Interactive Brokers Group Inc.’s (IBKR) Electronic Brokerage segment has announced monthly brokerage data for October. The segment under review clears and settles trades globally for both individual and institutional clients.
Interactive’s total customer accounts for the month of October were 185,900, up 1% from 152,900 in October 2010 and 22% from 183,900 in September 2011. However, though total customer Daily Average Revenue Trades (DARTs) rose 30% from the prior-year month, it fell 4% from the prior month to 489,000.
Furthermore, during the month under review, Interactive recorded Cleared Customer DARTs of 450,000 compared with 340,000 in October 2010 and 474,000 in September 2011. On an annualized basis, the company reported Cleared Average DART per customer account of 613,000, up from 564,000 in the comparable month last year but lower than 654,000 recorded in the previous month.
Interactive’s total options contracts improved 31% from the prior-year month and 1% from the prior month to 26,783 in October 2011. Additionally, during the reported month, the company’s futures contracts stood at 8,323, up from 6,406 in the year-ago month but down from 6,878 in the previous period.
Interactive also provided period-end statistics for customer equity, customer credit balances and customer margin loan balances. For the period ended October 2011, customer equity stood at $25.5 billion, up 28% year over year and 9% sequentially.
Additionally, Interactive’s Electronic Brokerage segment recorded customer credit balances of $17.2 billion at October 2011-end, up 26% from $13.7 billion at October 2010 end and 4% from $16.5 billion at September 2011-end. Customer margin loan balances of $6.8 billion in the reported month reflected a 10% hike from $6.2 billion recorded at October 2010-end and flat compared with September 2010-end data.
Though Interactive’s fundamentals remain strong with a liquid balance sheet, sturdy capital base and high barriers to entry, we remain concerned about the Market Making segment’s ability to consistently generate sufficient returns to fund dividend payment. Also, there are concerns looming over Interactive’s dependence on IBG LLC and its wide international exposure.
Currently, Interactive retains a Zacks #2 Rank (a short-term Buy rating). Similarly, one of its competitors, Knight Capital Group Inc. (KCG) retains a Zacks # 2 Rank.
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