Brokerage growing amid ‘unusually active period’
GREENWICH — Since the start of the COVID-19 pandemic, trading among retail investors has surged. The growth of a Greenwich brokerage highlights the trend.
In the last three months of 2021, the number of customer accounts at Interactive Brokers Group jumped 56 percent year over year to about 1.68 million, according to its quarterly results released this week.
During the same period, the company recorded a daily average of about 2.44 million revenueproducing trades — rising 16 percent from the same period in 2020. Those trades include stocks and contracts for futures and options, with the company making money from trade commissions.
“I've been saying for some time that after this unusually active period we have been experiencing, a period that seems to keep growing longer, we will see account growth closer to between 30 percent and 40 percent a year,” Interactive Brokers founder and Chairman Thomas Peterffy said in a statement that was read on an earnings call Tuesday by Nancy Stuebe, the company’s director of investor relations.
“But that does not mean that we will not do almost anything we can think of to try to keep it above those levels. We introduced more new products and expanded the capabilities of existing ones.”
Interactive Brokers’ quarterly revenues totaled $603 million, up about 1 percent from the same period in 2020. It recorded a quarterly profit of $67 million, compared with $71 million a year ago.
For all of 2021, the company’s revenues rose 22 percent to $2.7 billion. Its annual profit of $308 million compared with a bottom line of $195 million in 2020.
Interactive Brokers shares closed Thursday at about $72, up 0.1 percent from Wednesday. They have reached a 52-week high of about $83 and a 52-week low of around $59.
As its customer base has burgeoned — which reflects many clients spending more time on their investments during the pandemic — Interactive Brokers has expanded its offerings. Last September, it announced the launch of cryptocurrency trading, allowing clients to trade and “custody” Bitcoin, Ethereum, Litecoin and Bitcoin Cash.
The customer growth of the No. 848 company on the 2021 Fortune list of the companies with the highest revenues has also contributed to an expanding workforce. In 2021, Interactive Brokers hired and trained about 450 employees worldwide. It employs a total of about 2,400, including 615 based in Greenwich.
While retail investors’ surging interest in the past two years has largely benefited Interactive Brokers and other brokerages, the spike has also created challenges. Interactive Brokers dealt with many customer complaints in response to short-lived trading restrictions that it instituted in January 2021 amid the market mania surrounding the social media-hyped “meme stocks” of companies such as video-game retailer GameStop.
Some customers responded by filing lawsuits against Interactive Brokers and other brokerages, alleging they manipulated the market with their new rules. Interactive Brokers denied those allegations.
“The story of the meme stocks will fade in the minds of investors, while the most remarkable story of the year — the huge rise in popularity of options and, more specifically, option spreads — will remain,” Peterffy said. “As someone who has spent the last 50 years trying to automate the options industry, I very much welcome this development. For a long time, Interactive Brokers was alone trying to stir up industry interest to computerize these markets.”