IBKR 10-K & 10-Q changes, risk factors and insider trading

Future sales of our common stock in the public market could lower our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.

Control by Mr. Thomas Peterffy of a majority of the combined voting power of our common stock may give rise to conflicts of interests and could discourage a change of control that other stockholders may favor, which could negatively affect our stock price, and adversely affect stockholders in other ways.

We depend on IBG LLC to distribute cash to us in amounts sufficient to pay our tax liabilities and other expenses.

We are required to pay Holdings for the benefit relating to additional tax depreciation or amortization deductions we claim as a result of the tax basis step-up our subsidiaries received in connection with our initial public offering (“IPO”) and certain subsequent redemptions of Holdings membership interests.

Certain provisions in our amended and restated certificate of incorporation may prevent efforts by our stockholders to change our direction or management.

Macroeconomic, geopolitical and other challenges and uncertainties could have a negative impact on our business.

Our business could be harmed by a systemic market event.

Damage to our reputation could harm our business.

The impact of a public health emergency may have a material adverse impact on our business and results of operations.

Our future success will depend on our response to the demand for new services, products and technologies.

The loss of our key employees would materially adversely affect our business.

We may not always pay dividends on our common stock at any time in the foreseeable future.stock.

Our direct market access clearing and non-clearing brokerage operations face intense competition.

We are subject to potential losses as a result of our clearing and execution activities.

We are exposed to risks associated with our international operations.

We are subject to counterparty risk whereby defaults by parties with whom we do business can have an adverse effect on our business, financial condition and results of operations.

Any future acquisitions may result in significant transaction expenses, integration and consolidation risks and risks associated with entering new markets, and we may be unable to profitably operate our consolidated company.

Because our revenues and profitability depend on trading volume and interest rate levels, they are prone to significant fluctuations and are difficult to predict.

We may incur material trading losses from our market making activities.

Reduced spreads in securities pricing, levels of trading activity and trading through market makers could harm our business.

We may incur losses in our market making activities in the event of failures of our proprietary pricing model.

The valuation of the financial instruments we hold may result in large and occasionally anomalous swings in the value of our positions and in our earnings in any period.

We are exposed to losses due to lack of perfect information.

Rules governing designated market makers may require us to make unprofitable trades or prevent us from making profitable trades.

Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks.

Our future efforts to sell shares or raise additional capital may be delayed or prohibited by regulations.

Regulatory and legal uncertainties could harm our business.

We are subject to risks relating to litigation and potential securities laws liability.

Heightened regulatory and legislative requirements and changes in the U.S. and globally have increased our compliance, regulatory and other risks and costs.

 We may incur additional tax expense or become subject to additional tax liabilities.

We may not be able to protect our intellectual property rights or may be prevented from using intellectual property necessary for our business.

Our reliance on our computer software could cause us great financial harm in the event of any disruption or corruption of our computer software. We may experience technology failures while developing our software.

We depend on our proprietary technology, and our future results may be impacted if we cannot maintain technological superiority in our industry.

We do not have fully redundant systems. System failures could harm our business.

Failure of third-party systems on which we rely could adversely affect our business.

Internet-related issues may reduce or slow the growth in the use of our services in the future.

We could be the target of a cyber-attack or experience a cybersecurity incident that impairs internal systems, degrades services we provide to customers, or results in a data compromise, causing reputational or monetary damages as a consequence.

We are subject to stringent and complex data privacy rules. Failure to comply with these rules could have an adverse effect on our business, financial condition, and results of operation.

We rely on third-party Cryptocurrency Service Providers (“CSPs”) to provide our customers the ability to access cryptocurrency trading and custody services.

A data breach at thea CSP may result in irreversible losses, which would adversely affect our customers and our business.

We may encounter technical issues which would result in disruption or interruption of our customers’ access to their CSP accounts.

Changes in laws and regulations regarding cryptocurrency may negatively impact our ability to enable our customers to buy, hold and sell cryptocurrencies in the future and may adversely affect our business.

We are a holding companycompany, and our primary assets are our approximately 25.8%26.3% equity interest in IBG LLC and our controlling interest and related rights as the sole managing member of IBG LLCLLC. and, asAs such, we operate and control all of the business and affairs of IBG LLC and are able to consolidate IBG LLC’s financial results into our financial statements. We have no independent means of generating revenues. IBG LLC is treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to U.S. federal income tax. Instead, its taxable income is allocated on a pro rata basis to Holdings and us. Accordingly, we incur income taxes on our proportionate share of the net taxable income of IBG LLC, andas alsowell incuras expenses related to our operations. We intend to cause IBG LLC to distribute cash to its members in amounts at least equal to that necessary to cover their tax liabilities, if any, with respect to the earnings of IBG LLC. To the extent we need funds to pay such taxes, or for any other purpose, and IBG LLC is unable to provide such funds, it could have a material adverse effect on our business, financial condition and results of operations.

In connection with our IPO, we purchased interests in IBG LLC from Holdings for cash. InSubsequently, in connection with redemptions of Holdings membership interests, we acquiredpurchased additional interests in IBG LLC by issuing shares of Class A common stock in exchange for an equivalent number of shares of member interests in IBG LLC (the “Redemptions”). In addition, IBG LLC membership interests held by Holdings may be sold in the future to us and financed by our issuances of shares of our common stock. The initial purchase and the Redemptions did, and the subsequentfuture purchases may, result in increases in the tax basis of the tangible and intangible assets of IBG LLC and its subsidiaries that otherwise would not have been available. Such increase will beis approximately equal to the amount by which our stock price at the time of the purchase exceeds the incomeinside tax basis of the assets of IBG LLC underlying the IBG LLC interests acquired by us. These increases in tax basis will result in increased deductions in computing our taxable income andincome, resulting in tax savings for us generally over the 15-year period which commencedcommencing with the initial purchase and subsequent purchases, respectively.purchases. We have agreed to pay 85% of these tax savings, if any, to Holdings as they are realized as additional consideration for the IBG LLC interests that we acquire, with the balance to be retained by us.

As a result of the IPO and the Redemptions by Holdings, the increase in the tax basis attributable to our interest in IBG LLC is $2.1$2.2 billion.billion, with the portion attributable to the IPO having been substantially amortized as of December 31, 2025. The tax savings that we would actually realize as a result of this increase in tax basis likely wouldcould be significantly less than this amount multiplied by our effective tax rate due to a number of factors, including, for example, the allocation of a portion of the increase in tax basis to foreign or non-depreciable fixed assets, the impact of the increase in the tax basis on our ability to use foreign tax credits and the rules relating to the amortization of intangible assets. Based on facts and assumptions as of December 31, 2024,2025, including that subsequentfuture purchases of IBG LLC interests will occur in fully taxable transactions, the potential tax basis increase resulting from the historical and future purchases of the IBG LLC interests held by Holdings could be as much as $31.2$44.6 billion. The actual increase in tax basis depends, among other factors, upon the price of shares of our common stock at the time of the purchase and the extent to which such purchases are taxable and, as a result, could differ materially from this amount. Our ability to achieve benefits from any such increase, and the amount of the payments to be made under the Tax Receivable Agreement, depends upon a number of factors, as discussed above, including the timing and amount of our future income.

rapid technological change;

changing customer demands;

the need to enhance existing services and products or introduce new services and products; and

evolving industry standards.

New services, products and technologies may render our existing services, products and technologies less competitive. Our future success will depend, in part, on our ability to respond to the demand for new services, products and technologies on a timely and cost-effective basis and to adapt to technological advancements and changing standards to address the increasingly sophisticated requirements and varied needs of our customers and prospective customers. We cannot assure youguarantee that we will always be successful in developing, introducing or marketing new services, products and technologies. In addition, we may experience difficulties that could delay or prevent the successful development, introduction or marketing of these services and products, and our new service and product enhancements may not achieve market acceptance. Any failure on our part to anticipate or respond adequately to technological advancements, customer requirements or changing industry standards, or any significant delays in the development, introduction or availability of new services, products or enhancements could have a material adverse effect on our business, financial condition and results of operations.

We may not always pay dividends on our common stock at any time in the foreseeable future.stock.

As a holding company for our interest in IBG LLC, we will be dependent upon the ability of IBG LLC to generate earnings and cash flows and distribute them to us so that we may pay any dividends to our stockholders. To the extent (if any) that we have excess cash, any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors and will depend on, among other things, our results of operations, financial conditions, cash requirement, contractual restrictions and other factors that our Board of Directors may deem relevant. From the second quarter of 2011 through the first quarter of 2024, we declared and paid a quarterly cash dividend of $0.10 per share. Starting in the second quarter of 2024, we increased the quarterly cash dividend from $0.10 per share to $0.25 per share. Although not required, we currently intend to pay quarterly dividends of $0.25 per share to our common stockholders for the foreseeable future.

prime brokers who, in an effort to satisfy the demands of their customers for hands-on electronic trading facilities, universal access to markets, smart routing, better trading tools, and lower commissions and financing rates, have embarked upon building such facilities and product and service enhancements;

direct market access and online equity brokers, and online options and futures firms;

zero commission brokers, while technically not offering direct market access, who use simplified interfaces and a limited product offering to attract new market participants;

software development firms and vendors who create global trading networks and analytical tools and make them available to brokers; and

traditional brokers.

We are an automated global electronic broker. We custody and service accounts for hedge and mutual funds, ETFs, registered investment advisors, proprietary trading groups, introducing brokers and individual investors. We specialize in routing orders and executing and processing trades in stocks, options, futures, forex, bonds, mutual funds, ETFs and precious metals on more than 160170 electronic exchanges and market centers in 3640 countries and 2829 currencies around the world. In addition, our customers can use our trading platform to trade certain cryptocurrencies through third-party cryptocurrency service providers that execute, clear and custody the cryptocurrencies. InWe Augustalso 2024, we began offeringoffer trading in forecast contracts, which are event-based contracts traded on ForecastEx, a CFTC-registered exchange and clearinghouse we established.

As an electronica broker, we execute, clear and settle trades globally for both institutional and individual customers. CapitalizingPowered onby our proprietary technology, our systems provide our customers with the capability to monitor multiple markets around the world simultaneously and to execute trades electronically in these markets at a low cost, in multiple products and currencies from a single trading account. Our overnight trading facilities, available for an array of instruments, support our customers who trade across time zones. The ever-growing complexity of multiple market centers across diverse geographies provides us with ongoing opportunities to build and continuously adapt our order routing software to secure excellent execution prices.

Since our inception in 1977, we have focused on developing proprietary software to automate broker-dealer functions. The proliferation of electronic exchanges and market centers has allowed us to integrate our software with an increasing number of trading venues – as well as with market data sources, securities lending platforms and regulatory reporting facilities – creating one automatically functioning, computerizedautomated platform that requires minimal human intervention.

Our customer base is diverse with respect to geography and type. Currently, approximately 83% of our customers reside outside the U.S. in over 200 countries and territories,territories. andWe overserve 85%individuals, ofas newwell customers come from outside the U.S. Approximately 55% of our customers’ equity is inas institutional accounts such as hedge funds, financial advisors, proprietary trading firms and introducing brokers. Specialized products and services that we have developed successfully attract theseinstitutional accounts. For example, we offer prime brokerage services, including financing and securities lending, to hedge funds; our model portfolio technology and automated share allocation and rebalancing tools are particularly attractive to financial advisors; and our trading platform, global access and low pricing attract introducing brokers.

Global trading volumes. Worldwide, equities volumes at most major trading venues increased in the current year, while major market indices reached all-time highs in the U.S., Canada, Europe, U.K., Germany, Japan, and Australia. In the U.S., according to industry data, average daily volume in listed cash equities increased by 45%, exchange-listed equity-based options increased by 10%, listed cash equities volume by 10%,25%, and futures by 9%,6%, compared to 2023.2024. Options trading volumes have risen with the growing popularity of shorter-dated options contracts. In futures markets, volumes increased across allmost product segments, particularly in commodities such as the metals, energyenergy, equity index, agriculture and agricultureinterest sectors,rate products, as investors sought to mitigate their exposure to ongoing economic and geopolitical uncertainties.

These factors led to mixed but generally positivestrong results across our major product types. Our customer equities, options, equities,foreign exchange, and futures volumes were up 32%,38%, 22%,26%, 15%, and 4%,12%, respectively, while foreign exchange volumes declined 9%, compared to the prior year.

Volatility. U.S. market volatility, as measured by the average Chicago Board Options Exchange Volatility Index (‘‘VIX®’’), declinedincreased by 8%,22%, from an average of 16.815.6 in 20232024 to 15.618.9 in the current year. Volatility levels remain belowyear, the levelshighest reachedannual inlevel 2020seen throughsince 2022,2022. asIn thegeneral, worldhigher economicvolatility outlooktypically hasenhances improvedour andperformance recessionbecause fearsit haveoften waned.correlates positively with customer trading activity across product types.

Interest Rates. AfterDuring holding rates steady since July 2023,2025, the U.S. Federal Reserve cut the benchmark federal funds rate threeby timesa intotal 2024of (in75 basis points, with 25 basis point reductions at its September, NovemberOctober, and December), bymeetings. This resulted in a cumulativetarget 100 basis points. After a periodrange of inversion,3.50% to 3.75% at year end, the lowest level since late 2022. Over the course of the year, the U.S. Treasury yield curve began to revertmoved toward anormalization historicallybut typicalremained upwardpartially slopeinverted byat year end, with long-termshort- ratesto becomingintermediate-term higheryields thanflat short-termto inverted, while longer-term yields exceeded shorter-term rates. In most countries with developed financial markets, benchmark interest rates also declined overduring the course of the year2025 as inflationary pressures eased and central banks’banks concernsadjusted overmonetary inflationpolicy abated.accordingly.

Lower U.S. benchmark rates reduce the interest we earn on our segregated cash, the majority of which is invested in short-term U.S. government securities and related instruments. Higher short-term rates,rates and uncertainty over future U.S. Federal Reserve rate policy,policy have led us to maintain a short duration portfolio, substantially all of which matured within three months at December 31, 2024,2025, to more closely match our asset and liability maturities on our interest-sensitive assets. Further, our margin balances are tied to benchmark rates, so lower rates also limit the interest we earn on margin lending to our customers. We continue to offer among the lowest rates in the industry on margin lending, and we believe our low rates are an important feature that attracts customers to our platform.

As an offset, lower rates also reduce our interest expense. For example, in U.S. dollars we pay interest to customers on their qualified cash balances when the federal funds effective rate is above 0.50%, which it has been since May 2022. WithAt this benchmark ratesrate at higher levels than they were during an extended period during and after the pandemic,level, we are able to earn our full 0.50% spread. We believe the attractive rates we pay on customer cash are among the highest in the industry and are another important feature that draws customers to our platform.

Net interest income on margin loan balances rose compared to the prior year. This increase was due to the average federal funds effective rate increasing to 5.14% in the current year from 5.02% in the prior year, and the growth in margin loan balances in the current active market environment.environment despite the average federal funds effective rate declining to 4.21% in the current year from 5.14% in the prior year.

Higher average balances contributed to a 13% rise in net interest income over the prior year,year. and our netNet interest margin held fairly steady, dipping slightlydeclined from 2.36%2.35% in the prior year to 2.35%2.08% in the current year.year primarily due to lower interest rates.

Currency fluctuations. As a global electronic broker trading on exchanges around the world in multiple currencies, we are exposed to foreign currency risk. We actively manage this exposure by keeping our equity in proportion to a defined basket of 10 currencies we call the ‘‘GLOBAL’’ to diversify our risk and to align our hedging strategy with the currencies that we use in our business. Because we report our financial results in U.S. dollars, the change in the value of the GLOBAL versus the U.S. dollar affects our earnings. During the current year, the value of the GLOBAL, as measured in U.S. dollars, decreasedincreased 1.45%2.05% compared to its value at December 31, 2023,2024, which had a negativepositive impact on our comprehensive earnings for the current year. A discussion of our approach for managing foreign currency exposure is contained in Part I,II, Item 7A of this QuarterlyAnnual Report on Form 10-Q10-K entitled ‘‘Quantitative and Qualitative Disclosures about Market Risk.”

Net interest income increased 13% from the prior year to $3,148$3,563 million, driven by higher average customer margin loans and customer credit balances.balances, and by stronger securities lending activity.

Commission revenue increased 25%27% from the prior year to $1,697$2,149 million on higher options,stocks, stockoptions and futures volumes.

Other fees and services increased 42%4% from the prior year to $280$291 million on higher risk exposure fees, payments for order flow from exchange-mandated programs, and Insured Bank Deposit Sweep Program fees (“FDIC sweep fees”)., market data fees and payments for order flow from exchange-mandated programs, partially offset by lower risk exposure fees.

Other income increased $71$142 million from the prior year to a gain of $60$202 million.

Execution, clearing and distribution fees expenses increaseddecreased 16%6% to $447$420 million, driven by greater capture of liquidity rebates from certain exchanges due to higher customer trading volumevolumes in options, stocks and futures.options, and by the elimination of SEC fees beginning in May 2025.

Pretax profit margin was 77%, up from 71% in both the current and prior year. Adjusted pretax profit margin was 72%,77%, up from 71%72% in the prior year.

In connection with our currency diversification strategy as of December 31, 2024,2025, approximately 23%25% of our equity was denominated in currencies other than the U.S. dollar. In the current year, our currency diversification strategy decreasedincreased our comprehensive earnings by $222$387 million (compared to ana increasedecrease of $42$222 million in the prior year), as the U.S. dollar value of the GLOBAL decreasedincreased by approximately 1.45%,2.05%, compared to its value as of December 31, 2023.2024. The effects of our currency diversification strategy are reported as (1) a component of “Other Income” (loss of $15$4 million) in the consolidated statements of comprehensive income and (2) other comprehensive income (“OCI”) (lossgain of $207$391 million) in the consolidated statements of financial condition and the consolidated statements of comprehensive income. The full effect of the GLOBAL is captured in comprehensive income.

Retail participation in the equity markets has fluctuated in the past due to investor sentiment, market conditions and a variety of other factors. Retail transaction volumes may not be sustainable and are not predictable.

Consolidation among market centers may adversely affect the value of our IB SmartRoutingSM software.

Competition among broker-dealers may continue to intensify.

Benchmark interest rates tend to fluctuate with economic conditions. Changes in interest rates may not be predictable.

Fiscal and/or monetary policy may change and impact the financial services business and securities markets.

New legislation or modifications to existing regulations and rules could occur in the future. Scrutiny in the use of artificial intelligence (AI) and information security by regulatory and legislative authorities has increased.

The impact of anothera pandemic or aother public health emergency will depend on numerous evolving factors that cannot be accurately predicted, including the duration and spread of the pandemic, governmental regulations in response to the pandemic, and the effectiveness of vaccinations and other medical advancements.

We continue to be exposed to the risks and uncertainties of doing business in international markets, particularly in the heavily regulated brokerage industry. Such risks and uncertainties include political, economic and financial instability, and foreign policy changes. For example, tensions between the U.S. and China have escalated in recent years, and changes in Chinese governmental oversight of the Chinese and Hong Kong capital markets could result in adverse effects on our business and loss of assets we hold in the region. Additionally, although our direct and indirect exposures to Russia and Ukraine are not material, the war in Ukraine and related sanctions have created substantial uncertainty in the global economy and financial markets. Finally, government actions such as tariff policy changes may create uncertainty that affects volumes and volatility in the financial markets.

Our remaining market making activitiesactivities, while not material, will continue to be impacted by market structure changes, market conditions, the level of automation of competitors, and the relationship between actual and implied volatility in the equities markets.

(1)Futures contract volume includes options on futures.

(1)Excludes non-customers.

(2)Daily average revenue trades ("DARTs") are based on customer orders.

(3)Commissionable order – a customer order that generates commissions.

Total net revenues, for the current year, increased $845$1,020 million, or 19%,20%, compared to the prior year, to $5,185$6,205 million. The increase in net revenues was due to higher commissions, net interest income, commissions,other income, and other fees and services, and other income.services.

We earn commissions from our cleared customers for whom we act as an executing and clearing broker and also from our non-cleared customers for whom we act as an execution-only broker. Our commission structure allows customers to choose between (1) an all-inclusive fixed, or “bundled”, rate; (2) a tiered, or “unbundled”, rate that offers lower commissions for high volume customers where we pass through regulatory and exchange fees; and (3) our IBKR LiteSM offering, which provides commission-free trades on U.S. exchange-listed stocks and ETFs. IBKR LiteSM trades generate payments from market makers and others to whom we route these orders, which are reported in commissions. Our commissions are geographically diversified.diversified Inaround 2024,the 2023,world, andthough 2022a wesubstantial majority are generated 38%,on 37%products andtraded 37%, respectively, of commissions from operations conducted by our subsidiaries outsidein the U.S.

Commissions for the current year increased $337$452 million, or 25%,27%, compared to the prior year, to $1,697$2,149 million, driven by higher customer trading volumes in options,stocks, stocksoptions and futures. Total customer stock share and options and futures contract and stock share volumes increased 32%,38%, 4%26% and 22%,12%, respectively, from the prior year. Total DARTs for cleared and execution-only customers, for the current year, increased 36%40% to 2.63.7 million, compared to 1.92.6 million for the prior year. Average commission per commissionable order for cleared customers, for the current year, decreased 9%6% to $2.86,$2.68, compared to $3.14$2.86 for the prior year, due to smaller order sizes across all products, lower average commissions per order in stocks,options, optionsfutures and forex, and greater capture of exchange liquidity rebates passed through to customers.

Other fees and services, for the current year increased $83$11 million, or 42%,4%, compared to the prior year, to $280$291 million, driven by a $54$9 million increase in riskFDIC exposuresweep fees ason customershigher exhibitedcustomer morebalances, risk-onan behavior,$8 million increase in market data fees due to our growing customer base, and a $14$6 million increase in payments for order flow from exchange-mandated programs driven by higher customer trading volume,volume; andpartially offset by a $9$20 million increasedecrease in FDICrisk sweepexposure fees dueas tocustomers higherexhibited customermore balancescautious andrisk-taking benchmark interest rates.behavior.

Other income, for the current year, increased $71$142 million, or 237%, compared to the prior year, to a gain of $60$202 million. This increase was mainly compriseddue ofto $65(1) $73 million related to our currency diversification strategy; $48 million from our principal trading and investmentinvesting activities; and(2) $23the millionnon-recurrence related to million related to our strategic investment in Up Fintech Holding Limited (“Tiger Brokers”); partially offset byof a $48 million loss on positions taken over as customer accommodation due to a technical issue at the New York Stock Exchange that occurred on the morning of June 3, 2024, as previously disclosed; (3) $11 million related to our currency diversification strategy; and $16(4) $6 million related to the remeasurement of our Tax Receivable Agreement liability, payable to Holdings, which went from a gain of $7 million in the prior year to a loss of $9 million in the current year, primarily due to changes in the Company’s effective tax rates.Holdings.

Net interest income (interest income less interest expense), for the current year, increased $354$415 million, or 13%, compared to the prior year, to $3,148$3,563 million. The increase in net interest income was driven by higher average customer margin loans and customer credit balances, and higherstronger securities lending activity, partially offset by lower benchmark interest rates.

Net interest income on customer balances, for the current year, increased $497$174 million, compared to the prior year, driven by aincreases $12.3of $29.6 billion, $16.5 billion increaseand in average customer margin loans, a $9.8$15.1 billion increase in average customer credit balances, margin loans, and ansegregated increasecash inand thesecurities, averagerespectively. federalYields fundson effectiveall ratethree tocomponents 5.14%decreased fromas 5.02%interest inrates thedeclined prior year and.worldwide. See the “Business Environment” section above in this Item 7 for a further discussion about the change in interest rates in the current year.

In the current year, average securities borrowed balances increased 11%,32%, to $5.9$7.8 billion, and average securities loaned balances increased 44%,42%, to $13.7$19.5 billion, compared to the prior year. Net interest earned from securities lending is affected by the level of demand for securities positions held by our customers that investors are looking to sell short. During the current year, net interest earned from securities lending transactions decreasedincreased $184$195 million, or 67%,212%, compared to the prior year, driven by lowera demandhigher forlevel sellingof stocksshort short,sale asactivity and generally higher price levels raising the stocknotional marketvalue rose steadily inof the currentsecurities year,we and by fewer so-called “hard to borrow” stocks industry wide.lent. However, as noted above, the rise in benchmark interest rates hasfrom March 2022 to September 2024 shifted a portion of the interest reported as generated by lending securities to interest income on segregated cash (see further explanation above). It should be noted that securities lending transactions entered into to support customer activity may produce interest income (expense) that is offset by interest expense (income) related to customer balances. With benchmark rates falling during 2025, the opposite shift occurred, from interest income on segregated cash to securities lending income.

(1)Represents the average amount of customer cash swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. This item is not recorded in the Company’s consolidated statements of financial condition. Income derived from program deposits is reported in other net interest income in the table above.

(2)Interest income and interest expense on customer margin loans and customer credit balances, respectively, are calculated on daily cash balances within each customer’s account on a net basis, which may result in an offset of balances across multiple account segments (e.g., between securities and commodities segments).

(3)Includes income from financial instruments that has the same characteristics as interest, but is reported in other fees and services and other income in the Company’sCompany's consolidated statements of comprehensive income. For the years ended December 31, 2025, 2024, and 2023, and 2022, $28$38 million, $19$28 million and $10$19 million were reported in other fees and services, respectively. For the years ended December 31, 2025, 2024, and 2023, and 2022, $47$86 million, $7$47 million and $4$7 million were reported in other income, respectively.

Non-interest expenses, for the current year, increaseddecreased $219$56 million, or 17%,4%, compared to the prior year, to $1,490$1,434 million, mainly due to a $103$67 million increasedecrease in general and administrative expenses; a $61$27 million increasedecrease in execution, clearing and distribution fees; and a $47$14 million decrease in customer bad debt; partially offset by a $52 million increase in employee compensation and benefits. As a percentage of total net revenues, non-interest expenses were 29%23% for both the current year and 29% for the prior year.

Employee compensation and benefits expenses, for the current year, increased $47$52 million, or 9%, compared to the prior year, to $574$626 million, associated with a combination of staffing increases and inflation.inflation, and an increase in U.S. Social Security and Medicare and other social insurance taxes driven by the annual vesting of the Company’s Stock Incentive Plan units at a higher stock price than in the prior year. The average number of employees increased 2%4% to 2,9603,085 for the current year, compared to 2,8922,960 for the prior year. We continued to add staff worldwide to support our business expansion. As we continue to grow, our focus on automation has allowed us to maintain a relatively smalllean staff. As a percentage of total net revenues, employee compensation and benefits expenses were 11%10% for the current year and 12%11% for the prior year. Employee compensation and benefits expenses as a percentage of adjusted net revenues were 11% for the current year and 12% for the prior year.

Occupancy, depreciation and amortization expenses, for the current year, increaseddecreased $2$4 million, or 2%,4%, compared to the prior year, to $101$97 million, mainly due to higherlower costs related to the expansion of our physical space for both officesdepreciation and dataamortization centers.expense. As a percentage of total net revenues, occupancy, depreciation and amortization expenses were 2% for both the current year and the prior year.

Communications expenses, for the current year, decreasedincreased $2$4 million, or 5%,10%, compared to the prior year, to $39$43 million. As a percentage of total net revenues, communications expenses were 1% for both the current year and the prior year.

General and administrative expenses, for the current year, increaseddecreased $103$67 million, or 49%,21%, compared to the prior year, to $314$247 million, primarily due to athe $57non-recurrences of $82 million increase related to a legal and regulatory matters, a $20 million increase in advertising expenses,settlement and a one-time charge of $12 million related to the consolidation of our European subsidiaries.subsidiaries in the prior year; partially offset by a $35 million increase in advertising expenses. As a percentage of total net revenues, general and administrative expenses were 6%4% for the current year and 5%6% for the prior year.

Customer bad debt expense consists primarily of losses incurred by customers in excess of their assets with us, net of amounts recovered by us. Customer bad debt expense, for the current year increaseddecreased $8$14 million, or 114%,93%, compared to the prior year, to $15$1 million.million, mainly driven by the non-recurrence of customer losses during short periods of extreme market volatility in the prior year.

Income tax expense, for the current year, increased $31$126 million, or 12%,44%, compared to the prior year, to $288$414 million, primarily due to (1) higher income before taxes at our operating subsidiaries outside the U.S. and higher income tax rates in Europe following the adoption of the minimum effective tax rate of 15% on January 1, 20242025; (2) higher income before income taxes subject to U.S. income tax at IBG, Inc.; and (3) IBG, Inc.’s higher average ownership percentage of IBG LLC, which rose from 25.0%25.6% to 25.6%26.0%; partially offset byand (4) an $11$8 million lower income tax benefitbenefit, incompared to the currentprior yearyear, due to the remeasurement of deferred tax assets related to the step-up in basis arising from the acquisition of interests in IBG LLC, primarily due to changes in the Company’s effective tax rates.

Interactive Brokers Group, Inc. (the “Company” or “IBG, Inc.”) is a holding company whose primary asset is its ownership of approximately 26.3%26.5% of the membership interests of IBG LLC. The remaining approximately 73.7%73.5% of IBG LLC membership interests are held by IBG Holdings LLC (“Holdings”), a holding company that is owned by our founder and Chairman, Mr. Thomas Peterffy and his affiliates, management and other employees of IBG LLC, and certain other members. The table below shows the amount of IBG LLC membership interests held by IBG, Inc. and Holdings as of MarchJune 31,30, 2026.

We are an automated global broker. We custody and service accounts for hedge and mutual funds, exchange-traded funds (“ETFs”), registered investment advisors, proprietary trading groups, introducing brokers and individual investors. We specialize in routing orders and executing, clearing and settling trades in stocks, options, futures, forex, bonds, mutual funds, ETFs and precious metals on more than 170 electronic exchanges and market centers in 40 countries and territories and 29 currencies around the world. In addition, our customers can use our trading platform to trade certain cryptocurrencies through third-party cryptocurrency service providers that execute, clear and custody the cryptocurrencies. We also offer trading in prediction markets, which are event-based contracts traded on ForecastEx, a CFTC-registered exchange and clearinghouse we established.established, and on other platforms.

During the quarter ended MarchJune 31,30, 2026 (“current quarter”), most global equity markets were mixed,advanced, with mostseveral major market indices decliningreaching amidnew all-time highs, supported by strong technology earnings and heightened investor interest in artificial intelligence (“AI”)-driven themes, despite persistent uncertainties related to ongoing geopolitical conflicts and inflationary pressures, including those associated with rising oil prices.pressures. In the Americas, U.S. equity markets began the quarter strongly in January but declined over the rest of the period,rose, with the S&P 500®© index decreasingincreasing 4.6%14.9%, compared to the prior quarter, whileto Canadiana marketsnew posted modest gains.high. Most European markets also declined.rose, Inwhile the Asia-Pacific region,region performancesaw was mixed, with declinesgains in China, Australia, and Japan while Hong Kong and Australia, and gains in Japan.fell.

Inflationary pressures re-emergedpersisted duringthroughout the quarter, contributing to continued uncertainty regarding monetary policy across several major economies. Most central banks maintainedopted to hold policy interest rates andsteady, adoptedadopting a cautious, wait-and-see approach, asthough ongoingrates were raised in several currencies. Ongoing geopolitical conflictsconflicts, higher energy prices, and trade policy uncertainty reducedweighed on the likelihood of near-term rate cuts.cuts, As a result,and expectations for additional monetary easing faded,diminished. weighingDespite onthis marketambiguous sentiment.environment, Retailretail investor participation remained elevated, with continued engagement in equity, futures and options markets.

Global trading volumes. Worldwide, equity trading volumes at most major venues increased during the current quarter compared to the prior-year quarter. In the U.S., according to industry data, average daily volume increased by 27%10% in listed cash equities,equities 20%and 27% in exchange-listed equity-based optionsoptions, andwhile 22%futures inwere futures, eachflat, compared to the prior-year quarter. Options trading volumes continue to benefit from the growing popularity of shorter-dated contracts. In futures markets, volumes increaseddecreased across all major product categories, including metals, energy,in interest rates, equityenergy indices,and agricultureforeign exchange products and foreignincreased exchange,in equity indices, metals and agriculture products as market participants sought to manage exposure to ongoing economic and geopolitical uncertainties.

These market dynamics produced strongsimilar results across our major product types. Customer average daily trading volumes in equities, options, and futures increased by 25%,14%, 16%,17%, and 20%,2%, respectively, compared to the prior-year quarter, though foreign exchange volumes decreased by 12%31% from an all-time high in the prior-year quarter, which was driven by uncertainty over thetariff same period.policies.

Volatility. U.S. market volatility, as measured by the average Chicago Board Options Exchange Volatility Index (‘‘VIX ®’’), increaseddecreased by 10%,22% from an average of 18.523.7 in the prior-year quarter to 20.418.3 in the current quarter, still below the elevated levels reached in 2020 and 2022.quarter. In general, higher volatility typically enhances our performance because it often correlates positively with customer trading activity across product types. However, the current quarter’s strong volumes, particularly in equities and options, indicate that volatility is only one of several factors influencing market participation.

Interest Rates. The U.S. Federal Reserve maintainedhas kept the benchmark federal funds rate unchanged during the quarter,first half of 2026, after cutting it three times in the second half of 2025 (September, October and December) by a total of 75 basis points.points, This resulted inmaintaining a target range of 3.50% to 3.75% at year end,3.75%, the lowest level since late 2022. During the current quarter, the U.S. Treasury yield curve inversion from the short-short to medium-term substantially flattened,flattened before risingexhibiting steeplya more consistent upward profile toward longer-term rates. InOutside mostthe U.S., benchmark interest rate policies were mixed across countries and territories with developed financial markets, benchmark interestwith rates also remainedremaining unchanged duringin the currentU.K., quarter as inflationary pressures resurfacedCanada and Hong Kong, and rising in Europe, Japan and Australia, where those central banks adopted a cautious approach before adjustingadjusted monetary policy.policy in response to inflationary pressures.

Lower U.S. benchmark rates reduce the interest we earn on our segregated cash, the majority of which is invested in short-term U.S. government securities and related instruments. A relatively flat near-term yield curve and uncertainty over future U.S. Federal Reserve rate policy have led us to maintain a short duration portfolio, substantially all of which maturedcontained withinmaturities of less than three months atas Marchof 31,June 30, 2026, to more closely match our asset and liability maturities on our interest-sensitive assets. Further, our margin balances are tied to benchmark rates, so lower rates also limit the interest we earn on margin lending to our customers. We continue to offer among the lowest rates in the industry on margin lending, and we believe our low rates are an important feature that attracts customers to our platform.

Currency fluctuations. As a global broker trading on exchanges around the world in multiple currencies, we are exposed to foreign currency risk. We actively manage this exposure by keeping our equity in proportion to a defined basket of 10 currencies we call the ‘‘GLOBAL’’ to diversify our risk and to align our hedging strategy with the currencies that we use in our business. Because we report our financial results in U.S. dollars, the change in the value of the GLOBAL versus the U.S. dollar affects our earnings. During the current quarter, the value of the GLOBAL, as measured in U.S. dollars, decreased 0.30%0.21% compared to its value at DecemberMarch 31, 2025,2026, which had a negative impact on our comprehensive earnings for the current year. A discussion of our approach for managing foreign currency exposure is contained in Part I, Item 3 of this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures about Market Risk.”

For the current quarter, our net revenues were $1,669$1.90 millionbillion and income before income taxes was $1,288$1.46 million,billion, compared to net revenues of $1,427$1.48 millionbillion and income before income taxes of $1,055$1.10 millionbillion in the prior-year quarter. Adjusted net revenues were $1,680$1.88 millionbillion and adjusted income before income taxes was $1,299$1.44 million,billion, compared to adjusted net revenues of $1,396$1.48 millionbillion and adjusted income before income taxes of $1,024$1.10 millionbillion in the prior-year quarter.

Commission revenue increased 19%30% to $613$673 million on higher customer trading volumes. Customer trading volume in stocks,options, stocks and futures and options increased 25%,17%, 20%14%, and 16%,2%, respectively.

Net interest income increased 17%23% to $904$1.06 millionbillion on higher average customer margin loans and customer credit balances.

Other fees and services increased 10%40% to $86$87 million, led by increases of $2$9 million in payments for order flow from exchange-mandated programs, $2$8 million in FDICrisk sweepexposure feesfees, and $2$3 million in market data fees, partially offset by a decrease of $3 million in risk exposure fees.

Execution, clearing and distribution fees decreasedincreased 12%22% to $106$142 million, driven by lowera $19 million increase in regulatory fees, as the SEC Section 31 transaction fee rate was reduced to zeroincreased on MayApril 14,4, 2025,2026; andpartially offset by greater capture of liquidity rebates from certain exchanges due to higher trading volumes in stocks and options.

Total equity as of MarchJune 31,30, 2026, was $21.3$22.3 billion.

In connection with our currency diversification strategy, as of MarchJune 31,30, 2026, approximately 25% of our equity was denominated in currencies other than the U.S. dollar. In the current quarter, our currency diversification strategy decreased our comprehensive earnings by $53$36 million (compared to an increase of $127$301 million in the prior-year quarter), as the U.S. dollar value of the GLOBAL decreased by approximately 0.30%0.21% compared to its value as of DecemberMarch 31, 2025.2026. The effects of our currency diversification strategy are reported as (1) a component of “Other income” (gain of $26$21 million) in the condensed consolidated statements of comprehensive income and (2) other comprehensive income (“OCI”) (loss of $79$57 million) in the condensed consolidated statements of financial condition and the condensed consolidated statements of comprehensive income. The full effect of the GLOBAL is captured in comprehensive income.

Retail participation in the equityfinancial markets has fluctuated in the past due to investor sentiment, market conditions and a variety of other factors. Retail transaction volumes may not be sustainable and are not predictable.

Three Months Ended MarchJune 31,30, 2026 (“current quarter”) compared to the Three Months Ended MarchJune 31,30, 2025 (“prior-year quarter”)

Total net revenues, for the current quarter, increased $242$416 million, or 17%,28%, compared to the prior-year quarter, to $1,669$1.90 million.billion. The increase in net revenues was due to higher net interest income, commissions, other fees and services,income, and other income.fees and services.

Commissions, for the current quarter, increased $99$157 million, or 19%,30%, compared to the prior-year quarter, to $613$673 million, driven by higher customer trading volumes in stocks,options, futuresstocks and options.futures. Total customer options contract, stock share and futures and options contract volumes increased 25%,17%, 20%14% and 16%,2%, respectively. Total DARTs for the current quarter increased 24%36% to 4.44.8 million, compared to 3.53.6 million for the prior-year quarter. Average commission per commissionable order for cleared customers decreased 3%slightly to $2.69$2.64 for the current quarter compared to $2.76$2.65 for the prior-year quarter, primarily due to smaller order sizes in stocks;foreign exchange and greater capture of liquidity rebates; and a reduction in the SEC transaction fee rate to zero in the second quarter of 2025.rebates. As pass-throughs, the liquidity rebates and SEC fees affect both our commission revenues and our execution costs.

Other fees and services, for the current quarter, increased $8$25 million, or 10%,40%, compared to the prior-year quarter, to $86$87 million, driven by a $2 million increase in FDIC sweep fees on higher customer balances, a $2 million increase in market data fees due to our growing customer base, and a $2$9 million increase in payments for order flow from exchange-mandated programs driven by higher customer trading volume;volume, partiallyan offset$8 bymillion increase in risk exposure fees, a $3 million decreaseincrease in riskmarket exposuredata fees asdue customersto exhibitedour moregrowing cautiouscustomer risk-takingbase, behavior.and a $1 million increase in FDIC sweep fees on higher customer balances.

Other income, for the current quarter, increased $1$37 million, or 2%88% compared to the prior-year quarter, to $66$79 million. This increase was mainly due to $23 million related to our investing and trading activities and $6$26 million related to our currency diversification strategy,strategy partiallyand offset by $27$11 million related to our strategicinvesting investment in Up Fintech Holding Limited (“Tiger Brokers”), which lost $16 million in the current quarter compared to a gain of $11 million in the prior-year quarter.activities.

Net interest income (interest income less interest expense), for the current quarter, increased $134$197 million, or 17%,23%, compared to the prior-year quarter, to $904$1.06 million.billion. The increase in net interest income was driven by higher average customer margin loans and customer credit balances, partially offset by lower benchmark interest rates.

In the current quarter, average securities borrowed balances increased 84%,27%, to $8.9 billion, and average securities loaned balances increased 58%,93%, to $25.6$33.2 billion, compared to the prior-year quarter. Net interest earned from securities lending is affected by the level of demand for securities positions held by our customers that investors are looking to sell short. During the current quarter, net interest earned from securities lending transactionstransactions, increasedas $23reported, decreased $16 million, or 230%,27%, compared to the prior-year quarter, driven by (1) our growing account base, which increases our inventory of attractive stocks to lend, including international securities; (2) the interest we pay on short cash balances, which makes us attractive to investors who utilize short selling; (3) our fully-paid lending program shares proceeds with clients generally on a 50/50 basis, which appeals to investors looking to maximize the return on their portfolios; and (4) more activity in some of the typical drivers of securities lending, including IPOs and merger & acquisition activity.quarter. However, as noted above, the rise in benchmark interest rates from near zero in 2022 has shifted a portion of the interest reported as generated by lending securities to interest income on segregated cash (see further explanation above). It should be noted that securities lending transactions entered into to support customer activity may produce interest income (expense) that is offset by interest expense (income) related to customer balances.

Represents the average amount of customer cash swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. This item is not recorded in the condensed consolidated statements of financial condition. Income derived from program deposits is reported in other"Other net interest income" in the table above.

Includes income from financial instruments that has the same characteristics as interest, but is reported in other"Other fees and services" and other"Other income" in the condensed consolidated statements of comprehensive income. For the three months ended MarchJune 31,30, 2026 and 2025, $11 million and $8$9 million were reported in other"Other fees and services,services", respectively; and $38$32 million and $16$18 million were reported in other"Other income,income", respectively.

Non-interest expenses, for the current quarter, increased $9$64 million, or 2%,17%, compared to the prior-year quarter, to $381$440 million, mainly due to a $13$26 million increase in execution, clearing and distribution fees, a $19 million increase in employee compensation and benefits, a $6$9 million increase in customer bad debt expense, a $7 million increase in general and administrative expenses, and a $3 million increase in occupancy, depreciation and amortization expenses; partially offset by a $15 million decrease in execution, clearing and distribution fees.expenses. As a percentage of total net revenues, non-interest expenses were 23% for the current quarter and 26%25% for the prior-year quarter.

Execution, clearing and distribution fees, for the current quarter, decreasedincreased $15$26 million, or 12%,22%, compared to the prior-year quarter, to $106$142 million, mainly driven by a $24$19 million decreaseincrease in regulatory feesfees, asfor a total of $34 million, from the re-initiation on April 4, 2026 of SEC Section 31 transaction feefees, ratewhich washad reducedbeen set to zero onsince May 14, 2025,2025; andpartially offset by greater capture of liquidity rebates fromdue certain exchanges onto higher customer trading volumes in stocks and options. SEC fees, as with other regulatory fees, are passed through to customers. As a percentage of total net revenues, execution, clearing and distribution fees were 6%7% for the current quarter and 8% for the prior-year quarter.

Employee compensation and benefits expenses, for the current quarter, increased $13$19 million, or 8%,12%, compared to the prior-year quarter, to $167$182 million, associated with a combination of staffing increasesincreases, inflation, and inflation.a $4 million increase in U.S. Social Security and Medicare, and other social insurance taxes driven by the annual vesting of the Company’s Stock Incentive Plan units at a higher stock price than in the prior year. The average number of employees increased 6% to 3,2073,249 for the current quarter, compared to 3,0133,059 for the prior-year quarter. As we continue to grow, our focus on automation has allowed us to increase our staff at a relatively modest pace. As a percentage of total net revenues, employee compensation and benefits expenses were 10% for the current quarter and 11% for the prior-year quarter.

Occupancy, depreciation and amortization expenses, for the current quarter, increased $3 million, or 13%, compared to the prior-year quarter, to $27 million, mainly due to higher rent expense for new offices.offices and depreciation of computer equipment, as we continue to expand our data centers globally. As a percentage of total net revenues, occupancy, depreciation and amortization expenses were 2%1% for both the current quarter and 2% for the prior-year quarter.

Communications expenses, for the current quarter, increasedwere $2unchanged million, or 20%, compared tofrom the prior-year quarter, toat $12$11 million. As a percentage of total net revenues, communications expenses were 1% for both the current quarter and the prior-year quarter.

General and administrative expenses, for the current quarter, increased $6$7 million, or 10%,11%, compared to the prior-year quarter, to $68 million, driven primarily by a $7$2 million increase in legal reserves and a $1 million increase in advertising expenses. As a percentage of total net revenues, general and administrative expenses were 4% for both the current quarter and the prior-year quarter.

Customer bad debt expense, for the current quarter, wasincreased unchanged$9 frommillion compared to the prior-year quarter, atto $1$10 million.million, mainly due to customer losses related to a corporate action during the current quarter.

Income tax expense, for the current quarter, increased $26$20 million, or 29%,20%, compared to the prior-year quarter, to $117$118 million, primarily due to (1) higher income before taxes at our operating subsidiaries outside the U.S.; (2) higher income before income taxes subject to U.S. income tax at IBG, Inc.; and (3) IBG, Inc.’s higher average ownership percentage of IBG LLC, which rose from 25.8%25.9% in the prior-year quarter to 26.3%26.4% in the current quarter.quarter; partially offset by (4) higher tax deductions driven by the annual vesting of the Company’s Stock Incentive Plan restricted stock units at a higher stock price than in the prior year.

Represents the net gains or losses from the Company’s common stock (IBKR shares) held in treasury related to shares withheld from employees to satisfy their tax withholding obligations related to the annual vesting of the Company's Stock Incentive Plan restricted stock units and shares for distribution to eligible customers participating in one or more promotions.

Income before income taxes, for the current quarter, increased $233$352 million, or 22%,32%, compared to the prior-year quarter, to $1,288$1.46 million.billion. Pretax profit margin was 77% for the current quarter and 74%75% for the prior-year quarter.

Comparing our operating results for the current quarter to the prior-year quarter using non-GAAP financial measures, adjusted net revenues were $1,680$1.88 million,billion, up 20%27%; adjusted income before income taxes was $1,299$1.44 million,billion, up 27%31%; and adjusted pre-tax profit margin was 77% for the current quarter compared to 73%75% for the prior-year quarter. See the “Non-GAAP Financial Measures” section below in this Item 2 for additional details.