Interactive Brokers Group Strength and Security

Financial Strength

When placing your money with a broker, you need to make sure your broker is secure and can endure through good and bad times. The financial statements of Interactive Brokers LLC are available on our website for your review.

Note that Interactive Brokers LLC and its affiliates are owned by IBG LLC.

---

Important Strength and Security Facts about Interactive Brokers Group¹

• On a consolidated basis, IBG LLC exceeds $7 billion in equity capital.
• IBG LLC's owners are our public company, Interactive Brokers Group, Inc. (18.5%) and the firm's employees and their affiliates (81.5%). Unlike at most other firms, where management owns a relatively small share, we participate substantially in the downside just as much as in the upside. Because of this vested interest, we run our business conservatively.
• We manage our brokerage and market making businesses in separate companies, which are registered with local securities and/or commodities regulators. We maintain strict systematic and procedural separation between the two business lines and we do not commingle or utilize customer-segregated assets for proprietary operations. Although certain affiliates of IBKR trade for their own account, our customer-facing businesses do not conduct proprietary trading. We have completed the winding down of the bulk of our market making operations.
• We hold no material positions in over-the-counter securities or derivatives. We hold no CDOs, MBS or CDS.

---

Important Strength and Security Facts about Interactive Brokers LLC

How We Handle Customer Assets

Customer money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of customers of IBKR. This protection (the SEC term is "reserve" and the CFTC term is "segregation") is a core principle of securities and commodities brokerage. By properly segregating the customer's assets, if no money or stock is borrowed and no futures positions are held by the customer, then the customer's assets are available to be returned to the customer in the event of a default by or bankruptcy of the broker.

A portion of customer funds are typically invested in U.S. Treasury securities. Although permitted by CFTC regulations, given the credit concerns over foreign sovereign debt IBKR does not currently invest any customer money in money market funds.

As a practice, IBKR holds an excess amount of its own money in these reserve and segregated accounts to ensure that there is more than enough cash to protect all customers.

---

Securities accounts with no borrowing of cash or securities

Securities customer money is protected as follows:

• A majority is invested in U.S. Treasury securities, including direct investments in Treasury bills, Treasury Notes and reverse repurchase agreements, where the collateral received is in the form of U.S. Treasury securities. These transactions are conducted with third parties and guaranteed through a central counterparty clearing house (Fixed Income Clearing Corp., a subsidiary of the Depository Trust & Clearing Corp.). The collateral remains in the possession of IBKR and held at a custody bank in a segregated Reserve Safekeeping Account for the exclusive benefit of customers. U.S. Treasury securities may also be pledged to a clearing house to support customer margin requirements on securities options positions.
• Customer cash is maintained on a net basis in the reserve accounts, which reflects the long balances of some customers and loans to others. To the extent any one customer maintains a margin loan with IBKR, that loan will be fully secured by stock valued at up to 140% of the loan. The security of the loan is enhanced by IBKR's conservative margin policies, which do not allow the borrower to correct a margin deficiency within days, as permitted by regulation. Instead, IBKR monitors and acts on a real-time basis to automatically liquidate positions and repay the loan. This brings the borrower back into margin compliance without putting IBKR and other customers at risk.

Current SEC regulations require broker-dealers to perform a detailed reconciliation of customer money and securities (known as the "reserve computation") at least weekly to ensure that customer monies are properly segregated from the broker-dealer's own funds. In order to further enhance our protection of our customers' assets, Interactive Brokers sought and received approval from FINRA (the Financial Industry Regulatory Authority), to perform and report the reserve computation on a daily basis, instead of once per week. IBKR initiated daily computations in December 2011 along with daily adjustments of the money set aside in safekeeping for our customers. Reconciling our accounts and customer reserves daily instead of weekly is just another way that Interactive Brokers seeks to provide state-of-the-art protection for our customers.

Customer-owned, fully-paid securities are protected in accounts at depositories and custodians that are specifically identified for the exclusive benefit of customers. IBKR reconciles positions in securities owned by customers daily to ensure that these securities have been received at the depositories and custodians.

---

Commodities accounts

Commodities customer money is protected as follows:

• A majority is invested in U.S. Treasury securities, which are held at a custody bank in a safekeeping account segregated for the exclusive benefit of customers.
• A portion is invested in U.S. Treasury securities and pledged to futures clearing houses to support customer margin requirements on futures and options on futures positions.
• A portion is held at commodities clearing banks/brokers in accounts identified as segregated for the benefit of IBKR's customers to support customer margin requirements.

Click below for the Interactive Brokers Firm Specific Disclosure Document required by CFTC Rule 1.55(k).
Interactive Brokers LLC Firm Specific Disclosure Document pursuant to CFTC Rule 1.55(k) and NFA Rule 2-36(n)

---

Securities accounts with margin loans

For customers who borrow money from IBKR to purchase securities, IBKR is permitted by securities regulations to utilize for financing purposes up to 140% of the loan value of the stock these customers hold with IBKR. In simple terms, IBKR borrows money from a third party (such as a bank or broker-dealer), using the customer's margin stock as collateral, and it lends those funds to the customer to finance the customer's margin purchases. Typically, IBKR lends out a small portion of the total stock it is permitted to lend out. When IBKR lends customers' stock, it must put additional money into the special reserve accounts set aside for the benefit of customers.

---

Insured Bank Deposit Sweep Program

Under the Insured Bank Deposit Sweep Program, eligible IBKR clients can obtain up to $2,500,000 of FDIC insurance in addition to the existing $250,000 SIPC coverage for total coverage of $2,750,000. IBKR sweeps each participating client's free credit balances daily to one or more banks, up to $246,500 per bank, allowing for the accrual of interest and keeping within the FDIC protected threshold. Cash balances above $2,750,000 remain subject to safeguarding under the SEC's Customer Protection Rule 15c3-3, backed by the firm's equity capital, which exceeds $7 billion.

Click below for more information about the Insured Bank Deposit Sweep Program and its benefits. https://www.interactivebrokers.com/en/index.php?f=27462