Interactive Brokers volumes snap three-month losing streak

Electronic brokerage firm Interactive Brokers LLC (NASDAQ:IBKR) said its trading volumes rose in January, an indication that investor confidence in the financial markets is rebounding after having been fairly mixed over the past few months.

More buyers came into the market last month amid recent stock gains that have been driven by hope that the Federal Reserve would ease off its aggressive tightening campaign.

Trading was the busiest since June 2022, with more than 1.98 million transactions changing hands, up 14 percent from 1.75 million transactions in the month of December. Over a year-on-year basis, however, Interactive Brokers saw a large drop in its DARTs with January’s figure down by 24 percent relative to 2.62 million reported in January 2022.

In terms of equity balance in customers’ accounts during January 2023, the figure totaled $337.6 billion, down by 14 percent on a yearly basis. Interactive Brokers managed to best its December equivalent, having notched a 10 percent increase relative to $306 billion the prior month.

Elsewhere, the discount brokerage has won more than 37,000 new accounts. January’s active accounts increased to 2.12 million, or 2 percent higher than in December and 23 percent above the previous year’s figure of 1.72 million ‎accounts.

The Greenwich, Connecticut-based company also revealed that on average it charged clients commission fees of $3.11 per order compared to $3.17 in December. This figure includes exchange, clearing and regulatory fees, with the key product metrics coming out at $2.23 for stocks, $4.47 for equity options and $3.73 for futures orders.

Interactive Brokers reported last month its largest-ever quarterly profit, buoyed by a favorable interest rate environment and an increasing user base.

The discount broker posted strong fourth-quarter earnings led by a recovery in interest income and its investment in Tiger Brokers. However, IBKR’s commission revenue was muted due to higher operating expenses and lower customer stock trading volume.

Ranked as the largest US electronic broker by some measures, Interactive Brokers’ fourth-quarter adjusted revenues rose 40 percent year-over-year, to $958 million compared to $683 million in Q4 2021.

On an adjusted basis, income before tax totaled $671 million, up 48 percent year-over-year from $453 million in the previous year. Diluted earnings per share came in at $1.30 for this quarter compared to $0.83 in Q4 2021.

Despite headwinds from a push to no-fee trading, Interactive Brokers’ commission revenue increased 3 percent from the year-ago quarter to $331 million. The growth was attributed to customer’s futures trading volume and higher options commission per contract. However, the figure was tempered partially by lower stock volume.