. He wrote a letter to the CFTC Chairman explaining his pessimism over the state of the market and its respective volatility, saying: “Cryptocurrencies do not have a mature, regulated and tested underlying market. The products and their markets have existed for fewer than 10 years and bear little if any relationship to any economic circumstance or reality in the world.”
Just one month later however, Mr. Peterffy retracted those statements, and his sentiment became much more positive. “I think bitcoin and other cryptocurrencies are great ideas. They should be allowed to be traded freely and used freely to find their appropriate role in the economy,” he said.
His change of attitude toward the cryptocurrency market coincided with the launch of Bitcoin futures on the CBOE and CME exchanges in December of last year.