We Expect Interactive Brokers to Navigate Normalizing Trading Activity and Falling Rates Adroitly

Interactive Brokers' strategy has long been rooted in efficiency, automation, and superior order execution, and we do not expect any deviation from this foundation. While the company has broadened its reach by allowing a quickly growing retail clientele to tap into its global platform, it has done so without the addition of high-touch client services that investors expect from its largest US peers, Charles Schwab and Fidelity. We view the firm's recent success with active retail traders as largely incremental, with those customers self-selecting onto Interactive Brokers' platform for its superior order execution, low margin lending rates, and access to more than 160 global exchanges, 36 countries, and 28 currencies (with low-cost currency exchange) as of the end of 2024. It is exceedingly likely that many retail clients maintain relationships with Interactive Brokers' larger peers, with the firm deliberately eschewing services like asset and wealth management that tend to be higher touch and which more directly compete with its institutional customer base, but we see few economic incentives for the largest firms to attempt to replicate Interactive Brokers' offering (and few indications that they would be able to).