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Interactive Brokers Takes Aim At Free Trading, Tech Innovation, New Assets

November 15, 2019 12:49 pm
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Interactive Brokers Takes Aim At Free Trading, Tech Innovation, New Assets

Initially an options market making firm, Interactive Brokers Group, Inc. (NASDAQ:IBKR) is a deep-discount electronic access broker for online equity, options, futures and forex trading.

The company's core mission is to “create technology to provide liquidity on better terms [and] compete on price, speed, size, diversity of global products and advanced trading tools.”

Interactive Brokers Rolls Out Commission-Free Trading

In September, Interactive Brokers began offering commission-free U.S. stock and ETF trading via a new service, IBKR Lite.

“We tended to cater towards the more sophisticated audience. With IBKR Lite, we cater to a broader audience,” Steve Sanders, the company's executive vice president of marketing and product development, told Benzinga in an interview. 

Now, two choices are available when customers open accounts: Pro and Lite.

With Pro, users pay commissions, but receive smart routing and best execution.

“According to IHS Markit, our clients save 43 cents per 100 shares by using our smart router. If you take the average trade size, that works out to about $6 or $7 per trade.”

With Lite, trades are commission-free, but order-flow is routed to market makers. Lite is geared toward bringing new, lower-volume traders into the IBKR trading ecosystem.

Additional Lite features include:

  • Access to over 120 global market centers.
  • Stock, option, futures, forex and bond functionality.
  • No minimum balance and maintenance fees.
  • 2.5% interest on margin loans.
  • Interest on idle cash balances.
  • Free market data.
  • IBKR mobile and client Portal.

“If you’re borrowing, our rates are significantly lower than the other brokers right now. For instance, we are at 1.5% over the benchmark Fed funds,” Sanders said.

Portfolio Analysis In The Pipeline 

Interactive Brokers was the first to offer Bitcoin futures, the exec said. 

The firm was considering the launch of a cash crypto product, but after CME’s Bitcoin futures failed to generate a lot of interest, Interactive Brokers decided to delay the release, he said. 

Interactive Brokers is focusing on providing an open tech infrastructure and API solution for continuous innovation, Sanders said. 

The company is working on a portfolio analysis tool.

“It is a free tool. You don’t have to be an Interactive Brokers client. I would liken it to portfolio management systems, or something like Quicken or Mint,” Sanders said.

“You can take all your bank accounts, credit cards, investment accounts and aggregate it in one place, and do very thorough and advanced investment analysis.”

A unique feature is a parsing tool that disaggregates ETF and mutual fund holdings by underlying symbols, improving investment transparency and decision-making.

Related Links: 

Alpaca, TradingView Offer Commission-Free Trading For Tech Natives, Developers

'How Do We Compete?': Invstr Founder Kerim Derhalli On The Brokerage Pricing War

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