Trading Volumes Ease at Interactive Brokers, but Traders’ Bets Increase

During July 2020, the number of DARTs, a standard industry metric, were reported at 1.79 million transactions.

Trading activity at Interactive Brokers LLC (NASDAQ:IBKR) lost momentum in July with volumes easing on a month-on-month basis following strong gains in June. The broker, however, posted its third-best reading for Daily Average Revenue Trades (DARTs). This is a sign that trades continue to meaningfully accelerate despite the pandemic volatility over the summer.

During July 2020, the number of DARTs, a standard industry metric, reported were at 1.79 million transactions. This is a fall of 4 percent month-over-month from 1.86 million in June, with a record high of 1.96 million‎ in June. On a year-on-year basis, Interactive Brokers saw a brighter performance in its DARTs with July’s figure up 124 percent relative to nearly 800k transactions reported in the same month last year.

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Interactive Brokers, whose two main divisions were online brokerage and market-making before it ceased the latter in 2018, has won more clients, with the total for July’s active accounts up to 913,000. That is or 4 percent higher from 876,000 accounts for the previous month. The figure increased by 40 percent year-on-year when compared to July 2019 (‎652,100 ‎accounts).

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Interactive Brokers had seemingly eased its recent restrictions on borrowed margins, which occurred amid fears over the impact of the spreading coronavirus on its traders’ bets. The company’s ending client margin loan balances were around $28.4 billion in July 2020. This figure has climbed 14 percent from $24.9 billion in June, which is also an increase of more than 7 percent against the year prior. That marks a return to pre- COVID-19 levels after the company reduced clients’ exposure by a third when compared to February.

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On average, in July 2020, Interactive Brokers charged clients commission fees of $2.78 per order, relative to $2.83 in June. This figure includes exchange, clearing and regulatory fees, with the key products metrics coming out at $2.05 for stocks, $4.20 for equity options, and $4.01 for futures orders.

Interactive Brokers said last month that its second-quarter revenues rose 7 percent year-over-year, to $523 million compared to $488 million in Q2 2019. The company had been forced to cover $104 million worth of its customers’ losses on April 20. That was when prices plunged below zero for the first time ever. The Greenwich, Connecticut-based broker reported earlier that it had suffered an aggregate provisionary loss of $88 million, but the figure swelled after IBKR made its final calculations for the second quarter.

Interactive said several customers had been caught on the wrong side of the June plunge, having held long positions on cash-settled WTI futures at both CME and ICE Futures Europe. The negative settlement price caused customers to incur losses in excess of the equity in their accounts. Thus, the broker was forced to step in and pay the margin calls owed to clearing houses.

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