Interactive Brokers Group, Inc. is an automated global electronic broker and
market maker. We custody and service accounts for hedge and mutual funds, registered
investment advisors, proprietary trading groups, introducing brokers and individual
investors. We specialize in routing orders while striving to achieve best executions
and processing trades in securities, futures, foreign exchange instruments,
bonds and mutual funds on more than 100 electronic exchanges and market centers
around the world. In the United States ("U.S."), we conduct our business
primarily from our headquarters in Greenwich, Connecticut and from Chicago,
Illinois. Abroad, we conduct our business through offices located in Canada,
England, Switzerland, Liechtenstein, India, China (Hong Kong and Shanghai),
Japan and Australia.
ur activities are divided into two principal business segments: (1) electronic
brokerage and (2) market making:
As a direct market access broker, we serve the customers of both traditional
brokers and prime brokers. We provide our customers with an advanced order management,
trade execution and portfolio management platform at a very low cost. Our customers
can simultaneously access many financial markets worldwide and trade across
multiple asset classes (stocks, options, futures, foreign exchange ("forex"),
bonds and mutual funds) denominated in 23 different currencies, on one screen,
from a single account based in any major currency. Our large financial advisor
and broker-dealer customers may "white brand" our trading interface
(i.e., make our trading interface available to their customers without referencing
our name), or they can select from among our modular functionalities, such as
order routing, trade reporting or clearing on specific products or exchanges
where they may not have up-to-date technology to offer their customers a comprehensive,
global range of services and products. The emerging complexity of multiple market
centers provided us with the opportunity of building and continuously adapting
our order routing software to secure excellent execution prices for our customers.
This has become our major focus.
As a market maker, we provide continuous bid and offer quotations on over one
million securities and futures products listed on electronic exchanges around
the world. Our quotes are driven by proprietary mathematical models that assimilate
market data and reevaluate our outstanding quotes each second. Unlike firms
that trade over-the-counter ("OTC") derivative products, our business
creates liquidity and transparency on electronic exchanges. In the past several
years our market making business has suffered from competitive pressures and
along with the rapid increase of our electronic brokerage business, its significance
has diminished.
Our electronic brokerage and market making businesses are complementary. Both
benefit from our combined scale and volume, as well as from our proprietary
technology. Our brokerage customers benefit from the technology and market structure
expertise developed in our market making business. The expense of developing
and maintaining our unique technology, clearing, settlement, banking and regulatory
structure required by any specific exchange or market center is shared by both
of our businesses. These economies, in turn, enable us to provide lower transaction
costs to our customers than our competitors. In addition, we believe we gain
a competitive advantage by applying the software features we have developed
for a specific product or market to newly-introduced products and markets over
others who may have less automated facilities in one or both of our businesses
or who operate only in a subset of the exchanges and market centers on which
we operate. Our trading system contains unique architectural aspects that, together
with our massive trading volume in markets worldwide, may impose a significant
barrier to entry for firms wishing to compete in our specific businesses and
permit us to compete favorably against our competitors. In addition, many of
our regulatory and compliance functions have been built into our integrated
market making, order routing and custodial systems.
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