Top 50 Brokers of 2012

Interactive Brokers jumped three spots to number 14 in Futures Magazine’s annual list of the top 50 brokers. In Top 50 Brokers of 2012: The good, bad and ugly of a post-MF Global world, Futures Magazine’s Daniel P. Collins and Ginger Szala present comments from six leaders in the FCM community. The discussion touches on challenges facing the industry in the wake of crises at MF Global and Peregrine Financial Group, high-frequency trading, regulatory changes and the future of the industry.

To view Futures Magazine’s Top 50 Brokers of 2012 rank, please click here.

Father of Algorithmic Trading Seeks Speed Controls

Traders Magazine reporter, Gregory Bresiger, spoke with Interactive Brokers founder and computerized-trading pioneer, Thomas Peterffy, about his contributions to algorithmic trading, the history and evolution of the industry, and Peterffy’s proposed solutions to prevent damaging out-of-control algos. In a Q&A session with Traders Magazine, Peterffy calls on brokers, regulators and exchanges to implement various layers of protection, in addition to those that already exist, to insulate markets from costly disruptions without drying up liquidity in the process.

To read the full article, please click here.

To read the accompanying Q&A with Interactive Brokers founder, Thomas Peterffy, please click here.

Traders Burst Silos

One “here-to-stay reality,” writes Markets Media reporter, Terry Flanagan, CFA, in an article entitled Traders Burst Silos, “is the need to be involved in more asset classes, over a broader swathe of geography.” The article highlights the rise in demand for multi-asset trading over the past decade and points to the challenges inherent in providing streamlined trading platforms that are both functional and easy to use. Steve Sanders, SVP of product development at Interactive Brokers, describes the benefits of trading across asset classes, geographies and currencies using IB’s Universal Account. Sanders notes that substantial infrastructure was built into the Universal Account to accommodate the requirements of two separate U.S. regulatory agencies, while still providing end-users the ability to trade both securities and commodities in one seamless account from a single screen.

To read the full article, please click here.

Smallest Stock Trading Firms Hardest Hit as Commissions Collapse

Years of below average equity volume, shrinking commissions and the shift toward computerized trading are forcing change in the crowded brokerage space. Bloomberg reporter Zeke Faux notes that overcapacity in an industry with too few commission dollars to go around is forcing some small stock traders to shut their doors, while other firms merge to remain competitive. The trend toward computerized trading has left brokers who rely on more traditional and costly methods behind. Faux reports that Interactive Brokers “has benefited from the trend,” and IB’s Senior Vice President of Business Development Steve Sanders notes that IB is “gaining business as institutional clients pay more attention to costs.”

To read the full article from October 18, 2012, please click here.

High-Speed Trading No Longer Hurtling Forward

The challenges of “speed-focused” firms facing increasing technological costs and regulatory scrutiny amid declining volumes on stock markets around the world are among the issues discussed in an article by New York Times reporter, Nathaniel Popper. Timber Hill, the market-making unit of Interactive Brokers Group (IBG), is highlighted as one of few firms that release financial results publicly. IBG’s chairman, Thomas Peterffy, comments on headwinds faced by Timber Hill and other market participants in the article, but adds that the company he founded more than thirty-five years ago is prepared for such challenges given the strength and growth of the brokerage business, Interactive Brokers.

To read the full article from October 14, 2012, please click here.

High-Speed Pioneer

Amanda Lang, anchor of the Lang & O’Leary Exchange, discusses trading and technology with Interactive Brokers founder, Thomas Peterffy, in an interview that covers the benefits and risks of automation. Peterffy points out that, “automation allows [IB] to charge $2.65 for the average trade […], which in an un-automated world would be completely unheard of.” Reduced trading costs, lower bid/offer differentials and the ability to trade global markets and move portfolios across continents, currencies or asset classes in seconds are some of the automation benefits highlighted by Mr. Peterffy. But he also notes that automation has created an environment where some market participants are now competing on time intervals within hundredths of a second, and that, according to Peterffy, is a “completely useless activity.” Recent events from the Flash Crash to the crisis at Knight Capital are clear indications that work needs to be done to prevent future problems. Peterffy puts forth several suggestions, including multiple safety shields in addition to existing circuit breakers to stop runaway markets.

To read the full article from October 12, 2012, please click here.

Calling All Middle Market Correspondents Recently Shown the Door

Interactive Brokers managing director, Bill McGowan, discusses the rise in middle market clients seeking “no-frills, basic clearing and custody” services with Gregory Bresiger, a reporter with Traders Magazine. Bresiger’s article “Calling All Middle Market Correspondents Recently Shown the Door” states that a number of middle market clients are being pushed out by their clearing broker as the largest clearers increase deposit requirements, capital requirements or required number of ticket charges. IB is pleased to be able to provide these clients with a low cost solution, argues McGowan; IB has no required security deposit or minimum capital requirements. Clearing clients at IB pay one rate that includes clearing and custody.

To read the full article from September 28, 2012, please click here.

Seeking Alpha Contributor Saves by Switching to Interactive Brokers

J.D. Welch, a self-described do-it-yourself investor and contributor on Seeking Alpha, highlights low commissions realized by switching to Interactive Brokers from another brokerage firm in an article entitled, My Mad Method: Q3 2012 Recap. The article summarizes Welch’s third-quarter trading activities in an IRA account held at IB. Welch states that “While any trade will incur some commissions, I can assure you that the amounts I paid in commissions during Q2 and Q3 2012 pale in comparison to the commissions I was paying at my former brokerage house. To put things in perspective, I paid less in total commissions in Q3 2012 with Interactive Brokers than I would have on just two trades (one sell and one buy) at my former brokerage firm.”

To read this and other articles contributed by J.D. Welch, click here.

Meet the Father of High-Frequency Trading

In an interview with Rick Santelli on CNBC’s Squawk on the Street, Interactive Brokers Group founder, Chairman and CEO, Thomas Peterffy, highlights the benefits automation has brought to both individual and institutional customers, stating that “investing and trading [is] a great deal less expensive and easier to do”, noting that Interactive Brokers charges $2.65 in commission on the average trade excluding exchange and regulatory fees; an amount that would be unheard of in an un-automated market. Peterffy adds that today customers “can see the world’s markets on their desktop or mobile device and can move their entire portfolio across asset classes or continents or currencies.” Peterffy goes on to address the negatives associated with high-frequency trading and the damage “runaway” algorithms can cause to the markets and investor confidence. Potential solutions, according to Mr. Peterffy, include multiple software shields and more robust circuit breakers.

To view the September 20, 2012, interview please visit.

Automate This: How Algorithms Came to Rule Our World

Interactive Brokers Group’s founder, Chairman and CEO Thomas Peterffy’s contributions to computerized trading are detailed in Christopher Steiner’s book, Automate This: How Algorithms Came to Rule Our World. Steiner points to computer programming skills, the ability to innovate and unflagging persistence to computerize trading as some of the driving forces behind Mr. Peterffy’s success. Learn more about Peterffy’s years as a trader on the floor of the American Stock Exchange and the triumphs and setbacks experienced on the path to revolutionizing an industry in Automate This.

A Father of High-Speed Trading Thinks We Should Slow Down

NPR’s Planet Money, a multimedia team that produces twice-weekly podcasts covering the global economy, devoted a recent episode to the story of Interactive Brokers Group founder, Chairman and CEO, Thomas Peterffy. The episode describes Peterffy’s upbringing in war-torn communist-controlled Hungary, highlighting Peterffy’s early experiences as an arbitrageur of Juicy Fruit gum at the age of 12. In this fascinating podcast about the history and future of automation in the markets, Mr. Peterffy details his drive to bring electronic trading to traditional open-outcry exchanges.

To listen to the August 21, 2012, podcast entitled please visit.

With Knight Wounded, Traders Ask if Speed Kills

WSJ reporters Tom Lauricella and Scott Patterson cover the computer-trading malfunction that roiled equity markets and pushed Knight Capital Group to the brink in an article entitled, With Knight Wounded, Traders Ask if Speed Kills. IB’s founder, Chairman and CEO, Thomas Peterffy, weighs in on the risks rogue computer algorithms and ever-faster trading speeds pose to the marketplace, warning “problems will continue if we don’t slow things down.”

Click here to read more.

The Striking Price – A Gift From Interactive Brokers

Barron’s senior editor and columnist Steven M. Sears ponders the potential outlook for Interactive Brokers’ investors, in light of continually “too low” stock prices coupled with disappointing second-quarter earnings. While talk of paying a special dividend and taking the company private remain unsubstantiated rumors, the worst-case scenario for investors, according to Sears, would be that they "end up owning a well-run, out-of-favor stock that pays a decent regular dividend and has good management."

Click here to read more.

Breakdown: A Glimpse Inside the ‘Flash Crash’

In this adaptation from his 2012 book “Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System,” author Scott Patterson takes a look inside the “Flash Crash” of May 6, 2010, which Patterson calls “The root of retail investors’ end of the love affair with the stock market.” He considers how the move from a floor-based trading paradigm to one that is “digitized and decimalized” has resulted in the vexing of ordinary investors, and concludes that investors, who still have no answer on the mystery of the flash crash, have been left in the dark.

Click here to read more.

Interview with Interactive Brokers’ CEO, Thomas Peterffy

Thomas Peterffy, Chairman, Chief Executive Officer and President of Interactive Brokers Group, Inc., comments on Interactive Brokers Group’s historical roots, competitive advantage, opportunities for growth and strategic goals in an interview conducted by The Wall Street Transcript. IB’s brokerage platform “differs from that of our competitors,” says Peterffy. “It was built for the professional floor trader who trades for a living and for whom low trading costs are vitally important.”

“What attracts them [Financial Professionals] to our platform,” Mr. Peterffy explains, “Is that we charge approximately 75% less for our services and margin loans than other brokers do and we place a huge emphasis on executing their trades at the most favorable prices possible. This, in addition to the fact that they can trade stocks, options, futures, bonds and foreign exchange on approximately 100 exchanges in 20 different currencies all from one account.”

The electronic platform today serves proprietary trading groups, hedge funds, financial advisors and individuals attracted by IB’s low costs, cutting-edge technology and breadth of product.

Click here to read more.

Cut the Cord In Barron’s 17th annual ranking of online brokers, Interactive Brokers gets the highest marks

Interactive Brokers out-performed 26 other brokers in multiple categories to come out on top in Barron’s 17th annual Best Online Brokers review published March 10, 2012. IB received 4.5 out of 5 stars overall, and was awarded 5 stars in the Portfolio Analysis and Reports category with our PortfolioAnalyst online analysis and reporting tool leading the way. IB also received 4.5 stars in the Best for Frequent Trading and Best for International Traders categories and 4.6 stars for our Research Amenities and Trading Experience and Technology. Along with our low commissions and fees, the review also made special mention of the Mosaic, our new intuitive and customizable trading interface; the Tax Optimizer, our new lot matching tool with real-time P&L “what-if” scenarios; and mobileTWS, our mobile app for the iPad that “takes full advantage of the device's expansive real estate."

Click here to read more.

FOW 30 Year Anniversary: Top 30 most influential people of the past 30 years

Thomas Peterffy, founder, Chairman and Chief Executive Officer of Interactive Brokers Group, was recognized in FOW’s 30 Year Anniversary Issue for his impact on the industry over the past three decades. FOW’s Top 30 most influential people of the past 30 years, honors “those whose effect on the industry has been the deepest and longest lasting.” Some of Peterffy’s contributions to the industry, including the development of handheld computers to aid floor trading and the use of computer models to value stock options, are highlighted in the article.

Click here to read more.

Trading Technology 30: Masters of Market Magic

Interactive Brokers Group, Inc.’s founder, Chairman and CEO, Thomas Peterffy, ranked 15^th out of the 30 “leading system designers, managers and innovators” highlighted by Institutional Investor in their inaugural Trading Technology 30. According to Jay Kutler, author of Trading Technology 30: Masters of Market Magic, criteria for inclusion in the Trading Tech 30 consists of: career accomplishments and contributions made at both individual companies and to the industry at large; scope and complexity of executive responsibilities; and pure technological innovation. Many of the individuals profiled are executives of exchange operators, buy- and sell-side firms and other ventures whose technological innovations help to shape modern financial markets. The article describes IB’s Chairman as “one of the fathers of electronic trade,” spotlighting Mr. Peterffy’s unique history and significant impact on trading technology.

Click here to read more.

TRADING PACES: Interactive Brokers Segregating Customer Funds Daily

Securities Technology Monitor Editor-in-Chief Tom Steinert-Threlkeld highlights one of the many reasons Interactive Brokers is among the safest brokers in TRADING PACES: Interactive Brokers Segregating Customer Funds Daily. To further enhance protection of customers’ assets, Interactive Brokers sought and received approval from FINRA (Financial Industry Regulatory Authority) to perform and report reserve computation on a daily basis, rather than the once per week reconciliation of customer monies and securities required under current SEC regulations. Reconciling accounts and customer reserves daily instead of weekly is just another way that IB provides state-of-the-art protection for customers. Steinert-Threlkeld, drawing from IB’s January 19th earnings call, quotes Interactive Brokers Chairman and CEO Thomas Peterffy on the matter, this “should give our customers additional comfort and allows us to demonstrate to the industry that the firms who are well-automated do not need the extra time over the weekend to figure out their segregation requirements.”

Click here to read more.

Electronic Investor

In her January 23^rd article^†, Barron’s columnist Theresa W. Carey highlights several of IB’s latest product offerings, including the Interactive Brokers Information System (IBIS) and the PortfolioAnalyst with the new Attribution Report. Carey describes the range of powerful research tools available to active traders in IBIS and notes the Research Platform’s low cost of “$39 a month for the basic bundle of services.” IBIS users can access the platform from within TWS or purchase the stand-alone system, and will receive real-time quotes, stock scanners, risk analytics and charts and alerts, along with a suite of news, data feeds and third-party analyst research subscriptions from which to choose. Traders can use IB’s PortfolioAnalyst to analyze portfolio risk factors and assess net performance over a specified period, while the Attribution Report makes it easy to compare portfolio return to a selected benchmark index. Carey notes that the new customizable “reporting capabilities are extremely powerful, and very informative,” a particularly useful feature for advisors and brokers looking for a way to easily distribute performance reports to their clients. ^†Full article titled E*Trade Expands E*Arsenal, published in Barron’s, January 23, 2012.

Click here to read more.