Interactive Brokers Checks In; IBKR; TRAD

| 02 November 2009

Less than two weeks after Interactive Brokers dropped a tough Q3 on us, missing all the analyst estimates and dropping EPS by 70%, the firm posted metrics for October. Customer balances and DARTs ticked up ever so slightly by 5% and 2% respectively. The company increased total customer accounts by 2% to 129,800 at the end of October.

We continue to monitor the tale of the tight spreads, but the company only reports revenue on a quarterly basis. Eleven days ago CEO Thomas Peterffy said, “Ever increasing competition in the transparent, exchange listed derivatives markets continued to pressure spreads to never before seen levels in the third quarter."

The market making segment of the company saw a 74% decrease year-over-year in income before income taxes in Q3. The brokerage segment, meanwhile, saw only a 3% decrease and was "roughly flat" quarter-over-quarter in Q3.

Even as the company continues to increase customer accounts, the trading activity relative to those accounts is much lower than it was a year ago. A total of 129,800 accounts generated 365,000 DARTs in October. This compares with 108,000 accounts generating 940,000 DARTs in October 2008.

Average annualized DARTs per account dropped from 940,000 to 645,000 year-over-year in October, or a 21.4% decrease.

We expect to hear from smaller rival TradeStation Securities (TRAD) later today or tomorrow.