FULLTEXT DEL 2 AV 3
10-K – 2026-02-27 – ibkr-20251231.htm
Eligible customers of IBHK can enroll to trade and hold Cryptocurrency Assets through a relationship IBHK has established with a CSP, which is an SFC-licensed digital asset exchange and custodian. The Cryptocurrency Assets are sub-custodied by the CSP on an omnibus basis for the benefit of the customers of IBHK. IBHK notifies its customers that exchange and sub-custody services are provided by a CSP. IBHK does not maintain (or have access to) the cryptographic key information and wallets necessary to access the Cryptocurrency Assets, nor does IBHK have any beneficial claim to those Cryptocurrency Assets. The CSP is responsible for securing the customers’ Cryptocurrency Assets and protecting them from loss or theft, and the SFC requires the CSP to maintain adequate controls and insurance against the risk of theft or loss of the customers’ Cryptocurrency Assets. The agreement the customer signs with IBHK before the customer is permitted to access digital asset trading provides that:
To the maximum extent permitted by applicable Rules, [IBHK] is not liable to [Customer] for loss arising from or attributable to the insolvency of any [CSP], in the event of hacking or otherwise caused by the default of the [CSP], where [IBHK] has not failed to exercise reasonable care and diligence in the selection, appointment and ongoing monitoring of the [CSP], except (i) such loss arising from the gross negligence, willful default or fraud of [IBHK], or (ii) to the extent prohibited under applicable Rules. Notwithstanding any other provision of these Terms, in the absence of either (a) a failure by [IBHK] to exercise reasonable care and diligence in the selection, appointment and ongoing monitoring of the [CSP], or (b) gross negligence, wilful default or fraud on the part of [IBHK], [IBHK] will only be obliged to return Virtual Assets held for [Customer] with the [CSP] who is insolvent, or which Virtual Assets have otherwise been subjected to loss due to an event of hacking, embezzlement, or theft at the [CSP] or which losses are otherwise caused by the default of the [CSP], solely if and to the extent that those Virtual Assets or equivalent value are recovered by [IBHK] from the [CSP]. Unless otherwise provided under applicable Rules, [Customer] hereby agree[s] not to bring any action against [IBHK] on any claim arising from a loss occurring at the [CSP], in the absence of circumstances addressed under (a) or (b) above, so long as [IBHK] makes commercially reasonable efforts to assert a claim for recovery against the [CSP].
The CSPs’ failure to safeguard the Cryptocurrency Assets may result in losses to our customers which could have adverse effects on our customers’ confidence in our cryptocurrency offering through CSPs and on our business.
We m ay encounter technical issues which would result in disruption or interruption of our customers’ access to their CSP accounts.
Both we and the CSPs rely on computer software, hardware and telecommunications infrastructure and networking to provide the respective services to our customers with respect to trading and custody of the Cryptocurrency Assets. These computer-based systems and services are inherently vulnerable to disruption, delay, or failure, which may cause our customers to lose access to our trading platform and the Exchange Services provided by the CSPs. Any such disruption could have an adverse effect on our customers’ confidence in our cryptocurrency offering through the CSPs and an adverse effect on our business.
Chang es in laws and regulations regarding cryptocurrency may negatively impact our ability to enable our customers to buy, hold and sell cryptocurrencies in the future and may adversely affect our business.
Regulation of the cryptocurrency industry continues to evolve and is subject to change. Securities and commodities laws and regulations and other bodies of laws can apply to certain cryptocurrency assets. These laws and regulations are complex and the interpretations of them may be subject to challenge by the relevant regulators. Future regulatory developments, including the treatment of certain cryptocurrency assets for U.S. federal income tax and foreign tax purposes, could have an adverse effect on our cryptocurrency offering through CSPs and on our business.
ITEM 1B. U NRESOLVED STAFF COMMENTS
None.
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ITEM 1C. C YBERSECURITY
We are a global financial services firm, with a longstanding commitment to providing a reliable and secure trading environment for our customers.
Technology is at the core of our business, with customers, exchanges, clearing houses, counterparties, and third-party service providers interacting with our systems and applications on an ongoing basis. As a consequence, we are subject to significant cybersecurity risks. Moreover, such risks continue to evolve as a result of the growing sophistication of cyber threat actors, geo-political instability, and advances in technology, such as AI, which may be misused in cyber-attacks.
As part of our overall risk management framework, our cybersecurity program is designed to identify, assess, and manage cyber risks. The program involves risk assessments, implementation of security measures, and ongoing monitoring of systems and networks. We continually evaluate the current threat landscape to identify material risks arising from new and evolving cybersecurity threats.
Management and Board Oversight of Cybersecurity Risks
The Company’s management, including the Company’s Executive Vice President ("EVP") of Technology and Chief Information Security Officer (“CISO”), are responsible for assessing and managing material risks from cybersecurity threats. Members of Company management possess relevant expertise in various disciplines that are key to effectively managing such risks.
The Company’s management, including through its oversight of the Company’s policies and procedures regarding cybersecurity, is actively involved in the prevention, detection, mitigation, and remediation of cybersecurity incidents impacting or with the potential to impact the Company. Management’s oversight is augmented through the Company’s Enterprise Risk Management Framework, which includes risk and control assessments related to the Company’s cybersecurity program. Additionally, the Company’s Internal Audit Group periodically audits aspects of the Company’s cybersecurity program and reports the results of such audits to the Board’s Audit Committee, and an external audit firm conducts an annual SOC 2 attestation of the Company’s information security controls.
If a cybersecurity incident occurs, incident response procedures are in place to ensure that the occurrence is appropriately reported to the CISO and senior management. Where necessary, business continuity plans are invoked to minimize disruption to business operations. The Company has established the Cyber Materiality Committee (“CMC”), whose purpose is to review cybersecurity incidents escalated to it by our Threat & Incident Management Team and determine whether they are material and thus require a disclosure on Form 8-K. CMC’s membership includes the Chief Executive Officer (“CEO”), the Chief Financial Officer, the EVP of Technology, the CISO, and other senior leaders.
Our Board of Directors receives periodic updates on cybersecurity matters and the overall state of our cybersecurity program from our CEO (based on consultation with our EVP of Technology, CISO, and other senior members of our Information Security and Technology teams).
Assessment of Cybersecurity Risk
The potential impact of risks from cybersecurity threats to the Company is assessed on an ongoing basis. During the reporting period and through the issuance of this Annual Report on Form 10-K, the Company has not identified any risks from cybersecurity threats, including as a result of previous cybersecurity incidents, that the Company believes have materially affected, or are reasonably likely to materially affect the Company, including its business strategy, operational results, and financial condition. For additional information about cybersecurity risks, see Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K.
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ITEM 2. P ROPERTIES
Our headquarters are located in Greenwich, Connecticut. We lease office and data center facilities in 34 cities throughout the world where we conduct our operations as set forth below. We believe our present facilities, together with our current options to extend lease terms, are adequate for our current needs.
The table below presents certain information with respect to our leased facilities as of December 31, 2025.
Location
Space (sq. feet)
Principal Usage
North America
Greenwich, CT
163,510
Headquarters
Chicago, IL
163,106
Office space and data center
New York, NY
22,916
Office space
Other (11 locations)
37,252
Office space and data center
Europe
Zug, Switzerland
36,635
Office space
Budapest, Hungary
29,073
Office space
Dublin, Ireland
17,982
Office space and data center
London, United Kingdom
17,457
Office space
Tallinn, Estonia
12,731
Office space
Other (4 locations)
2,762
Office space and data center
Asia - Pacific
Mumbai, India
198,423
Office space and data center
Hong Kong
26,020
Office space and data center
Other (9 locations)
18,186
Office space and data center
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ITEM 3. L EGAL PROCEEDINGS AND REGULATORY MATTERS
The securities and commodities industry is highly regulated and many aspects of our business involve substantial risk of liability. In past years, there has been an increasing incidence of litigation involving the brokerage industry, including class action suits that generally seek substantial damages, including in some cases punitive damages. Compliance and trading problems that are reported to federal, state and provincial regulators, exchanges or other self-regulatory organizations by dissatisfied customers are investigated by such regulatory bodies, and, if pursued by such regulatory body or such customers, may rise to the level of arbitration or disciplinary action. We are also subject to periodic regulatory audits and inspections.
Like other brokerage firms, we have been named as a defendant in lawsuits and from time to time we have been threatened with, or named as a defendant in arbitrations and administrative proceedings. We may in the future become involved in additional litigation or regulatory proceedings in the ordinary course of our business, including litigation or regulatory proceedings that could be material to our business.
For more information regarding pending and threatened legal actions and proceedings see Note 14 - “Commitments, Contingencies, and Guarantees” to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Pending Regulatory Inquiries
Our businesses are heavily regulated by state, federal and foreign regulatory agencies as well as numerous exchanges and self-regulatory organizations. Most of our companies are regulated under some or all of the following: state securities laws, U.S. and foreign securities, commodities and financial services laws and the rules of the more than 170 exchanges, market centers and self-regulatory organizations of which one or more of our companies may be members. Due to heightened regulatory scrutiny of financial institutions, we have incurred increased compliance costs, along with the industry as a whole. Increased regulation also creates increased barriers to entry. We have built and continue to build human and automated infrastructure in light of increasing regulatory scrutiny, which provides us with a possible advantage over potential newcomers to the business.
We receive many regulatory inquiries each year in addition to being subject to frequent regulatory examinations. The great majority of these inquiries do not lead to fines or any further action against us. We are generally the subject of regulatory inquiries regarding subjects including, but not limited to: audit trail reporting, trade reporting, best execution and order execution procedures, display of market data, short sales, margin lending, exchange fees charged to customers, anti-money laundering or potentially manipulative trading by customers, sanctions compliance, procedures for accounts managed by independent financial advisors or referred by third parties, technology development practices, registration, record-keeping, business continuity planning, cybersecurity, forecast contracts and other topics of recent regulatory interest. The Company has procedures for evaluating whether potential regulatory fines are probable, estimable and material and for updating its contingency reserves and disclosures accordingly. We expect to pay significant regulatory fines on various topics on an ongoing basis, as other regulated financial services businesses do. The amount of any fines, and when and if they will be incurred, typically is impossible to predict given the nature of the regulatory process.
ITEM 4. M INE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. M ARKET FOR REGISTRANT’S COMMON EQUITY; RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information for Common Stock
Interactive Brokers Group Inc.’s Class A common stock trades under the symbol “IBKR” on Nasdaq. There is no public trading market for our Class B common stock, which is held by Holdings.
Holders of Record
As of February 18, 2026, there were 59 holders of record, which does not reflect those shares held beneficially or those shares held in “street” name. Accordingly, the number of beneficial owners of our common stock exceeds this number.
Dividends and Other Restrictions
We currently intend to pay quarterly dividends of $0.08 per share to our common stockholders for the foreseeable future. For more information regarding dividends see Note 4 – “Equity and Earnings per Share” to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Stockholder Return Performance Graph
The graph below compares cumulative total stockholder return on our common stock, the S&P 500 Index and the Nasdaq Financial-100 Index from December 31, 2020 to December 31, 2025. The comparison assumes $100 was invested on December 31, 2020 in our common stock and each of the foregoing indices and assumes reinvestment of dividends before consideration of income taxes.
• The Nasdaq Financial - 100 Index includes 100 of the largest domestic and international financial securities listed on The Nasdaq Stock Market based on market capitalization. They include companies classified according to the Industry Classification Benchmark as Financials, which are included within the Nasdaq Bank, Nasdaq Insurance, and Nasdaq Other Finance Indexes.
• The S&P 500 Index includes 500 large cap common stocks actively traded in the U.S. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock markets, the New York Stock Exchange and Nasdaq.
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The stock performance depicted in the graph above is not to be relied upon as indicative of future performance. The stock performance graph shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate the same by reference, nor shall it be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act.
Use of Proceeds
The Exchange Agreement, as amended, provides for future redemptions of member interests and for the purchase of member interests in IBG LLC by IBG, Inc. from Holdings, which could result in IBG, Inc. acquiring the remaining member interests in IBG LLC that it does not own. On an annual basis, members of Holdings can request redemption of their interests.
On July 30, 2025, the Company filed a Prospectus Supplement on Form 424B5 (File Number 333-273451) with the SEC to issue 3,836,000 shares of common stock (with a fair value of $254 million) in exchange for an equivalent number of shares of member interests in IBG LLC, in accordance with the Exchange Agreement.
As a consequence of redemption transactions in accordance with the Exchange Agreement, distribution of shares to customers under one or more promotions, and distribution of shares to employees pursuant to the Company’s amended 2007 Stock Incentive Plan, IBG, Inc.’s interest in IBG LLC has increased to approximately 26.3%, with Holdings owning the remaining 73.7% as of December 31, 2025. The redemptions also resulted in an increase in the Holdings interest held by Mr. Thomas Peterffy and his affiliates from approximately 84.6% at the IPO to approximately 91.6% as of December 31, 2025. See Note 4 – “Equity and Earnings per Share” and Note 10 – “Employee Incentive Plans” to the financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
Securities Authorized for Issuance under Equity Compensation Plans
The table below presents information about shares of common stock available for future awards under all the Company’s equity compensation plans as of December 31, 2025. The Company has not made grants of common stock outside of its equity compensation plans.
Number of securities to be
Number of securities
issued upon exercise of
Weighted-average exercise
remaining available for
outstanding options,
price of outstanding options
future awards under
warrants and rights
warrants and rights
equity compensation plans (1)
Equity compensation plans
approved by security holders
N/A
N/A
35,930,685
Total
—
—
35,930,685
(1) Amount represents restricted stock units available for future issuance of grants under the Company’s amended 2007 Stock Incentive Plan (the “Plan”). On April 20, 2023, the Company’s stockholders approved an additional 40,000,000 shares to be distributed under the Plan. This increased the total number of shares available to be distributed under the Plan to 160,000,000 shares, from 120,000,000 shares.
ITEM 6. R ESERVED
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ITEM 7. M ANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the audited consolidated financial statements and the related notes in Part II, Item 8, of this Annual Report on Form 10-K. In addition to historical information, the following discussion also contains forward-looking statements that include risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under the heading “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.
B usiness Overview
We are an automated global broker. We custody and service accounts for hedge and mutual funds, ETFs, registered investment advisors, proprietary trading groups, introducing brokers and individual investors. We specialize in routing orders and executing and processing trades in stocks, options, futures, forex, bonds, mutual funds, ETFs and precious metals on more than 170 electronic exchanges and market centers in 40 countries and 29 currencies around the world. In addition, our customers can use our trading platform to trade certain cryptocurrencies through third-party cryptocurrency service providers that execute, clear and custody the cryptocurrencies. We also offer trading in forecast contracts, which are event-based contracts traded on ForecastEx, a CFTC-registered exchange and clearinghouse we established.
As a broker, we execute, clear and settle trades globally for both institutional and individual customers. Powered by our proprietary technology, our systems provide our customers with the capability to monitor multiple markets around the world simultaneously and to execute trades electronically at a low cost, in multiple products and currencies from a single trading account. Our overnight trading facilities, available for an array of instruments, support our customers who trade across time zones. The ever-growing complexity of multiple market centers across diverse geographies provides us with ongoing opportunities to build and continuously adapt our order routing software to secure excellent execution prices.
Since our inception in 1977, we have focused on developing proprietary software to automate broker-dealer functions. The proliferation of electronic exchanges and market centers has allowed us to integrate our software with an increasing number of trading venues – as well as with market data sources, securities lending platforms and regulatory reporting facilities – creating one automated platform that requires minimal human intervention.
Our customer base is diverse with respect to geography and type. Currently, our customers reside in over 200 countries and territories. We serve individuals, as well as institutional accounts such as hedge funds, financial advisors, proprietary trading firms and introducing brokers. Specialized products and services that we have developed successfully attract institutional accounts. For example, we offer prime brokerage services, including financing and securities lending, to hedge funds; our model portfolio technology and automated share allocation and rebalancing tools are particularly attractive to financial advisors; and our trading platform, global access and low pricing attract introducing brokers.
B usiness Environment
During 2025, global equity markets extended their multi-year advances, with several major indices reaching record levels and many recording double-digit gains. The S&P 500 Index returned 16.4% for the year, though it was outperformed by a number of international markets, including Canada, the United Kingdom, Europe, Hong Kong, Japan, and China.
Within the U.S., market performance became somewhat more diversified compared to the prior year. The group of large-cap technology stocks commonly referred to as the “Magnificent Seven” accounted for approximately 35% of the S&P 500’s total return in 2025, compared to approximately 50% in 2024. More broadly, companies associated with AI, including these large-cap technology firms, contributed more than half of the index’s overall return. Increased investor interest in AI-related companies also coincided with a partial recovery in the initial public offering market, particularly among technology-focused issuers.
Inflationary pressures moderated during 2025, contributing to monetary policy easing across several major economies. Central banks reduced policy interest rates, which supported financial market activity and economic conditions, despite ongoing geopolitical developments and trade policy uncertainty. Lower interest rates, along with expectations of additional monetary easing, were associated with higher market indices and increased trading. Retail investor participation remained elevated with continued engagement, particularly in equity and options markets.
The following is a summary of the key economic drivers that affect our business and how they compared to the prior year:
Global trading volumes. Worldwide, equities volumes at most major trading venues increased in the current year, while major market indices reached all-time highs in the U.S., Canada, Europe, U.K., Germany, Japan, and Australia. In the U.S., according to industry data, average daily volume in listed cash equities increased by 45%, exchange-listed equity-based options by 25%, and futures by 6%, compared to 2024. Options trading volumes have risen with the growing popularity of shorter-dated options contracts. In futures markets, volumes increased across most product segments, particularly in metals, energy, equity index, agriculture and interest rate products, as investors sought to mitigate their exposure to ongoing economic and geopolitical uncertainties.
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These factors led to strong results across our major product types. Our customer equities, options, foreign exchange, and futures volumes were up 38%, 26%, 15%, and 12%, respectively, compared to the prior year.
Note that while U.S. options, futures and cash equities volumes are readily comparable measures, they reflect most but not all of the global volumes that generate our commission revenue. See ‘‘Trading Volumes and Customer Statistics’’ below in this Item 7 for additional details regarding our trade volumes, contract and share volumes, and customer statistics.
Volatility . U.S. market volatility, as measured by the average Chicago Board Options Exchange Volatility Index (‘‘VIX ® ’’), increased by 22%, from an average of 15.6 in 2024 to 18.9 in the current year, the highest annual level seen since 2022. In general, higher volatility typically enhances our performance because it often correlates positively with customer trading activity across product types.
Interest Rates. During 2025, the U.S. Federal Reserve cut the benchmark federal funds rate by a total of 75 basis points, with 25 basis point reductions at its September, October, and December meetings. This resulted in a target range of 3.50% to 3.75% at year end, the lowest level since late 2022. Over the course of the year, the U.S. Treasury yield curve moved toward normalization but remained partially inverted at year end, with short- to intermediate-term yields flat to inverted, while longer-term yields exceeded shorter-term rates. In most countries with developed financial markets, benchmark interest rates also declined during 2025 as inflationary pressures eased and central banks adjusted monetary policy accordingly.
Lower U.S. benchmark rates reduce the interest we earn on our segregated cash, the majority of which is invested in short-term U.S. government securities and related instruments. Higher short-term rates and uncertainty over future U.S. Federal Reserve rate policy have led us to maintain a short duration portfolio, all of which matured within three months at December 31, 2025, to more closely match our asset and liability maturities on our interest-sensitive assets. Further, our margin balances are tied to benchmark rates, so lower rates also limit the interest we earn on margin lending to our customers. We continue to offer among the lowest rates in the industry on margin lending, and we believe our low rates are an important feature that attracts customers to our platform.
As an offset, lower rates also reduce our interest expense. For example, in U.S. dollars we pay interest to customers on their qualified cash balances when the federal funds effective rate is above 0.50%, which it has been since May 2022. At this benchmark rate level, we are able to earn our full 0.50% spread. We believe the attractive rates we pay on customer cash are among the highest in the industry and are another important feature that draws customers to our platform.
Net interest income on margin loan balances rose compared to the prior year. This increase was due to the growth in margin loan balances in the current active market environment despite the average federal funds effective rate declining to 4.21% in the current year from 5.14% in the prior year.
Higher average balances contributed to a 13% rise in net interest income over the prior year. Net interest margin declined from 2.35% in the prior year to 2.08% in the current year primarily due to lower interest rates.
Currency fluctuations . As a global broker trading on exchanges around the world in multiple currencies, we are exposed to foreign currency risk. We actively manage this exposure by keeping our equity in proportion to a defined basket of 10 currencies we call the ‘‘GLOBAL’’ to diversify our risk and to align our hedging strategy with the currencies that we use in our business. Because we report our financial results in U.S. dollars, the change in the value of the GLOBAL versus the U.S. dollar affects our earnings. During the current year, the value of the GLOBAL, as measured in U.S. dollars, increased 2.05% compared to its value at December 31, 2024, which had a positive impact on our comprehensive earnings for the current year. A discussion of our approach for managing foreign currency exposure is contained in Part II, Item 7A of this Annual Report on Form 10-K entitled ‘‘Quantitative and Qualitative Disclosures about Market Risk.”
F inancial Overview
We report non-GAAP financial measures, which exclude certain items that may not be indicative of our core operating results and business outlook and are useful in evaluating the operating performance of our business. See the “Non-GAAP Financial Measures” section below in this Item 7 for additional details.
Diluted earnings per share were $2.22 for the year ended December 31, 2025 (“current year”), compared to $1.73 for the year ended December 31, 2024 (“prior year”). Adjusted diluted earnings per share were $2.19 for the current year, compared to $1.76 for the prior year. The calculation of diluted earnings per share is detailed in Note 4 – “Equity and Earnings Per Share” to the audited consolidated financial statements, in Part II, Item 8 of this Annual Report on Form 10-K.
For the current year, our net revenues were $6,205 million and income before income taxes was $4,771 million, compared to net revenues of $5,185 million and income before income taxes of $3,695 million in the prior year. Adjusted net revenues were $6,156 million and adjusted income before income taxes was $4,722 million, compared to adjusted net revenues of $5,257 million and adjusted income before income taxes of $3,767 million in the prior year.
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The financial highlights for the current year were:
• Net interest income increased 13% from the prior year to $3,563 million, driven by higher average customer margin loans and customer credit balances, and by stronger securities lending activity.
• Commission revenue increased 27% from the prior year to $2,149 million on higher stocks, options and futures volumes.
• Other fees and services increased 4% from the prior year to $291 million on higher Insured Bank Deposit Sweep Program fees (“FDIC sweep fees”), market data fees and payments for order flow from exchange-mandated programs, partially offset by lower risk exposure fees.
• Other income increased $142 million from the prior year to $202 million.
• Execution, clearing and distribution fees expenses decreased 6% to $420 million, driven by greater capture of liquidity rebates from certain exchanges due to higher trading volumes in stocks and options, and by the elimination of SEC fees beginning in May 2025.
• Pretax profit margin was 77%, up from 71% in the prior year. Adjusted pretax profit margin was 77%, up from 72% in the prior year.
In connection with our currency diversification strategy as of December 31, 2025, approximately 25% of our equity was denominated in currencies other than the U.S. dollar. In the current year, our currency diversification strategy increased our comprehensive earnings by $387 million (compared to a decrease of $222 million in the prior year), as the U.S. dollar value of the GLOBAL increased by approximately 2.05%, compared to its value as of December 31, 2024. The effects of our currency diversification strategy are reported as (1) a component of “Other Income” (loss of $4 million) in the consolidated statements of comprehensive income and (2) other comprehensive income (“OCI”) (gain of $391 million) in the consolidated statements of financial condition and the consolidated statements of comprehensive income. The full effect of the GLOBAL is captured in comprehensive income.
C ertain Trends and Uncertainties
We believe that our current operations may be favorably or unfavorably impacted by the following trends and uncertainties that may affect our financial condition and results of operations:
• Retail participation in the equity markets has fluctuated in the past due to investor sentiment, market conditions and a variety of other factors. Retail transaction volumes may not be sustainable and are not predictable.
• Consolidation among market centers may adversely affect the value of our IB SmartRouting SM software.
• Competition among broker-dealers may continue to intensify.
• Benchmark interest rates tend to fluctuate with economic conditions. Changes in interest rates may not be predictable.
• Fiscal and/or monetary policy may change and impact the financial services business and securities markets.
• New legislation or modifications to existing regulations and rules could occur in the future. Scrutiny in the use of AI and information security by regulatory and legislative authorities has increased.
• The impact of a pandemic or other public health emergency will depend on numerous evolving factors that cannot be accurately predicted, including the duration and spread of the pandemic, governmental regulations in response to the pandemic, and the effectiveness of vaccinations and other medical advancements.
• We continue to be exposed to the risks and uncertainties of doing business in international markets, particularly in the heavily regulated brokerage industry. Such risks and uncertainties include political, economic and financial instability, and foreign policy changes. For example, tensions between the U.S. and China have escalated in recent years, and changes in Chinese governmental oversight of the Chinese and Hong Kong capital markets could result in adverse effects on our business and loss of assets we hold in the region. Additionally, although our direct and indirect exposures to Russia and Ukraine are not material, the war in Ukraine and related sanctions have created substantial uncertainty in the global economy and financial markets. Finally, government actions such as tariff policy changes may create uncertainty that affects volumes and volatility in the financial markets.
• Our remaining market making activities, while not material, will continue to be impacted by market structure changes, market conditions, the level of automation of competitors, and the relationship between actual and implied volatility in the equities markets.
See “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of other risks that may affect our financial condition and results of operations.
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T rading Volumes and Customer Statistics
The tables below present historical trading volumes and customer statistics for our business. Trading volumes are the primary driver in our business. Information on our net interest income can be found elsewhere in this report.
EXECUTED ORDER VOLUMES:
(in thousands, except %)
Customer
%
Principal
%
Total
%
Period
Orders
Change
Orders
Change
Orders
Change
2021
646,440
27,334
673,774
2022
532,064
(18%)
26,966
(1%)
559,030
(17%)
2023
483,015
(9%)
29,712
10%
512,727
(8%)
2024
661,666
37%
63,348
113%
725,014
41%
2025
915,616
38%
121,972
93%
1,037,588
43%
CONTRACT AND SHARE VOLUMES:
(in thousands, except %)
TOTAL
Options
%
Futures 1
%
Stocks
%
Period
(contracts)
Change
(contracts)
Change
(shares)
Change
2021
887,849
154,866
771,273,709
2022
908,415
2%
207,138
34%
330,035,586
(57%)
2023
1,020,736
12%
209,034
1%
252,742,847
(23%)
2024
1,344,855
32%
218,327
4%
307,489,711
22%
2025
1,668,228
24%
241,631
11%
421,707,895
37%
CUSTOMER
Options
%
Futures 1
%
Stocks
%
Period
(contracts)
Change
(contracts)
Change
(shares)
Change
2021
852,169
152,787
766,211,726
2022
873,914
3%
203,933
33%
325,368,714
(58%)
2023
981,172
12%
206,073
1%
248,588,960
(24%)
2024
1,290,770
32%
214,864
4%
302,040,873
22%
2025
1,623,384
26%
240,120
12%
417,457,770
38%
PRINCIPAL
Options
%
Futures 1
%
Stocks
%
Period
(contracts)
Change
(contracts)
Change
(shares)
Change
2021
35,680
2,079
5,061,983
2022
34,501
(3%)
3,205
54%
4,666,872
(8%)
2023
39,564
15%
2,961
(8%)
4,153,887
(11%)
2024
54,085
37%
3,463
17%
5,448,838
31%
2025
44,844
(17%)
1,511
(56%)
4,250,125
(22%)
(1) Futures contract volume includes options on futures.
CUSTOMER STATISTICS:
Year over Year
2025
2024
% Change
Total Accounts (in thousands)
4,399
3,337
32%
Customer Equity (in billions) 1
$
779.9
$
568.2
37%
Total Customer DARTs (in thousands) 2
3,685
2,641
40%
Cleared Customers
Commission per Cleared Commissionable Order 3
$
2.68
$
2.86
(6%)
Cleared Avg. DARTs per Account (Annualized)
203
213
(5%)
(1) Excludes non-customers.
(2) Daily average revenue trades ("DARTs") are based on customer orders.
(3) Commissionable order – a customer order that generates commissions.
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R esults of Operations
The table below presents our consolidated results of operations for the periods indicated. The period-to-period comparisons below of financial results are not necessarily indicative of future results.
Year-Ended December 31,
2025
2024
2023
(in millions, except share and per share amounts)
Revenues
Commissions
$
2,149
$
1,697
$
1,360
Other fees and services
291
280
197
Other income (loss)
202
60
(11)
Total non-interest income
2,642
2,037
1,546
Interest income
7,782
7,339
6,230
Interest expense
(4,219)
(4,191)
(3,436)
Total net interest income
3,563
3,148
2,794
Total net revenues
6,205
5,185
4,340
Non-interest expenses
Execution, clearing and distribution fees
420
447
386
Employee compensation and benefits
626
574
527
Occupancy, depreciation and amortization
97
101
99
Communications
43
39
41
General and administrative
247
314
211
Customer bad debt
1
15
7
Total non-interest expenses
1,434
1,490
1,271
Income before income taxes
4,771
3,695
3,069
Income tax expense
414
288
257
Net income
4,357
3,407
2,812
Less net income attributable to noncontrolling interests
3,373
2,652
2,212
Net income available for common stockholders
$
984
$
755
$
600
Earnings per share
Basic
$
2.23
$
1.75
$
1.43
Diluted
$
2.22
$
1.73
$
1.42
Weighted average common shares outstanding
Basic
440,931,909
432,448,796
419,860,200
Diluted
443,859,546
436,011,752
423,387,508
Comprehensive income
Net income available for common stockholders
$
984
$
755
$
600
Other comprehensive income
Cumulative translation adjustment, before income taxes
101
(53)
30
Income taxes related to items of other comprehensive income
-
-
-
Other comprehensive income (loss), net of tax
101
(53)
30
Comprehensive income available for common stockholders
$
1,085
$
702
$
630
Comprehensive income attributable to noncontrolling interests
Net income attributable to noncontrolling interests
$
3,373
$
2,652
$
2,212
Other comprehensive income - cumulative translation adjustment
290
(154)
92
Comprehensive income attributable to noncontrolling interests
$
3,663
$
2,498
$
2,304
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The table below presents our consolidated results of operations as a percent of our total net revenues for the periods indicated.
Year Ended December 31,
2025
2024
2023
Revenues
Commissions
35%
33%
31%
Other fees and services
5%
5%
5%
Other income (loss)
3%
1%
(0%)
Total non-interest income
43%
39%
36%
Interest income
125%
142%
144%
Interest expense
(68%)
(81%)
(79%)
Total net interest income
57%
61%
64%
Total net revenues
100%
100%
100%
Non-interest expenses
Execution, clearing and distribution fees
7%
9%
9%
Employee compensation and benefits
10%
11%
12%
Occupancy, depreciation and amortization
2%
2%
2%
Communications
1%
1%
1%
General and administrative
4%
6%
5%
Customer bad debt
0%
0%
0%
Total non-interest expenses
23%
29%
29%
Income before income taxes
77%
71%
71%
Income tax expense
7%
6%
6%
Net income
70%
66%
65%
Less net income attributable to noncontrolling interests
54%
51%
51%
Net income available for common stockholders
16%
15%
14%
Year Ended December 31, 2025 (“current year”) compared to the Year Ended December 31, 2024 (“prior year”)
Net Revenues
Total net revenues, for the current year, increased $1,020 million, or 20%, compared to the prior year, to $6,205 million. The increase in net revenues was due to higher commissions, net interest income, other income, and other fees and services.
Commissions
We earn commissions from our cleared customers for whom we act as an executing and clearing broker and from our non-cleared customers for whom we act as an execution-only broker. Our commission structure allows customers to choose between (1) an all-inclusive fixed, or “bundled”, rate; (2) a tiered, or “unbundled”, rate that offers lower commissions for high volume customers where we pass through regulatory and exchange fees; and (3) our IBKR Lite SM offering, which provides commission-free trades on U.S. exchange-listed stocks and ETFs. IBKR Lite SM trades generate payments from market makers and others to whom we route these orders, which are reported in commissions. Our commissions are geographically diversified around the world, though a substantial majority are generated on products traded in the U.S.
Commissions for the current year increased $452 million, or 27%, compared to the prior year, to $2,149 million, driven by higher customer trading volumes in stocks, options and futures. Total customer stock share and options and futures contract volumes increased 38%, 26% and 12%, respectively, from the prior year. Total DARTs for cleared and execution-only customers, for the current year, increased 40% to 3.7 million, compared to 2.6 million for the prior year. Average commission per commissionable order for cleared customers, for the current year, decreased 6% to $2.68, compared to $2.86 for the prior year, due to smaller order sizes across all products, lower average commissions per order in options, futures and forex, and greater capture of exchange liquidity rebates passed through to customers.
Other Fees and Services
We earn fee income on services provided to customers, which includes market data fees, risk exposure fees, payments for order flow from exchange-mandated programs, FDIC sweep fees, and other fees and services charged to customers.
Other fees and services, for the current year increased $11 million, or 4%, compared to the prior year, to $291 million, driven by a $9 million increase in FDIC sweep fees on higher customer balances, an $8 million increase in market data fees due to our growing customer base, and a $6 million increase in payments for order flow from exchange-mandated programs driven by higher customer trading volume; partially offset by a $20 million decrease in risk exposure fees as customers exhibited more cautious risk-taking behavior.
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Other Income (Loss)
Other income consists of foreign exchange gains (losses) from our currency diversification strategy, gains (losses) from principal transactions, gains (losses) from our equity method and other investments, and other revenue not directly attributable to our core business offerings. A discussion of our approach to managing foreign currency exposure is contained in Part II, Item 7A of this Annual Report on Form 10-K entitled “Quantitative and Qualitative Disclosures about Market Risk.”
Other income, for the current year, increased $142 million, or 237%, compared to the prior year, to $202 million. This increase was mainly due to (1) $73 million related to our investing activities; (2) the non-recurrence of a $48 million loss on positions taken over as customer accommodation due to a technical issue at the New York Stock Exchange that occurred on the morning of June 3, 2024, as previously disclosed; (3) $11 million related to our currency diversification strategy; and (4) $6 million related to the remeasurement of our Tax Receivable Agreement liability, payable to Holdings.
Interest Income and Interest Expense
We earn interest on margin lending to customers that is secured by marketable securities and currency balances these customers hold with us; from our investments in U.S. and foreign government securities; from borrowing and lending securities; on deposits (in positive interest rate currencies) with banks; and on certain customers’ cash balances in negative rate currencies. We pay interest on customer cash balances (in sufficiently positive interest rate currencies); for borrowing and lending securities; on deposits (in negative interest rate currencies) with banks; and on our borrowings.
Net interest income (interest income less interest expense), for the current year, increased $415 million, or 13%, compared to the prior year, to $3,563 million. The increase in net interest income was driven by higher average customer margin loans and customer credit balances, and stronger securities lending activity, partially offset by lower benchmark interest rates.
Net interest income on customer balances, for the current year, increased $174 million, compared to the prior year, driven by increases of $29.6 billion, $16.5 billion and $15.1 billion in average customer credit balances, margin loans, and segregated cash and securities, respectively. Yields on all three components decreased as interest rates declined worldwide. See the “Business Environment” section above in this Item 7 for a further discussion about the change in interest rates in the current year.
The Company measures return on interest-earning assets using net interest margin (“NIM”). NIM is computed by dividing the annualized net interest income by the average interest-earning assets for the period. Interest-earning assets consist of cash and securities segregated for regulatory purposes (including U.S. government securities and securities purchased under agreements to resell), customer margin loans, securities borrowed, other interest-earning assets (solely firm assets) and customer cash balances swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. Interest-bearing liabilities consist of customer credit balances, securities loaned, and other interest-bearing liabilities.
Yields are generally a reflection of benchmark interest rates in each currency in which the Company and its customers hold cash balances. Because a meaningful portion of customer cash and margin loans are denominated in currencies other than the U.S. dollar, changes in U.S. benchmark interest rates do not impact the total amount of segregated cash and securities, customer margin loans and customer credit balances. Furthermore, because interest, when benchmark rates are at sufficiently high levels, is paid only on eligible cash credit balances (i.e., balances over $10 thousand or equivalent, in securities accounts with over $100 thousand in equity, and in smaller accounts at reduced rates), changes in benchmark interest rates are not passed through to the total amount of customer credit balances. Finally, the Company’s policies with respect to currencies with near zero or negative interest rates impact the overall yields on segregated cash and customer credit balances as effective interest rates in those currencies move above or below zero.
We earn income on securities loaned and borrowed to support customer long and short stock holdings in margin accounts.
A securities lending transaction generates (1) net interest earned on lending a security, which is based on supply and demand for that security, and (2) interest earned on the cash collateral deposited for the loan of that security, which is based on benchmark interest rates. Interest on this collateral is reported as net interest on segregated cash, since cash collateral from securities lending is held in specially-designated bank accounts for the benefit of customers, in accordance with U.S. customer protection rules. Generally, as benchmark interest rates rise, while the overall revenue generated from a securities lending transaction may not change, the portion derived from interest earned on the cash collateral, which is classified as net interest income on “Segregated cash and securities, net” increases, while the portion classified as “Securities borrowed and loaned, net” decreases.
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In the current year, average securities borrowed balances increased 32%, to $7.8 billion, and average securities loaned balances increased 42%, to $19.5 billion, compared to the prior year. Net interest earned from securities lending is affected by the level of demand for securities positions held by our customers that investors are looking to sell short. During the current year, net interest earned from securities lending transactions increased $195 million, or 212%, compared to the prior year, driven by a higher level of short sale activity and generally higher price levels raising the notional value of the securities we lent. However, as noted above, the rise in benchmark interest rates from March 2022 to September 2024 shifted a portion of the interest reported as generated by lending securities to interest income on segregated cash (see further explanation above). It should be noted that securities lending transactions entered into to support customer activity may produce interest income (expense) that is offset by interest expense (income) related to customer balances. With benchmark rates falling during 2025, the opposite shift occurred, from interest income on segregated cash to securities lending income.
We estimate that if the interest earned and paid on cash collateral related to our securities lending transactions were included under “Securities borrowed and loaned, net” in the table below, the total net interest income related to our securities lending activities would have been $1,041 million in the current year, compared to $699 million in the prior year. Such additional interest attributed to our securities lending activities would be reclassified from net interest income on “Segregated cash and securities, net” and “Customer credit balances, net” in the table below, so it would have no effect on our overall net interest income or net interest margin.
Our Stock Yield Enhancement Program provides an opportunity for customers with fully-paid stock to allow us to lend it out. We pay customers a rebate on the cash collateral generally equal to 50% of a market-based rate for lending the shares. We place cash and/or U.S. Treasury securities as collateral securing the loans in the customer’s account, which is held in segregated accounts, or at an affiliate acting as collateral agent for the benefit of our customer.
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The table below presents net interest income information corresponding to interest-earning assets and interest-bearing liabilities for the periods indicated.
Year-Ended December 31,
2025
2024
2023
(in millions)
Average interest-earning assets
Segregated cash and securities
$
77,217
$
62,117
$
59,582
Customer margin loans
69,978
53,503
41,229
Securities borrowed
7,792
5,899
5,315
Other interest-earning assets
15,167
11,180
10,114
FDIC sweeps 1,4
5,555
4,214
3,003
$
175,709
$
136,913
$
119,242
Average interest-bearing liabilities
Customer credit balances
$
135,487
$
105,840
$
96,081
Securities loaned
19,469
13,737
9,518
Other interest-bearing liabilities
170
26
1
$
155,126
$
119,603
$
105,600
Net Interest income
Segregated cash and securities, net 2
$
2,930
$
3,024
$
2,791
Customer margin loans 3
3,230
3,012
2,278
Securities borrowed and loaned, net
287
92
276
Customer credit balances, net 3
(3,545)
(3,595)
(3,125)
Other net interest income 1,4
759
690
600
Net interest income 4
$
3,661
$
3,223
$
2,820
Net interest margin ("NIM")
2.08%
2.35%
2.36%
Annualized Yields
Segregated cash and securities
3.79%
4.87%
4.68%
Customer margin loans
4.62%
5.63%
5.53%
Customer credit balances
2.62%
3.40%
3.25%
(1) Represents the average amount of customer cash swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. This item is not recorded in the consolidated statements of financial condition. Income derived from program deposits is reported in other net interest income in the table above.
(2) Net interest income on "Segregated cash and securities, net" for the twelve months ended December 31, 2025, excludes approximately $26 million of interest income, recorded in the consolidated statements of comprehensive income, related to taxes withheld at source in prior periods which were determined to be fully refundable.
(3) Interest income and interest expense on customer margin loans and customer credit balances, respectively, are calculated on daily cash balances within each customer’s account on a net basis, which may result in an offset of balances across multiple account segments (e.g., between securities and commodities segments).
(4) Includes income from financial instruments that has the same characteristics as interest, but is reported in other fees and services and other income in the Company's consolidated statements of comprehensive income. For the years ended December 31, 2025, 2024, and 2023, $38 million, $28 million and $19 million were reported in other fees and services, respectively. For the years ended December 31, 2025, 2024, and 2023, $86 million, $47 million and $7 million were reported in other income, respectively.
Non-Interest Expenses
Non-interest expenses, for the current year, decreased $56 million, or 4%, compared to the prior year, to $1,434 million, mainly due to a $67 million decrease in general and administrative expenses; a $27 million decrease in execution, clearing and distribution fees; and a $14 million decrease in customer bad debt; partially offset by a $52 million increase in employee compensation and benefits. As a percentage of total net revenues, non-interest expenses were 23% for the current year and 29% for the prior year.
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Execution, Clearing and Distribution Fees
Execution, clearing and distribution fees include the costs of executing and clearing trades, net of liquidity rebates received from various exchanges and market centers, as well as regulatory fees and market data fees. Execution fees are paid primarily to electronic exchanges and market centers on which we trade. Clearing fees are paid to clearing houses and clearing agents. Market data fees, which are associated with market data revenue included in other fees and services, are paid to third parties to receive streaming price quotes and related information.
Execution, clearing and distribution fees, for the current year, decreased $27 million, or 6%, compared to the prior year, to $420 million, primarily driven by (1) a $41 million decrease in exchange fees due to greater capture of liquidity rebates from certain exchanges on higher customer trading volumes in stocks and options; and (2) a $9 million net decrease in regulatory fees as the SEC Section 31 transaction fee rate was reduced to zero on May 14, 2025, partially offset by a new FINRA Consolidated Audit Trail (“CAT”) fee, which was initiated in the fourth quarter of 2024; partially offset by (3) a $20 million increase in clearing fees due higher customer trading volumes in stocks and options. SEC and CAT fees, as with other regulatory fees, are passed through to customers. As a percentage of total net revenues, execution, clearing and distribution fees were 7% for the current year and 9% for the prior year.
Employee Compensation and Benefits
Employee compensation and benefits include salaries, bonuses and other incentive compensation plans, group insurance, contributions to benefit programs and other related employee costs.
Employee compensation and benefits expenses, for the current year, increased $52 million, or 9%, compared to the prior year, to $626 million, associated with a combination of staffing increases and inflation, and an increase in U.S. Social Security and Medicare and other social insurance taxes driven by the annual vesting of the Company’s Stock Incentive Plan units at a higher stock price than in the prior year. The average number of employees increased 4% to 3,085 for the current year, compared to 2,960 for the prior year. We continued to add staff worldwide to support our business expansion. As we continue to grow, our focus on automation has allowed us to maintain a relatively lean staff. As a percentage of total net revenues, employee compensation and benefits expenses were 10% for the current year and 11% for the prior year.
Occupancy, Depreciation and Amortization
Occupancy expenses consist primarily of rental payments on office and data center leases and related occupancy costs, such as utilities. Depreciation and amortization expenses result from the depreciation of fixed assets, such as computing and communications hardware, as well as amortization of leasehold improvements and capitalized in-house software development.
Occupancy, depreciation and amortization expenses, for the current year, decreased $4 million, or 4%, compared to the prior year, to $97 million, mainly due to lower depreciation and amortization expense. As a percentage of total net revenues, occupancy, depreciation and amortization expenses were 2% for both the current year and the prior year.
Communications
Communications expenses consist primarily of the cost of voice and data telecommunications lines supporting our business, including connectivity to exchanges and market centers around the world.
Communications expenses, for the current year, increased $4 million, or 10%, compared to the prior year, to $43 million. As a percentage of total net revenues, communications expenses were 1% for both the current year and the prior year.
General and Administrative
General and administrative expenses consist primarily of advertising; professional services expenses, such as legal and audit work; legal and regulatory matters; and other operating expenses.
General and administrative expenses, for the current year, decreased $67 million, or 21%, compared to the prior year, to $247 million, primarily due to the non-recurrences of $82 million related to a legal settlement and $12 million related to the consolidation of our European subsidiaries in the prior year; partially offset by a $35 million increase in advertising expenses. As a percentage of total net revenues, general and administrative expenses were 4% for the current year and 6% for the prior year.
Customer Bad Debt
Customer bad debt expense consists primarily of losses incurred by customers in excess of their assets with us, net of amounts recovered by us. Customer bad debt expense, for the current year decreased $14 million, or 93%, compared to the prior year, to $1 million, mainly driven by the non-recurrence of customer losses during short periods of extreme market volatility in the prior year.
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Income Tax Expense
We pay U.S. federal, state and local income taxes on our taxable income, which is proportional to the percentage we own of IBG LLC. Also, our operating subsidiaries are subject to income tax in the respective jurisdictions in which they operate.
Income tax expense, for the current year, increased $126 million, or 44%, compared to the prior year, to $414 million, primarily due to (1) higher income before taxes at our operating subsidiaries outside the U.S. and higher income tax rates in Europe following the adoption of the minimum effective tax rate of 15% on January 1, 2025; (2) higher income before income taxes subject to U.S. income tax at IBG, Inc.; (3) IBG, Inc.’s higher average ownership percentage of IBG LLC, which rose from 25.6% to 26.0%; and (4) an $8 million lower income tax benefit, compared to the prior year, due to the remeasurement of deferred tax assets related to the step-up in basis arising from the acquisition of interests in IBG LLC, primarily due to changes in the Company’s effective tax rates.
The table below presents information about our income tax expense for the periods indicated.
Year-Ended December 31,
2025
2024
2023
(in millions, except %)
Consolidated
Consolidated income before income taxes
$
4,771
$
3,695
$
3,069
Exclude IBG, Inc. stand-alone (income) loss before income taxes
4
12
5
Add-back IBG LLC net gain (loss) on IBKR shares eliminated in consolidation 1
13
6
(1)
Operating subsidiaries income before income taxes
$
4,788
$
3,713
$
3,073
Operating subsidiaries
Income before income taxes
$
4,788
$
3,713
$
3,065
Income tax expense
213
142
115
Net income available to members
$
4,575
$
3,571
$
2,950
IBG, Inc.
Average ownership percentage in IBG LLC
26.0%
25.6%
25.0%
Net income available to IBG, Inc. from operating subsidiaries
$
1,192
$
915
$
737
IBG, Inc. stand-alone income (loss) before income taxes
(4)
(12)
5
Elimination of IBG, Inc.'s portion of IBG LLC net (gain) loss on IBKR shares 1
(3)
(2)
-
Income before income taxes
1,185
901
742
Income tax expense
201
146
142
Net income available to common stockholders
$
984
$
755
$
600
Consolidated income tax expense
Income tax expense attributable to operating subsidiaries
$
213
$
142
$
115
Income tax expense attributable to IBG, Inc.
201
146
142
Consolidated income tax expense
$
414
$
288
$
257
______________________________
(1) Represents the net gains or losses from the Company’s common stock (IBKR shares) held in treasury related to shares withheld from employees to satisfy their tax withholding obligations related to the annual vesting of shares from the amended 2007 Stock Incentive Plan and shares held for distribution to eligible customers participating in one or more promotions.
Operating Results
Income before income taxes, for the current year, increased $1,076 million, or 29%, compared to the prior year, to $4,771 million. Pretax profit margin was 77% for the current year and 71% for the prior year.
Comparing our operating results for the current year to the prior year using non-GAAP financial measures, adjusted net revenues were $6,156 million, up 17%; adjusted income before income taxes was $4,722 million, up 25%; and adjusted pre-tax profit margin was 77% for the current year and 72% for the prior year. See the “Non-GAAP Financial Measures” section below in this Item 7 for additional details.
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Noncontrolling Interest
We are the sole managing member of IBG LLC and, as such, operate and control all of the business and affairs of IBG LLC and its subsidiaries and consolidate IBG LLC’s financial results into our financial statements. As of December 31, 2025, we held approximately 26.3% ownership interest in IBG LLC and Holdings held approximately 73.7% ownership interest in IBG LLC. We reflect Holdings’ ownership as a noncontrolling interest in our consolidated statements of financial condition, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows. Our share of IBG LLC’s net income, excluding Holdings’ noncontrolling interest, for the current year was approximately 26.0%, compared to approximately 25.6% for the prior year.
Year Ended December 31, 2024 compared to the Year Ended December 31, 2023
For a discussion of changes for the year ended December 31, 2024 compared to the Year Ended December 31, 2023 refer to the Annual Report on Form 10-K filed with the SEC on February 27, 2025.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures as additional measures to enhance the understanding of our financial results. These non-GAAP financial measures include adjusted net revenues, adjusted income before income taxes, adjusted net income available for common stockholders, and adjusted diluted earnings per share (“EPS”). We believe that these non-GAAP financial measures are important measures of our financial performance because they exclude certain items that may not be indicative of our core operating results and business outlook. We believe these non-GAAP financial measures are useful to investors and analysts in evaluating the operating performance of the business.
• We define adjusted net revenues as net revenues adjusted to remove the effect of our currency diversification strategy, our net mark-to-market gains (losses) on investments, and the remeasurement of our Tax Receivable Agreement (“TRA”) liability.
• We define adjusted income before income taxes as income before income taxes adjusted to remove the effect of our currency diversification strategy, our net mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, and unusual bad debt expense.
• We define adjusted net income available to common stockholders as net income available for common stockholders adjusted to remove the after-tax effects attributable to IBG, Inc. of our currency diversification strategy, our net mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, unusual bad debt expense, and the remeasurement of certain deferred tax assets.
• We define adjusted diluted EPS as adjusted net income available for common stockholders divided by the diluted weighted average number of shares outstanding for the period.
Mark-to-market on investments represents the net mark-to-market gains (losses) on investments in equity securities that do not qualify for equity method accounting, which are measured at fair value; on our U.S. government and municipal securities portfolios, which are typically held to maturity; and on certain other investments, including equity securities taken over by the Company from customers as a customer accommodation due to a technical issue at the New York Stock Exchange on the morning of June 3, 2024, as previously disclosed. In the event an investment is sold prior to maturity, accumulated gains (losses) are realized and previously accumulated non-GAAP adjustments are reversed in the period of sale.
Remeasurement of our TRA liability represents the change in the amount payable to Holdings under the TRA, primarily due to changes in the Company’s effective tax rates, which is related to the remeasurement of the deferred tax assets described below. For further information refer to Note 4 – Equity and Earnings per Share under Part II, Item 8 – Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Unusual bad debt expense consists of a credit loss on a loan not related to margin lending.
Remeasurement of certain deferred tax assets represents the change in the unamortized balance of deferred tax assets related to the step-up in basis arising from the acquisition of interests in IBG LLC, primarily due to changes in the Company’s effective tax rates. For further information refer to Note 4 – Equity and Earnings per Share under Part II, Item 8 – Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
We also report compensation and benefits expenses as a percentage of adjusted net revenues, as we believe this measure is useful to investors and analysts in evaluating the growth of our workforce in relation to the growth of our core revenues.
These non-GAAP financial measures should be considered in addition to, rather than as a substitute for, measures of financial performance prepared in accordance with GAAP 1 .
1 Refers to generally accepted accounting principles in the United States.
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The tables below present a reconciliation of consolidated GAAP to non-GAAP financial measures for the periods indicated.
Year-Ended December 31,
2025
2024
2023
Adjusted net revenues (in millions)
Net revenues - GAAP
$
6,205
$
5,185
$
4,340
Non-GAAP adjustments
Currency diversification strategy, net
4
15
80
Mark-to-market on investments
(56)
48
(46)
Remeasurement of TRA liability
3
9
(7)
Total non-GAAP adjustments
(49)
72
27
Adjusted net revenues
$
6,156
$
5,257
$
4,367
Adjusted income before income taxes (in millions)
Income before income taxes - GAAP
$
4,771
$
3,695
$
3,069
Non-GAAP adjustments
Currency diversification strategy, net
4
15
80
Mark-to-market on investments
(56)
48
(46)
Remeasurement of TRA liability
3
9
(7)
Bad debt expense
-
-
5
Total non-GAAP adjustments
(49)
72
32
Adjusted income before income taxes
$
4,722
$
3,767
$
3,101
Adjusted pre-tax profit margin
77%
72%
71%
Adjusted net income available for common stockholders (in millions)
Net income available for common stockholders - GAAP
$
984
$
755
$
600
Non-GAAP adjustments
Currency diversification strategy, net
1
4
20
Mark-to-market on investments
(15)
12
(12)
Remeasurement of TRA liability
3
9
(7)
Bad debt expense
-
-
1
Income tax effect of above adjustments 1
3
(4)
(2)
Remeasurement of deferred income taxes
(3)
(11)
7
Total non-GAAP adjustments 2
(11)
11
8
Adjusted net income available for common stockholders 2
$
973
$
766
$
608
Adjusted diluted EPS (in dollars, except share amounts)
Diluted EPS - GAAP
$
2.22
$
1.73
$
1.42
Non-GAAP adjustments
Currency diversification strategy, net
0.00
0.01
0.05
Mark-to-market on investments
(0.03)
0.03
(0.03)
Remeasurement of TRA liability
0.01
0.02
(0.02)
Bad debt expense
0.00
0.00
0.00
Income tax effect of above adjustments 1
0.01
(0.01)
(0.00)
Remeasurement of deferred income taxes
(0.01)
(0.02)
0.02
Total non-GAAP adjustments 2
(0.02)
0.03
0.02
Adjusted diluted EPS 2
$
2.19
$
1.76
$
1.44
Diluted weighted average common shares outstanding
443,859,546
436,011,752
423,387,508
(1) The income tax effect is estimated using the statutory income tax rates applicable to the Company.
(2) Amounts may not add due to rounding.
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L iquidity and Capital Resources
We maintain a highly liquid balance sheet. The majority of our assets consists of investments of customer funds, collateralized receivables arising from customer-related and proprietary securities transactions, and exchange-listed marketable securities, which are marked-to-market daily. Collateralized receivables consist primarily of customer margin loans, securities borrowed, and securities purchased under agreements to resell. As of December 31, 2025, total assets were $203.2 billion of which $201.1 billion, or 98.9%, were considered liquid.
Decisions on the allocation of capital are based upon, among other things, prudent risk management guidelines, potential liquidity and cash flow needs for current and future business activities, regulatory capital requirements, and projected profitability. Our Treasury department, Market Risk Committee, Enterprise Risk Management department and other management control groups assist in evaluating, monitoring and controlling the impact that our business activities have on our financial condition, liquidity and capital structure. The objective of these policies is to support our business strategies while ensuring ongoing and sufficient liquidity. Our significant capital comprises an aggregate across our many regulated subsidiaries, and in addition to supporting our current business and future expansion plans we believe this financial strength provides our customers with a source of confidence.
Daily monitoring of liquidity needs and available collateral levels is undertaken to help ensure that an appropriate liquidity cushion, in the form of cash and unpledged collateral, is maintained at all times. We actively manage our excess liquidity and maintain significant borrowing capabilities through the securities lending markets and in the form of credit facilities with banks. As a general practice, we maintain sufficient levels of cash on hand to provide us with a buffer should we need immediately available funds for any reason. In addition, pursuant to our liquidity risk management plan we perform periodic liquidity stress tests, which are designed to identify and reserve liquid assets that would be available under market or idiosyncratic stress events. Based on our current level of operations, we believe our cash flows from operations, available cash and available borrowings will be adequate to meet our future liquidity needs for more than the next twelve months.
As of December 31, 2025, liability balances in connection with securities loaned and payables to customers were higher than their average monthly balances during the current year, and short-term borrowings balance was lower than its average monthly balance during the current year.
Cash and cash equivalents held by our non-U.S. operating subsidiaries as of December 31, 2025 were $2,019 million ($1,513 million as of December 31, 2024). These funds are primarily intended to finance each individual operating subsidiary’s local operations, and thus would not be available to fund U.S. domestic operations unless repatriated through payment of dividends to IBG LLC. As of December 31, 2025, we had no intention to repatriate any amounts from non-U.S. operating subsidiaries. With the enactment of the U.S. Tax Cuts and Jobs Act on December 22, 2017, we recognized a liability for the one-time transition tax on deemed repatriation of earnings of some of our foreign subsidiaries for the year ended December 31, 2017, which was paid over eight years ending in 2025. As a result, in the event dividends were to be paid to the Company in the future by a non-U.S. operating subsidiaries, the Company would not be required to accrue and pay income taxes on such dividends, except for foreign taxes in the form of dividend withholding tax, and in connection with accumulated other comprehensive income/loss from currency exchange rate changes not previously taxed in the U.S., if any, imposed on the recipient of the distribution or dividend distribution tax imposed on the payor of the distribution.
Historically, our consolidated equity has consisted primarily of accumulated retained earnings, which to date have been sufficient to fund our operations and growth. Our consolidated equity increased 23% to $20.5 billion as of December 31, 2025, from $16.6 billion as of December 31, 2024. This increase is attributable to total comprehensive income, partially offset by distributions and dividends paid during 2025.
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Cash Flows
The table below presents our cash flows from operating activities, investing activities and financing activities for the periods indicated.
Year-Ended December 31,
2025
2024
2023
(in millions)
Net cash provided by operating activities
$
15,811
$
8,724
$
4,544
Net cash used in investing activities
(171)
(44)
(52)
Net cash used in financing activities
(969)
(833)
(624)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
391
(207)
122
Increase in cash, cash equivalents, and restricted cash
$
15,062
$
7,640
$
3,990
Our cash, cash equivalents, and restricted cash (i.e., cash and cash equivalents that are subject to withdrawal or usage restrictions) increased by $15.1 billion to $55.3 billion for the year ended December 31, 2025.
Operating Activities
Our cash flows from operating activities are largely a reflection of the changes in customer credit and margin loan balances. We raised $15.8 billion in net cash from operating activities mainly driven by customer credit balances which increased $39.0 billion and securities loaned which increased $8.5 billion; partially offset by customer margin loans which increased $26.0 billion.
Investing Activities
Our cash flows from investing activities are primarily related to other investments, capitalized internal software development, purchases and sales of memberships, trading rights and shares at exchanges where we trade, and strategic investments where such investments may enable us to offer better execution alternatives to our current and prospective customers, allow us to influence exchanges to provide competing products at better prices using sophisticated technology, or enable us to acquire either technology or customers faster than we could develop them on our own. We used net cash of $171 million in our investing activities, including strategic investments and property, equipment, and intangible assets.
Financing Activities
Our cash flows from financing activities are comprised of short-term borrowings, capital transactions, and payments made to Holdings under the Tax Receivable Agreement. Short-term borrowings from banks are part of our daily cash management in support of operating activities. Capital transactions consist primarily of quarterly dividends paid to common stockholders and related distributions paid to Holdings. We used net cash of $969 million in our financing activities, primarily for distributions to noncontrolling interests, dividends paid to common stockholders and payments made to Holdings under the Tax Receivable Agreement.
Year Ended December 31, 2024:
For a discussion of changes in cash flows for the year ended December 31, 2024 refer to our Annual Report on Form 10-K filed with the SEC on February 27, 2025.
Year Ended December 31, 2023:
For a discussion of changes in cash flows for the year ended December 31, 2023 refer to our Annual Report on Form 10-K filed with the SEC on February 27, 2024.
Regulatory Capital Requirements
As of December 31, 2025, all operating subsidiaries were in compliance with their respective regulatory capital requirements. For additional information regarding our regulatory capital requirements see Note 16 – “Regulatory Requirements” to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
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Capital Expenditures
We expect capital expenditures to remain primarily focused on technology infrastructure, system capacity, cybersecurity, and regulatory requirements. Our capital expenditures are comprised of compensation costs of our software engineering staff for development of software for internal use and expenditures for computer, networking and communications hardware, and leasehold improvements. These expenditure items are reported as property, equipment, and intangible assets. Capital expenditures for property, equipment, and intangible assets were $67 million, $49 million and $49 million for the three years ended December 31, 2025, 2024, and 2023, respectively. In the future, we plan to meet capital expenditure needs with cash from operations and cash on hand, as we continue our focus on technology infrastructure initiatives to further enhance our competitive position. In response to changing economic conditions, we believe we have the flexibility to modify our capital expenditures by adjusting them (either upward or downward) to match our actual performance. If we pursue any additional strategic acquisitions, we may incur additional capital expenditures.
Contractual Obligations Summary
Our contractual obligations principally include obligations associated with our outstanding indebtedness and interest payments as of December 31, 2025.
Payments Due by Year
Total
2026-2027
2028-2029
Thereafter
(in millions)
Payable to Holdings under Tax Receivable Agreement (1)
$
217
$
28
$
33
$
156
Operating leases
184
62
49
73
Total contractual cash obligations
$
401
$
90
$
82
$
229
(1) As of December 31, 2025, contractual amounts owed under the Tax Receivable Agreement of $217 million have been reported in payables to affiliate in the consolidated financial statements, representing management’s best estimate of the amounts currently expected to be owed under the Tax Receivable Agreement. Through December 31, 2025, approximately $308 million of cumulative cash payments have been made.
Seasonality
Our businesses are subject to seasonal fluctuations, reflecting varying numbers of market participants at times during the year, varying numbers of trading days from quarter-to-quarter, and declines in trading activity due to holidays. Typical seasonal trends may be superseded by market or world events, which can have a significant impact on prices and trading volume.
Inflation
Although we cannot accurately anticipate the effects of inflation on our operations, we believe that for the past several years inflation may have indirectly had a material impact on our results of operations. Inflation has been one of the factors driving our employee compensation and benefits expenses higher during the current period, although as a percentage of net revenues these expenses remain stable. Inflation may also be a contributing factor to general uncertainty in the markets in the foreseeable future. Statements about future inflation are subject to the risk that actual inflation and its effects may differ, possibly materially, due to, among other things, changes in economic growth, impact of supply chain disruptions, unemployment and consumer demand.
Investments in U.S. Government Securities
We invest in U.S. government securities to satisfy U.S. regulatory requirements. As a broker-dealer, unlike banks, we are required to mark these investments to market even though we intend to hold them to maturity. Sudden increases (decreases) in interest rates will cause mark-to-market losses (gains) on these securities, which are recovered (eliminated) if we hold them to maturity, as currently intended. As of December 31, 2025, all of our U.S. government securities had maturities within three months. The impact of changes in interest rates is further described in Part II, Item 7A of this Annual Report on Form 10-K entitled “Quantitative and Qualitative Disclosures about Market Risk.”
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Strategic Investments and Acquisitions
We regularly evaluate potential strategic investments and acquisitions. We hold strategic investments in certain electronic trading exchanges, including BOX Options Exchange, LLC and Miami International Holdings Inc. We also hold strategic investments in certain businesses, including Zero Hash Holdings Ltd. (a crypto-service provider) and Next Securities Corporation (a South Korea-based securities company).
We intend to continue making acquisitions on an opportunistic basis, generally only when the acquisition candidate will, in our opinion, enable us to offer better execution alternatives to our current and prospective customers, allow us to influence exchanges to provide competing products at better prices using sophisticated technology, or enable us to acquire either technology or customers faster than we could develop them on our own.
As of December 31, 2025, there were no definitive agreements with respect to any material acquisition.
Certain Information Concerning Off-Balance-Sheet Arrangements
We may be exposed to a risk of loss not reflected in our consolidated financial statements for futures products, which represent our obligations to settle at contracted prices, and which may require us to repurchase or sell in the market at prevailing prices. Accordingly, these transactions result in off-balance sheet risk, as our cost to liquidate such futures contracts may exceed the amounts reported in our consolidated statements of financial condition.
C ritical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Therefore, actual results could differ materially from those estimates. We believe that the critical policies listed below represent the most significant estimates used in the preparation of our consolidated financial statements. See Note 2 – “Significant Accounting Policies” to the audited consolidated financial statements for a summary of our significant accounting policies in Part II, Item 8 of this Annual Report on Form 10-K.
Contingencies
Our policy is to estimate and accrue for potential losses that may arise out of litigation and regulatory proceedings, to the extent that such losses are probable and can be estimated. Significant judgment is required in making these estimates and our final liabilities may ultimately be materially different. Our total liability accrued with respect to litigation and regulatory proceedings is determined on a case by case basis and represents an estimate of probable losses based on, among other factors, the progress of each case, our experience with and industry experience with similar cases and the opinions and views of internal and external legal counsel. Given the inherent difficulty of predicting the outcome of litigation and regulatory matters, particularly in cases or proceedings in which substantial or indeterminate damages or fines are sought, or where cases or proceedings are in the early stages, we cannot estimate losses or ranges of losses for cases or proceedings where there is only a reasonable possibility that a loss may be incurred.
Income Taxes
Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits are based on enacted tax laws and reflect management’s best assessment of estimated future taxes to be paid. We are subject to income taxes in both the U.S. and numerous foreign jurisdictions. Determining income tax expense requires significant judgment and estimates.
Deferred income tax assets and liabilities arise from temporary differences between the tax and financial statement recognition of the underlying assets and liabilities. In evaluating our ability to recover our deferred tax assets within the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations.
In projecting future taxable income, historical results are adjusted for changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax-planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, three years of cumulative operating income (loss) are considered. Deferred income taxes have not been provided for U.S. tax liabilities or for additional foreign taxes on the unremitted earnings of foreign subsidiaries that have been indefinitely reinvested.
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The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. For example, a number of jurisdictions, including the EU countries, have enacted the Pillar Two Framework established by the OECD, which generally imposes a minimum effective tax rate of 15% in each such jurisdiction. We record tax liabilities in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 740 and adjust these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in payments that are different from the current estimates of these tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information becomes available.
We recognize that a tax benefit from an uncertain tax position may be recognized only when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. A tax position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement.
Accounting Pronouncements Issued but Not Yet Adopted
For additional information regarding FASB Accounting Standards Updates (“ASU”s) that have been issued but not yet adopted and that may impact the Company, refer to Note 2 – “Significant Accounting Policies” to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on form 10-K.
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ITEM 7A. Q UANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various market risks. Our exposures to market risks arise from assumptions built into our pricing models, equity price risk, foreign currency exchange rate fluctuations related to our international operations, changes in interest rates and risks relating to the extension of margin credit to our customers.
Market risk refers to the risk that a change in the level of one or more market prices, rates, indices, implied volatilities (the price volatility of the underlying instrument imputed from option prices), correlations or other market factors, such as market liquidity, will result in losses for a position or portfolio. Generally, we incur trading-related market risk as a result of our remaining market making activities, where the substantial majority of our Value-at-Risk (“VaR”) for market risk exposures is generated. In addition, we incur non-trading-related market risk primarily from investment activities and from foreign currency exposure held in the equity of our foreign subsidiaries, i.e., our non-U.S. brokerage subsidiaries and information technology subsidiaries, and held to meet target balances in our currency diversification strategy.
We use various risk management tools in managing our market risk, which are embedded in our real-time market making systems. We employ certain hedging and risk management techniques to protect us from a severe market dislocation. Our risk management policies are developed and implemented by our Steering Committee, which is chaired by our Chief Executive Officer and comprised of senior executives of our various operating subsidiaries. The strategy of our remaining market making activities is to calculate quotes a few seconds ahead of the market and execute small trades at a tiny but favorable differential as a result. This strategy is made possible by our proprietary pricing model, which evaluates and monitors the risks inherent in our portfolio, assimilates external market data and reevaluates the outstanding quotes in our portfolio many times per second. Our model automatically rebalances our positions throughout each trading day to manage risk exposures on our options and futures positions and the underlying securities and will price the increased risk that a position would add to the overall portfolio into the bid and offer prices we post. Under risk management policies implemented and monitored primarily through our computer systems, reports to management, including risk profiles, profit and loss analysis and trading performance, are prepared on a real-time basis as well as daily and periodical bases. Although our remaining market making activities are completely automated, the trading process and our risk are monitored by a team of individuals who, in real time, observe various risk parameters of our consolidated positions. Our assets and liabilities are marked-to-market daily for financial reporting purposes and re-valued continuously throughout the trading day for risk management and asset/liability management purposes.
We use a covariant VaR methodology to measure, monitor and review the market risk of our market making portfolios, with the exception of fixed income products, and our currency exposures. The risk of fixed income products, which comprise primarily U.S. government securities, is measured using a stress test.
Pricing Model Exposure
As described above, our proprietary pricing model, which continuously evaluates and monitors the risks inherent in our portfolio, assimilates external market data and reevaluates the outstanding quotes in our entire portfolio many times per second. Certain aspects of the model rely on historical prices of securities. If the behavior of price movements of individual securities diverges substantially from what their historical behavior would predict, we might incur trading losses. We attempt to limit such risks by diversifying our portfolio across many different options, futures and underlying securities and avoiding concentrations of positions based on the same underlying security. Historically, our losses from these events have been immaterial in comparison to our annual trading profits.
Foreign Currency Exposure
As a result of our international activities and accumulated earnings in our non-U.S. subsidiaries, our income and equity are exposed to fluctuations in foreign exchange rates. For example, our non-U.S. subsidiaries are exposed to foreign exchange risks as described below:
• Some of our non-U.S. subsidiaries support customer transactions in financial instruments, carry bank balances, and borrow and lend securities in various currencies in their regular course of business. At the end of each accounting period, these non-U.S. subsidiaries’ assets and liabilities are revalued into their respective functional currencies for presentation in their financial statements. The resulting foreign currency gains or losses are reported in their income statements and, as translated into U.S. dollars for U.S. GAAP purposes, in our consolidated statements of comprehensive income, as a component of “Other income.”
• These non-U.S. subsidiaries’ financial statements are presented in their respective functional currencies, as noted above. For U.S. GAAP purposes, at the end of each accounting period, each non-U.S. subsidiary’s equity is translated at the then prevailing exchange rate into U.S. dollars and the resulting translation gain or loss is reported as OCI in our consolidated statements of financial condition and consolidated statements of comprehensive income.
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By periodically converting currency balances into functional currency, we substantially reduce the foreign currency exposures for each of these non-U.S. subsidiaries, which minimizes the impact of exchange rate changes to its income statement. However, historically, we have taken the approach of not hedging our consolidated foreign currency exposures to the U.S. dollar, based on the notion that the cost of constantly hedging over the years would amount to more than the random impact of rate changes on our non-U.S. dollar balances.
Instead, because we conduct business in many countries and many currencies and because we consider ourselves a global enterprise based in a diversified basket of currencies rather than a U.S. dollar-based company, we actively manage our global currency exposure by maintaining our equity in GLOBALs, a basket of currencies. Our risk management systems incorporate cash forex to hedge our currency exposure at little or no cost. Currency spot positions entered into as part of our currency diversification strategy are held by the parent holding company, IBG LLC.
The U.S. dollar value of the GLOBAL increased 2.05% as of December 31, 2025 compared to December 31, 2024. As of December 31, 2025, approximately 25% of our equity was denominated in currencies other than the U.S. dollar.
The effects of our currency diversification strategy appear in two places in the consolidated financial statements: (1) as a component of “Other income” in the consolidated statements of comprehensive income and (2) as OCI in the consolidated statements of financial condition and the consolidated statements of comprehensive income. The full effect of the GLOBAL is captured in the consolidated statements of comprehensive income.
The table below presents a comparison of the U.S. dollar equivalent of the GLOBAL for the periods indicated.
As of 12/31/2024
As of 12/31/2025
GLOBAL in
% of
Net Equity
GLOBAL in
% of
Net Equity
CHANGE in
Currency
Composition
FX Rate
USD Equiv.
Comp.
(in USD millions)
FX Rate
USD Equiv.
Comp.
(in USD millions)
% of Comp.
USD
0.72
1.0000
0.720
76.6%
$
12,714
1.0000
0.720
75.1%
$
15,367
-1.5%
EUR
0.09
1.0353
0.093
9.9%
1,645
1.1746
0.106
11.0%
2,256
1.1%
JPY
3.91
0.0064
0.025
2.6%
439
0.0064
0.025
2.6%
533
0.0%
GBP
0.02
1.2513
0.025
2.7%
442
1.3474
0.027
2.8%
575
0.1%
CHF
0.02
1.1019
0.022
2.3%
389
1.2615
0.025
2.6%
539
0.3%
CNH
0.13
0.1363
0.018
1.9%
313
0.1433
0.019
1.9%
398
0.1%
INR
1.10
0.0117
0.013
1.4%
227
0.0111
0.012
1.3%
261
-0.1%
CAD
0.02
0.6953
0.010
1.1%
184
0.7286
0.011
1.1%
233
0.0%
AUD
0.02
0.6188
0.009
1.0%
164
0.6673
0.010
1.0%
214
0.1%
HKD
0.04
0.1287
0.005
0.5%
80
0.1285
0.004
0.5%
96
0.0%
0.940
100.0%
$
16,597
0.959
100.0%
$
20,472
0.0%
Interest Rate Risk
We had no variable-rate debt outstanding as of December 31, 2025.
We pay our customers interest based on benchmark overnight interest rates in various currencies, when interest rates are above a benchmark rate plus a small spread, on cash balances above $10 thousand (or equivalent) in securities accounts holding more than $100 thousand and at lower, tiered rates for accounts holding less than $100 thousand (or equivalent) net asset value. In currencies, if any, with negative rates, we pass through the cost of holding certain cash balances to our customers; therefore, we charge our customers interest on these cash balances. In a normal rate environment, we typically invest a portion of these funds in U.S. government securities with maturities of up to two years, although given the current interest rate environment, at this time all such investments mature within three months. If interest rates were to increase rapidly and substantially, our net interest income would not increase proportionally with the interest rates for the portion of the funds invested at fixed yields. In addition, the mark-to-market changes in the value of these fixed rate securities will be reflected in other income, instead of net interest income. Our margin balances are priced to a benchmark rate plus a spread, with a minimum charge of 0.75% in U.S. dollars and most foreign currencies.
Based on customer balances and investments outstanding as of December 31, 2025, and assuming reinvestment of maturing instruments in instruments of short-term duration, an increase of 0.25% over current U.S. dollar interest rate levels would increase our net interest income by $77 million on an annualized basis, assuming the full effect of reinvestment at higher rates. A 0.25% increase in all the relevant non-U.S. dollar benchmark rates would increase our net interest income by $30 million on an annualized basis. Our interest rate sensitivity estimate contains separate assumptions for U.S. dollar rates from other currencies’ rates and it isolates the effects of a rate increase on reinvestments. We do not approximate mark-to-market impact from interest rate changes; if U.S. government securities whose prices were to fall under these scenarios were held to maturity, as intended, then the reduction in other income would be temporary, as the securities would mature at par value. If such securities were sold prior to maturity, the loss would be realized and the proceeds reinvested at prevailing higher interest rates.
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We also face the potential for reduced net interest income from customer deposits and margin loans if benchmark rates were to fall. Based on customer balances and investments outstanding as of December 31, 2025, and assuming reinvestment of maturing instruments in instruments of short-term duration, a decrease in U.S. dollar interest rates of 0.25% would decrease our net interest income by $77 million on an annualized basis, assuming the full effect of reinvestment at lower rates. A 0.25% decrease in all the relevant non-U.S. dollar benchmark rates would decrease our net interest income by $31 million on an annualized basis.
We also face interest rate risk due to positions carried for our remaining market making activities to the extent that long or short stock positions may have been established for future or forward dates on options or futures contracts and the value of such positions is impacted by interest rates. The amount of such risk cannot be quantified, however, the current low level of market making positions does not indicate a material potential exposure.
Dividend Risk
We face dividend risk in our remaining market making activities as we derive revenues and incur expenses in the form of dividend income and expense, respectively, from our inventory of equity securities, and must make payments in lieu of dividends on short positions in equity securities within our portfolio. Projected future dividends are an important component of pricing equity options and other derivatives, and incorrect projections may lead to trading losses. The amount of such risk cannot be quantified, however, the current low level of market making positions does not indicate a material potential exposure.
Margin Loans
We extend margin loans to our customers, which are subject to various regulatory requirements. Margin loans are collateralized by cash and securities in the customers’ accounts. The risks associated with margin credit increase during periods of fast market movements or in cases where collateral is concentrated and market movements occur. During such times, customers who utilize margin loans and who have collateralized their obligations with securities may find that the securities have a rapidly depreciating value and may not be sufficient to cover their obligations in the event of a liquidation. We are also exposed to credit risk when our customers execute transactions, such as short sales of options and equities that can expose them to risk beyond their invested capital.
We expect this kind of exposure to increase with the growth of our overall business. Because we indemnify and hold harmless our clearing houses and counterparties from certain liabilities or claims, the use of margin loans and short sales may expose us to significant off-balance-sheet risk if collateral requirements are not sufficient to fully cover losses that customers may incur and those customers fail to satisfy their obligations. As of December 31, 2025, we had $90.5 billion in margin loans extended to our customers. The amount of risk to which we are exposed from the margin loans we extend to our customers and from short sale transactions by our customers is unlimited and not quantifiable as the risk is dependent upon analysis of a potentially significant and undeterminable rise or fall in stock prices. Our account level margin requirements meet or exceed those required by Regulation T of the Board of Governors of the Federal Reserve and FINRA portfolio margin rules, as applicable. As a matter of practice, we enforce real-time margin compliance monitoring and liquidate customers’ positions if their equity falls below required margin requirements.
We have a comprehensive policy implemented in accordance with regulatory standards to assess and monitor the suitability of investors to engage in various trading activities. To mitigate our risk, we also continuously monitor customer accounts to detect excessive concentration, large orders or positions, patterns of day trading and other activities that indicate increased risk to us.
Our credit exposure is to a great extent mitigated by our real-time margining system, which automatically evaluates each account throughout the trading day and closes out positions automatically for accounts that are found to be under-margined. While this methodology is effective in most situations, it may not be effective in situations where no liquid market exists for the relevant securities or commodities or where, for any reason, automatic liquidation for certain accounts has been disabled. Our Market Risk Committee continually monitors and evaluates our risk management policies, including the implementation of policies and procedures to enhance the detection and prevention of potential events to mitigate margin loan losses.
Value-at-Risk
We estimate VaR using a historical approach, which uses the historical daily price returns of underlying assets as well as estimates of the end of day implied volatility for options. Our one-day VaR is defined as the unrealized loss in portfolio value that, based on historically observed market risk factors, would have been exceeded with a frequency of one percent, based on a calculation with a confidence interval of 99%.
Our VaR model generally takes into account exposures to equity and commodity price risk and foreign exchange rates.
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We use VaR as one of a range of risk management tools. Among their benefits, VaR models permit the estimation of a portfolio’s aggregate market risk exposure, incorporating a range of varied market risks and portfolio assets. One key element of the VaR model is that it reflects risk reduction due to portfolio diversification or hedging activities. However, VaR has various strengths and limitations, which include, but are not limited to: use of historical changes in market risk factors, which may not be accurate predictors of future market conditions, and may not fully incorporate the risk of extreme market events that are outsized relative to observed historical market behavior or reflect the historical distribution of results beyond the confidence interval; and reporting of losses in a single day, which does not reflect the risk of positions that cannot be liquidated or hedged in one day. A small proportion of market risk generated by trading positions is not included in VaR. The modeling of the risk characteristics of some positions relies on approximations that, under certain circumstances, could produce significantly different results from those produced using more precise measures. VaR is most appropriate as a risk measure for trading positions in liquid financial markets and will understate the risk associated with severe events, such as periods of extreme illiquidity.
The VaR calculation simulates the performance of the portfolio based on several years of daily price changes of the underlying assets and determines the VaR as the calculated loss that occurs at the 99 th percentile.
Since the reported VaR statistics are estimates based on historical data, VaR should not be viewed as predictive of our future revenues or financial performance or of our ability to monitor and manage risk. There can be no assurance that our actual losses on a particular day will not exceed the indicated VaR or that such losses will not occur more than one time in 100 trading days. VaR does not predict the magnitude of losses which, should they occur, may be significantly greater than the VaR amount.
Stress Test
We estimate the market risk of our fixed income portfolio using a risk analysis model provided by a leading external vendor. For corporate bonds, this stress test is configured to calculate the change in value of each fixed income security in the portfolio over one day in five scenarios each of which represents a parallel shift of the U.S. Treasury yield curve. The scenarios are shifts of +/−100 and +/−200 basis points. For U.S. government securities, the stress test is configured to calculate the change in value of each fixed income security in the portfolio over one day in three scenarios each of which represents a parallel shift of the U.S. Treasury yield curve. The scenarios are shifts of +/−50 basis points.
VaR and Stress Test Measures
At December 31,
At December 31,
Average
High
Market Risk Category
2025
2024
2025
2025
(in millions)
Trading (1)
Equities and Currencies (2)
$
10
$
8
$
9
$
10
Trading Total
$
10
$
8
$
9
$
10
Non-Trading (1)
Equities and Currencies
$
35
$
28
$
31
$
36
Fixed Income, Other (3)
0
2
1
1
Non-Trading Total
$
35
$
30
$
32
$
37
(1) The product categories displayed in the table as “Trading” reflect activities undertaken in the Company's market making activities.
The “Non-trading” category reflects investment activities, customer facilitation activities, and foreign currency exposures of the Company's non-market making subsidiaries (i.e., its brokerage subsidiaries and information technology subsidiaries). This category also includes corporate activities in foreign exchange designed to achieve the Company's currency diversification strategy.
The average and high VaR amounts are based on the four quarter ending calculations performed in 2025.
(2) Equities and currencies held for market making purposes are combined because these products are part of an integrated, hedged market making portfolio, on which the risk is measured using VaR.
(3) The Non-Trading – Fixed Income, Other category contains primarily U.S. government securities held in segregated safekeeping accounts for the exclusive benefit of our brokerage customers, on which the risk is measured using a stress test analysis.
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ITEM 8. F INANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 )
61
Consolidated Statements of Financial Condition
63
Consolidated Statements of Comprehensive Income
64
Consolidated Statements of Cash Flows
65
Consolidated Statements of Change in Equity
66
Notes to Consolidated Financial Statements
67
Note 1. Organization of Business
67
Note 2. Significant Accounting Policies
67
Note 3. Trading Activities and Related Risks
76
Note 4. Equity and Earnings per Share
77
Note 5. Comprehensive Income
80
Note 6. Financial Assets and Financial Liabilities
81
Note 7. Collateralized Transactions
88
Note 8. Revenue from Contracts with Customers
89
Note 9. Other Income (Loss)
91
Note 10. Employee Incentive Plans
91
Note 11. Income Taxes
93
Note 12. Leases
96
Note 13. Property, Equipment and Intangible Assets
97
Note 14. Commitments, Contingencies and Guarantees
97
Note 15. Segment Reporting and Geographic Information
99
Note 16. Regulatory Requirements
100
Note 17. Related Party Transactions
101
Note 18. Parent Company Condensed Financial Statements
102
Note 19. Subsequent Events
103
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REPORT OF IN DEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
Interactive Brokers Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial condition of Interactive Brokers Group, Inc. and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of comprehensive income, cash flows and changes in equity, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2026 , expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Income taxes — Refer to Notes 2 and 11 to the financial statements
Critical Audit Matter Description
The Company’s income tax expense, deferred tax assets and liabilities are based on enacted tax laws and reflects management's best assessment of estimated future taxes to be paid. The Company is subject to income taxes in both the U.S. and numerous foreign jurisdictions. The Company has deferred tax assets and liabilities that arose from temporary differences between tax and financial statement recognition of underlying assets and liabilities. Determining income tax expense and deferred tax assets and liabilities requires significant management judgments and estimates.
We identified management’s calculation of income tax expense and deferred tax assets and liabilities as a critical audit matter because of the significant judgments and estimates management makes to determine these amounts. Performing audit procedures to evaluate the reasonableness of management’s interpretation of tax law in a multitude of jurisdictions across the Company’s global operations, and its estimate of the associated income tax expense, and deferred tax assets and liabilities required a high degree of auditor judgment and increased effort, including the need to involve our income tax specialists.
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How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to income tax expense and deferred tax assets and liabilities included, among others, the following which were performed with the assistance of our income tax specialists:
• Testing the effectiveness of controls over income tax balances and deferred tax assets and liabilities.
• Evaluating the Company’s income tax expense calculation, including testing the appropriateness of income tax rates applied and of income allocations among the taxing jurisdictions, and the mathematical accuracy of the calculation.
• Evaluating the Company’s analyses supporting its conclusions as to the recognition and measurement of deferred tax assets and liabilities.
• Evaluating management’s assessment of the Company’s ability to utilize the net deferred tax assets in future years.
/s/ Deloitte & Touche LLP
New York, New York
February 27, 2026
We have served as the Company's auditor since 1990.
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Interactive Brokers Group, Inc. and Subsidiaries
Consolidated St atements of Financial Condition
December 31,
(in millions, except share amounts)
2025
2024
Assets
Cash and cash equivalents
$
4,963
$
3,633
Cash - segregated for regulatory purposes
50,332
36,600
Securities - segregated for regulatory purposes
26,521
27,846
Securities borrowed
11,589
5,369
Securities purchased under agreements to resell
7,117
6,575
Financial instruments owned, at fair value
Financial instruments owned
4,873
1,847
Financial instruments owned and pledged as collateral
109
77
Total financial instruments owned, at fair value
4,982
1,924
Receivables
Customers, less allowance for credit losses of $ 24 and $ 25 as of December 31, 2025 and December 31, 2024
90,475
64,432
Brokers, dealers, and clearing organizations
5,161
2,196
Interest
530
446
Total receivables
96,166
67,074
Other assets
1,570
1,121
Total assets
$
203,240
$
150,142
Liabilities and equity
Short-term borrowings
$
19
$
14
Securities loaned
24,751
16,248
Financial instruments sold, but not yet purchased, at fair value
740
293
Payables
Customers
154,336
115,343
Brokers, dealers, and clearing organizations
1,566
476
Affiliate
217
195
Accounts payable, accrued expenses and other liabilities
818
665
Interest
321
311
Total payables
157,258
116,990
Total liabilities
182,768
133,545
Commitments, contingencies and guarantees (see Note 14)
Equity
Stockholders’ equity
Common stock, $ 0.01 par value per share
Class A – Authorized - 4,000,000,000 shares, Issued - 446,130,605 and 436,244,236 shares, Outstanding – 445,413,716 and 435,618,452 shares as of December 31, 2025 and December 31, 2024
1
1
Class B – Authorized - 1,000 shares, Issued and Outstanding – 400 shares as of December 31, 2025 and December 31, 2024
—
—
Additional paid-in capital
1,957
1,816
Retained earnings
3,365
2,515
Accumulated other comprehensive income, net of income taxes of $ 0 as of both December 31, 2025 and December 31, 2024
56
( 45
)
Treasury stock, at cost, 716,889 and 625,784 shares as of December 31, 2025 and December 31, 2024
( 16
)
( 7
)
Total stockholders’ equity
5,363
4,280
Noncontrolling interests
15,109
12,317
Total equity
20,472
16,597
Total liabilities and equity
$
203,240
$
150,142
See accompanying notes to the consolidated financial statements.
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Interactive Brokers Group, Inc. and Subsidiaries
Consolidated Stat ements of Comprehensive Income
Year-Ended December 31,
(in millions, except share or per share amounts)
2025
2024
2023
Revenues
Commissions
$
2,149
$
1,697
$
1,360
Other fees and services
291
280
197
Other income (loss)
202
60
( 11 )
Total non-interest income
2,642
2,037
1,546
Interest income
7,782
7,339
6,230
Interest expense
( 4,219 )
( 4,191 )
( 3,436 )
Total net interest income
3,563
3,148
2,794
Total net revenues
6,205
5,185
4,340
Non-interest expenses
Execution, clearing and distribution fees
420
447
386
Employee compensation and benefits
626
574
527
Occupancy, depreciation and amortization
97
101
99
Communications
43
39
41
General and administrative
247
314
211
Customer bad debt
1
15
7
Total non-interest expenses
1,434
1,490
1,271
Income before income taxes
4,771
3,695
3,069
Income tax expense
414
288
257
Net income
4,357
3,407
2,812
Less net income attributable to noncontrolling interests
3,373
2,652
2,212
Net income available for common stockholders
$
984
$
755
$
600
Earnings per share
Basic
$
2.23
$
1.75
$
1.43
Diluted
$
2.22
$
1.73
$
1.42
Weighted average common shares outstanding
Basic
440,931,909
432,448,796
419,860,200
Diluted
443,859,546
436,011,752
423,387,508
Comprehensive income
Net income available for common stockholders
$
984
$
755
$
600
Other comprehensive income
Cumulative translation adjustment, before income taxes
101
( 53 )
30
Income taxes related to items of other comprehensive income
—
—
—
Other comprehensive income (loss), net of tax
101
( 53 )
30
Comprehensive income available for common stockholders
$
1,085
$
702
$
630
Comprehensive income attributable to noncontrolling interests
Net income attributable to noncontrolling interests
$
3,373
$
2,652
$
2,212
Other comprehensive income - cumulative translation adjustment
290
( 154 )
92
Comprehensive income attributable to noncontrolling interests
$
3,663
$
2,498
$
2,304
See accompanying notes to the consolidated financial statements.
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Interactive Brokers Group, Inc. and Subsidiaries
Consolidated St atements of Cash Flows
Year Ended December 31,
(in millions)
2025
2024
2023
Cash flows from operating activities
Net income
$
4,357
$
3,407
$
2,812
Adjustments to reconcile net income to net cash from operating activities
Deferred income taxes
41
( 2 )
30
Depreciation and amortization
61
67
65
Amortization of right-of-use assets
32
29
29
Employee stock plan compensation
118
112
100
Unrealized (gains) losses on other investments, net
( 76 )
( 12 )
( 14 )
(Gain) loss on remeasurement of Tax Receivable Agreement liability
3
10
( 7 )
Customer bad debt expense
1
15
7
Shares distributed to customers under IBKR Promotions
34
23
12
Non-cash capital contribution
3
—
—
Change in operating assets and liabilities
Securities - segregated for regulatory purposes
1,325
7,540
( 3,605 )
Securities borrowed
( 6,220 )
466
( 1,086 )
Securities purchased under agreements to resell
( 542 )
( 1,071 )
525
Financial instruments owned, at fair value
( 3,053 )
( 434 )
( 1,033 )
Receivables from customers
( 26,045 )
( 19,975 )
( 5,719 )
Other receivables
( 3,049 )
( 624 )
1,792
Other assets
( 348 )
( 203 )
( 103 )
Securities loaned
8,503
4,901
2,407
Financial instruments sold, but not yet purchased, at fair value
447
100
47
Payable to customers
38,993
14,331
7,817
Other payables
1,226
44
468
Net cash provided by operating activities
15,811
8,724
4,544
Cash flows from investing activities
Purchases of other investments
( 105 )
( 40 )
( 26 )
Distributions received and proceeds from sales of other investments
1
45
23
Purchase of property, equipment and intangible assets
( 67 )
( 49 )
( 49 )
Net cash used in investing activities
( 171 )
( 44 )
( 52 )
Cash flows from financing activities
Short-term borrowings, net
5
( 3 )
( 1 )
Dividends paid to stockholders
( 134 )
( 92 )
( 42 )
Distributions to noncontrolling interests
( 836 )
( 715 )
( 556 )
Repurchases of common stock for employee tax withholdings
( 84 )
( 54 )
( 34 )
Proceeds from the sale of treasury stock
95
56
34
Payments made under the Tax Receivable Agreement
( 15 )
( 25 )
( 25 )
Net cash used in financing activities
( 969 )
( 833 )
( 624 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash
391
( 207 )
122
Net increase in cash, cash equivalents and restricted cash
15,062
7,640
3,990
Cash, cash equivalents and restricted cash at beginning of period
40,233
32,593
28,603
Cash, cash equivalents and restricted cash at end of period
$
55,295
$
40,233
$
32,593
Cash, cash equivalents and restricted cash
Cash and cash equivalents
4,963
3,633
3,753
Cash segregated for regulatory purposes
50,332
36,600
28,840
Cash, cash equivalents and restricted cash at end of period
$
55,295
$
40,233
$
32,593
Supplemental disclosures of cash flow information
Cash paid for interest
$
4,209
$
4,190
$
3,317
Cash paid for taxes, net
$
316
$
279
$
228
Cash paid for amounts included in lease liabilities
$
42
$
39
$
35
Non-cash financing activities
Issuance of common stock in exchange of member interests in IBG LLC
$
254
$
39
$
229
Redemption of member interests from IBG Holdings LLC
$
( 254 )
$
( 39 )
$
( 229 )
Adjustments to additional paid-in capital for changes in proportionate ownership in IBG LLC
$
48
$
41
$
33
Adjustments to noncontrolling interests for changes in proportionate ownership in IBG LLC
$
( 48 )
$
( 41 )
$
( 33 )
Non-cash distributions to noncontrolling interests
$
( 69 )
$
—
$
—
Advertising expenses paid by noncontrolling interests
$
( 3 )
$
—
$
—
See accompanying notes to the consolidated financial statements .
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Interactive Brokers Group, Inc. and Subsidiaries
Consolidated Statem ents of Changes in Equity
Three Years Ended December 31, 2025, 2024, and 2023
Class A Common Stock
Accumulated
Additional
Other
Total
Non-
Issued
Par
Paid-In
Treasury
Retained
Comprehensive
Stockholders'
controlling
Total
(in millions, except share amounts)
Shares
Value
Capital
Stock
Earnings
Income
Equity
Interests
Equity
Balance, December 31, 2022
412,228,592
$
1
$
1,581
$
( 6 )
$
1,294
$
( 22 )
$
2,848
$
8,767
$
11,615
Issuance of common stock in follow-on offering
10,530,992
81
81
( 81 )
—
Common stock distributed pursuant to stock incentive plans
5,556,128
—
—
Issuance of common stock - IBKR Promotion
400,000
2
( 8 )
( 6 )
6
—
Net distribution of common stock - IBKR Promotion
11
11
1
12
Compensation for stock grants vesting in the future
25
25
75
100
Deferred tax benefit retained - follow-on offering
4
4
4
Repurchases of common stock for employee tax withholdings under stock incentive plans
( 34 )
( 34 )
( 34 )
Sales of treasury stock
34
34
34
Dividends paid to stockholders - $ 0.025 per share
( 42 )
( 42 )
( 42 )
Distributions from IBG LLC to noncontrolling interests
—
( 556 )
( 556 )
Adjustments for changes in proportionate ownership in IBG LLC
33
33
( 33 )
—
Comprehensive income
600
30
630
2,304
2,934
Balance, December 31, 2023
428,715,712
$
1
$
1,726
$
( 3 )
$
1,852
$
8
$
3,584
$
10,483
$
14,067
Issuance of common stock in follow-on offering
1,332,000
12
12
( 12 )
—
Common stock distributed pursuant to stock incentive plans
5,396,524
—
—
Issuance of common stock - IBKR Promotion
800,000
6
( 23 )
( 17 )
17
—
Net distribution of common stock - IBKR Promotion
1
19
20
2
22
Compensation for stock grants vesting in the future
28
28
84
112
Deferred tax benefit retained - follow-on offering
1
1
1
Repurchases of common stock for employee tax withholdings under stock incentive plans
( 54 )
( 54 )
( 54 )
Sales of treasury stock
1
54
55
1
56
Dividends paid to stockholders 1
( 92 )
( 92 )
( 92 )
Distributions from IBG LLC to noncontrolling interests
—
( 715 )
( 715 )
Adjustments for changes in proportionate ownership in IBG LLC
41
41
( 41 )
—
Comprehensive income
755
( 53 )
702
2,498
3,200
Balance, December 31, 2024
436,244,236
$
1
$
1,816
$
( 7 )
$
2,515
$
( 45 )
$
4,280
$
12,317
$
16,597
Issuance of common stock in follow-on offering
3,836,000
42
42
( 42 )
—
Common stock distributed pursuant to stock incentive plans
5,450,369
—
—
Issuance of common stock - IBKR Promotion
600,000
9
( 33 )
( 24 )
24
—
Net distribution of common stock - IBKR Promotion
1
24
25
3
28
Compensation for stock grants vesting in the future
32
32
86
118
Deferred tax benefit retained - follow-on offering
6
6
6
Repurchases of common stock for employee tax withholdings under stock incentive plans
( 84 )
( 84 )
( 84 )
Sales of treasury stock
3
84
87
8
95
Dividends paid to stockholders 2
( 134 )
( 134 )
( 134 )
Distributions from IBG LLC to noncontrolling interests
—
( 905 )
( 905 )
Adjustments for changes in proportionate ownership in IBG LLC
48
48
( 48 )
—
Contributions to IBG LLC by noncontrolling interests with no change in proportionate ownership 3
3
3
Comprehensive income
984
101
1,085
3,663
4,748
Balance, December 31, 2025
446,130,605
$
1
$
1,957
$
( 16 )
$
3,365
$
56
$
5,363
$
15,109
$
20,472
(1) In April of 2024, the Company increased the quarterly dividend from $ 0.025 per share to $ 0.0625 per share.
(2) In April of 2025, the Company increased the quarterly dividend from $ 0.0625 per share to $ 0.08 per share.
(3) See Note 17 for further information.
See accompanying notes to the consolidated financial statements.
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Table of Contents
Interactive Brokers Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. Or g anization of Business
Interactive Brokers Group, Inc. (“IBG, Inc.”) is a Delaware holding company whose primary asset is its ownership of approximately 26.3 % of the membership interests of IBG LLC, which, in turn, owns operating subsidiaries (collectively, “IBG LLC”). IBG, Inc. together with IBG LLC and its consolidated subsidiaries (collectively, “the Company”), is an automated global broker specializing in executing and clearing trades in stocks, options, futures, foreign exchange instruments, bonds, mutual funds, exchange-traded funds (“ETFs”), precious metals, and forecast contracts on more than 170 electronic exchanges and market centers around the world and offering custody, prime brokerage, securities and margin lending services to customers. In addition, the Company’s customers can use its trading platform to trade certain cryptocurrencies through third-party cryptocurrency service providers that execute, clear and custody the cryptocurrencies. In the United States of America (“U.S.”), the Company conducts its business primarily from its headquarters in Greenwich, Connecticut and from Chicago, Illinois. Abroad, the Company conducts its business through offices located in Canada, the United Kingdom, Ireland, Switzerland, Hungary, Dubai, India, China (Hong Kong and Shanghai), Japan, Singapore, and Australia. As of December 31, 2025, the Company had 3,182 employees worldwide.
IBG LLC is a Connecticut limited liability company that conducts its business through its significant operating subsidiaries: Interactive Brokers LLC (“IB LLC”); IBKR Securities Services LLC (“IBKRSS”); Interactive Brokers Canada Inc. (“IBC”); Interactive Brokers (U.K.) Limited (“IBUK”); Interactive Brokers Ireland Limited (“IBIE”); IBKR Financial Services AG (“IBKRFS”); Interactive Brokers (India) Private Limited (“IBI”); Interactive Brokers Hong Kong Limited (“IBHK”); Interactive Brokers Securities Japan, Inc. (“IBSJ”); Interactive Brokers Singapore Private Limited (“IBSG”); and Interactive Brokers Australia Pty Limited (“IBA”).
Certain operating subsidiaries are members of various securities and commodities exchanges in North America, Europe and the Asia/Pacific region and are subject to regulatory capital and other requirements (see Note 16). IB LLC, IBKRSS, IBC, IBUK, IBIE, IBI, IBHK, IBSJ, IBSG and IBA carry securities accounts for customers or perform custodial functions relating to customer securities.
2. Signi ficant Accounting Policies
Basis of Presentation
These consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10-K.
These consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the periods presented.
On April 15, 2025, the Company announced its intention to effect a four -for-one forward split of its common stock in the form of a stock dividend. This was executed by the filing of an amendment to the Company’s Certificate of Incorporation, which was approved by the Company’s Board of Directors and the Company’s majority stockholder on April 14, 2025 and on April 22, 2025, respectively, that, among other things (i) increased the Company’s authorized shares of Class A common stock to 4,000,000,000 shares from 1,000,000,000 shares and (ii) increased the Company’s authorized shares of Class B Common Stock to 1,000 shares from 100 shares to accommodate the stock split. Each holder of record of common stock as of the close of market on June 16, 2025, received three additional shares of common stock. All prior period shares, per share amounts and stock incentive awards presented herein have been retroactively adjusted to reflect the stock split.
Principles of Consolidation, including Noncontrolling Interests
These consolidated financial statements include the accounts of IBG, Inc. and its majority and wholly-owned subsidiaries. As sole managing member of IBG LLC, IBG, Inc. exerts control over IBG LLC’s operations. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” the Company consolidates IBG LLC’s financial statements and records the interests in IBG LLC that it does not own as noncontrolling interests.
The Company’s policy is to consolidate all other entities in which it owns more than 50% unless it does not have control and any potential variable interest entities (“VIEs”) where the Company is deemed to be the primary beneficiary when it has the power to make the decisions that most significantly affect the economic performance of the VIE and has the obligation to absorb significant losses or the right to receive benefits that could potentially be significant to the VIE. As of December 31, 2025 , the Company was not the primary beneficiary of any VIEs. All inter-company balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these consolidated financial statements and accompanying notes. These estimates
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and assumptions are based on judgment and the best available information at the time. Therefore, actual results could differ materially from those estimates. Such estimates include the allowance for credit losses, valuation of certain investments, compensation accruals, current and deferred income taxes, and contingency reserves.
Fair Value
Substantially all of the Company’s assets and liabilities, including financial instruments, are carried at fair value based on observable market prices and are marked to market, or are assets and liabilities which are short-term in nature and are carried at amounts that approximate fair value.
The Company applies the fair value hierarchy in accordance with FASB ASC Topic 820, “Fair Value Measurement” (“ASC Topic 820”), to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are:
Level 1
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2
Quoted prices for similar assets in an active market, quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.
Level 3
Prices or valuations that require inputs that are both significant to fair value measurement and unobservable.
Financial instruments owned, at fair value, and financial instruments sold, but not yet purchased, at fair value are generally classified as Level 1 of the fair value hierarchy. The Company’s Level 1 financial instruments, which are valued using quoted market prices as published by exchanges and clearing houses or otherwise broadly distributed in active markets, include active listed stocks, options, warrants and U.S. and foreign government securities. The Company does not adjust quoted prices for financial instruments classified as Level 1 of the fair value hierarchy, even if the Company may hold a large position whereby a purchase or sale could reasonably be expected to impact quoted prices.
Currency forward contracts are valued using broadly distributed bank and broker prices and are classified as Level 2 of the fair value hierarchy since inputs to their valuation can generally be corroborated by market data. Precious metals are valued using an internal model, which incorporates the exchange-traded futures price of the underlying instruments, benchmark interest rates and estimated storage costs, and are classified as Level 2 of the fair value hierarchy since the significant inputs to their valuation are observable. Other securities that are not traded in active markets are also classified as Level 2 of the fair value hierarchy. Level 3 financial instruments are comprised of securities that have been delisted or otherwise are no longer tradable in active markets and have been valued by the Company based on internal estimates.
Earnings per Share
Earnings per share (“EPS”) is computed in accordance with FASB ASC Topic 260, “Earnings per Share.” Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s stock-based compensation plans, with no adjustments to net income available for common stockholders for potentially dilutive common shares.
Current Expected Credit Losses
The Company follows FASB ASC Topic 326 – “Financial Instruments – Credit Losses” (“ASC Topic 326”) which applies to financial assets measured at amortized cost, held-to-maturity debt securities and off-balance sheet credit exposures. For on-balance sheet assets, an allowance must be recognized at the origination or purchase of in-scope assets and represents the expected credit losses over the contractual life of those assets. Expected credit losses on off-balance sheet credit exposures must be estimated over the contractual period the Company is exposed to credit risk as a result of a present obligation to extend credit. The impact to the current period is not material since the Company’s in-scope assets are primarily subject to collateral maintenance provisions for which the Company elected to apply the practical expedient of reporting the difference between the fair value of the collateral and the amortized cost for the in-scope assets as the allowance for current expected credit losses.
Cash and Cash Equivalents
Cash and cash equivalents consist of deposits with banks and all highly liquid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes or to meet margin requirements at clearing houses and clearing banks.
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Notes to Consolidated Financial Statements
Cash and Securities - Segregated for Regulatory Purposes
As a result of customer activities, certain operating subsidiaries are obligated by rules mandated by their primary regulators to segregate or set aside cash or qualified securities to satisfy such regulations, which have been promulgated to protect customer assets. Restricted cash represents cash and cash equivalents that are subject to withdrawal or usage restrictions. Cash segregated for regulatory purposes meets the definition of restricted cash and is reported in “Cash, cash equivalents and restricted cash” in the consolidated statements of cash flows.
The table below presents the composition of the Company’s securities segregated for regulatory purposes for the periods indicated.
December 31,
2025
2024
(in millions)
U.S. and foreign government securities
$
6,031
$
6,460
Municipal securities
66
33
Securities purchased under agreements to resell 1
17,981
21,353
Securities borrowed 1
2,443
-
$
26,521
$
27,846
(1) These balances are collateralized by U.S. government securities.
Securities Borrowed and Securities Loaned
Securities borrowed and securities loaned are recorded at the amount of the cash collateral advanced or received. Securities borrowed transactions require the Company to provide counterparties with collateral, which may be in the form of cash, letters of credit or other securities. With respect to securities loaned, the Company receives collateral, which may be in the form of cash or other securities in an amount generally in excess of the fair value of the securities loaned. The Company monitors the market value of securities borrowed and loaned daily, with additional collateral obtained or refunded as permitted contractually. The Company’s policy is to net, in the consolidated statements of financial condition, securities borrowed and securities loaned contracts entered into with the same counterparty that meet the offsetting requirements prescribed in FASB ASC Topic 210-20, “Balance Sheet – Offsetting” (“ASC Topic 210-20”).
Securities lending fees received and paid by the Company are reported in “Interest income” and “Interest expense,” respectively, in the consolidated statements of comprehensive income.
Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase
Securities purchased under agreements to resell and securities sold under agreements to repurchase, which are reported as collateralized financing transactions, are recorded at contract value, which approximates fair value. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company’s policy is to net, in the consolidated statements of financial condition, securities purchased under agreements to resell transactions and securities sold under agreements to repurchase transactions entered into with the same counterparty that meet the offsetting requirements prescribed in ASC Topic 210-20.
Financial Instruments Owned and Financial Instruments Sold, But Not Yet Purchased, at Fair Value
Financial instrument transactions are accounted for on a trade date basis. Financial instruments owned and financial instruments sold, but not yet purchased are stated at fair value based upon quoted market prices, or if not available, are valued by the Company based on internal estimates (see Fair Value above). The Company’s financial instruments pledged to counterparties where the counterparty has the right, by contract or custom, to sell or repledge the financial instruments are reported in “Financial instruments owned and pledged as collateral” in the consolidated statements of financial condition.
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Customer Receivables and Payables
Receivables from and payables to customers include amounts due on cash and margin transactions, including futures contracts transacted on behalf of customers. Securities owned by customers, including those that collateralize margin loans or other similar transactions, are not reported in the consolidated statements of financial condition. Amounts receivable from customers that are determined by management to be uncollectible are reported in “Customer bad debt” in the consolidated statements of comprehensive income (see Current Expected Credit Losses above).
Receivables from and Payables to Brokers, Dealers and Clearing Organizations
Receivables from and payables to brokers, dealers and clearing organizations include net receivables and payables from unsettled trades, including amounts related to futures and options on futures contracts executed on behalf of customers, amounts receivable for securities not delivered by the Company to the purchaser by the settlement date (“fails to deliver”) and cash deposits. Payables to brokers, dealers and clearing organizations also include amounts payable for securities not received by the Company from a seller by the settlement date (“fails to receive”).
Investments
The Company makes certain strategic investments related to its business which are reported in “Other assets” in the consolidated statements of financial condition. The Company accounts for these investments as follows:
• Under the equity method of accounting as required under FASB ASC Topic 323, “Investments - Equity Method and Joint Ventures.” These investments, including where the investee is a limited partnership or limited liability company, are recorded at the fair value amount of the Company’s initial investment and are adjusted each period for the Company’s share of the investee’s income or loss. Contributions paid to and distributions received from equity method investees are recorded as additions or reductions, respectively, to the respective investment balance.
• At fair value, if the investment in equity securities has a readily determinable fair value.
• At adjusted cost, if the investment does not have a readily determinable fair value. Adjusted cost represents the historical cost, less impairment if any. If the Company identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer, the Company measures the equity security at fair value as of the date that the observable transaction occurred in accordance with FASB ASC Topic 321, “Investments in Equity Securities.”
A judgmental aspect of accounting for investments is evaluating whether a decline in the value of an investment has occurred. The evaluation of impairment is dependent on specific quantitative and qualitative factors and circumstances surrounding an investment, including recurring operating losses, credit defaults and subsequent rounds of financing. Most of the Company’s equity investments do not have readily determinable market values. All investments are reviewed for changes in circumstances or occurrence of events that suggest the Company’s investment may not be recoverable. An impairment loss, if any, is recognized in the period the determination is made.
The table below presents the composition of the Company’s investments for the periods indicated.
December 31,
2025
2024
(in millions)
Equity method investments 1
$
159
$
172
Investments in equity securities at adjusted cost 2
39
29
Investments in equity securities at fair value 2
88
32
Investments in exchange memberships and equity securities of certain exchanges 2
2
2
$
288
$
235
(1) The Company’s share of income or losses is reported in “Other income” in the consolidated statements of comprehensive income.
(2) These investments do not qualify for the equity method of accounting. Dividends received are reported in “Other income” in the consolidated statements of comprehensive income.
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Property, Equipment and Intangible Assets
Property, equipment and intangible assets, which are reported in “Other assets” in the consolidated statements of financial condition, consist of leasehold improvements, computer equipment, software developed for the Company’s internal use, office furniture and equipment.
Property and equipment are recorded at historical cost, less accumulated depreciation and amortization. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation and amortization are computed using the straight-line method. Equipment is depreciated over the estimated useful lives of the assets, while leasehold improvements are amortized over the lesser of the estimated economic useful life of the asset or the term of the lease. Computer equipment is depreciated over three to five years and office furniture and equipment are depreciated over five to seven years . Intangible assets with a finite life are amortized on a straight-line basis over their estimated useful lives of three to five years , and tested for recoverability whenever events indicate that the carrying amounts may not be recoverable. Qualifying costs for internally developed software are capitalized and amortized over the expected useful life of the developed software, not to exceed three years . Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the consolidated statements of financial condition and any resulting gain or loss is reported in “Other income” in the consolidated statements of comprehensive income. Fully depreciated (or amortized) assets are retired periodically throughout the year.
Leases
The Company reviews all relevant contracts to determine if the contract contains a lease at its inception date. A contract contains a lease if the contract conveys to the company the right to control the use of an underlying asset for a period of time in exchange for consideration. If the Company determines that a contract contains a lease, it recognizes, in the consolidated statements of financial condition, a lease liability and a corresponding right-of-use asset on the commencement date of the lease. The lease liability is initially measured at the present value of the future lease payments over the lease term using the rate implicit in the lease or, if not readily determinable, the Company’s secured incremental borrowing rate. An operating lease right-of-use asset is initially measured at the value of the lease liability minus any lease incentives and initial direct costs incurred plus any prepaid rent.
The Company’s leases are classified as operating leases and consist of real estate leases for office space, data centers and other facilities. Each lease liability is measured using the Company’s secured incremental borrowing rate, which is based on an internally developed yield curve using interest rates of third parties’ corporate debt issued with a similar risk profile as the Company and a duration similar to the lease term. The Company’s leases have remaining terms of less than one year to thirteen years , some of which include options to extend the lease term, and some of which include options to terminate the lease upon notice. The Company considers these options when determining the lease term used to calculate the right-of-use asset and the lease liability when the Company is reasonably certain it will exercise such option.
The Company’s operating leases contain both lease components and non-lease components. Non-lease components are distinct elements of a contract that are not related to securing the use of the underlying assets, such as common area maintenance and other management costs. The Company elected to measure the lease liability by combining the lease and non-lease components as a single lease component. As such, the Company includes the fixed payments and any payments that depend on a rate or index that relate to the lease and non-lease components in the measurement of the lease liability. Some of the non-lease components are variable and not based on an index or rate, and as a result, are not included in the measurement of the right-of-use asset or lease liability.
Operating lease expense is recognized on a straight-line basis over the lease term and is reported in “Occupancy, depreciation and amortization” in the consolidated statements of comprehensive income.
Comprehensive Income and Foreign Currency Translation
The Company’s operating results are reported in the consolidated statements of comprehensive income pursuant to FASB ASC Topic 220, “Comprehensive Income.”
Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The Company’s OCI is comprised of gains and losses resulting from translating foreign currency financial statements of non-U.S. subsidiaries, net of related income taxes, where applicable. In general, the practice and intention of the Company is to reinvest the earnings of its non-U.S. subsidiaries in those operations; therefore, tax is usually not accrued on OCI.
The Company’s non-U.S. domiciled subsidiaries have a functional currency that is other than the U.S. dollar. Such subsidiaries’ assets and liabilities are translated into U.S. dollars at period-end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary’s functional currency to the U.S. dollar (as described above) are reported net of tax, where applicable, in “Accumulated other comprehensive income” in the consolidated statements of financial condition.
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Revenue Recognition
Commissions
Commissions earned for executing and/or clearing transactions are accrued on a trade date basis and are reported in “Commissions” in the consolidated statements of comprehensive income. Commissions also include payments for order flow income received from IBKR Lite SM liquidity providers. The Company’s IBKR Lite SM offering provides commission-free trades on U.S. exchange-listed stocks and ETFs and generates no commission revenues from customers on these trades. See Note 8 for further information on revenue from contracts with customers.
Other Fees and Services
The Company earns fee income on services provided to customers, which includes market data fees, risk exposure fees, payments for order flow from exchange-mandated programs, Insured Bank Deposit Sweep Program fees (“FDIC sweep fees”), and other fees and services charged to customers, which are reported in "Other fees and services" in the consolidated statements of comprehensive income. Fee income is recognized either daily or monthly. See Note 8 for further information on revenue from contracts with customers.
Interest Income and Expense
The Company earns interest income and incurs interest expense primarily in connection with its brokerage customer business and its securities lending activities, which are recorded on an accrual basis and are reported in “Interest income” and “Interest expense,” respectively, in the consolidated statements of comprehensive income.
Principal Transactions
Principal transactions include gains and losses as a result of changes in the fair value of financial instruments owned, at fair value, financial instruments sold, but not yet purchased, at fair value, and other investments measured at fair value (i.e., unrealized gains and losses) and realized gains and losses related to the Company’s principal transactions. These include net gains and losses on stocks, options, U.S. and foreign government securities, municipal securities, futures, foreign exchange, precious metals and other derivative instruments, which are reported on a net basis in “Other income” in the consolidated statements of comprehensive income. Dividends are integral to the valuation of stocks. Accordingly, dividend income and expense attributable to financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value, are reported on a net basis in “Other income” in the consolidated statements of comprehensive income.
Foreign Currency Gains and Losses
Foreign currency balances are assets and liabilities in currencies other than the Company’s functional currency. At every reporting date, the Company revalues its foreign currency balances to its functional currency at the spot exchange rate and records the associated foreign currency gains and losses. These foreign currency gains and losses are reported in the consolidated statements of comprehensive income, as follows: (a) foreign currency gains and losses related to the Company’s currency diversification strategy are reported in “Other income”; (b) foreign currency gains and losses arising from currency swap transactions are reported in “Interest income” or “Interest expense”; and (c) all other foreign currency gains and losses are reported in “Other income.”
Rebates
Rebates consist of volume discounts, credits, or payments received from exchanges or other market centers related to the placement and/or removal of liquidity from the marketplace and are recorded on an accrual basis. Rebates are reported net within “Execution, clearing and distribution fees” in the consolidated statements of comprehensive income. Rebates received for trades executed on behalf of customers that elect tiered pricing are passed, in whole or part, to these customers, and such pass-through amounts are reported net within “Commissions” in the consolidated statements of comprehensive income.
Stock-Based Compensation
The Company follows FASB ASC Topic 718, “Compensation - Stock Compensation” (“ASC Topic 718”), to account for its stock-based compensation plans. ASC Topic 718 requires all share-based payments to employees to be recognized in the consolidated financial statements using a fair value-based method. Grants, which are denominated in U.S. dollars, are communicated to employees in the year of the grant, thereby establishing the fair value of each grant. The fair value of awards granted to employees are generally expensed as follows: 50 % in the year of grant in recognition of the plans’ post-employment provisions (as described below) and the remaining 50 % over the related vesting period utilizing the “graded vesting” method permitted under ASC Topic 718. In the case of “retirement eligible” employees (those employees older than 59), 100 % of awards are expensed when granted.
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Notes to Consolidated Financial Statements
Awards granted under stock-based compensation plans are subject to the plans’ post-employment provisions in the event an employee ceases employment with the Company. The plans provide that employees who discontinue employment with the Company without cause and continue to meet the terms of the plans’ post-employment provisions will be eligible to earn 50 % of previously granted but not yet earned awards, unless the employee is over the age of 59, in which case the employee would be eligible to receive 100 % of previously granted but not yet earned awards.
Income Taxes
The Company accounts for income taxes in accordance with FASB ASC Topic 740, “Income Taxes” (“ASC Topic 740”) . The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits are based on enacted tax laws (see Note 11) and reflect management’s best assessment of estimated future taxes to be paid. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Determining income tax expense requires significant judgment and estimates.
Deferred income tax assets and liabilities arise from temporary differences between the tax and financial statement recognition of underlying assets and liabilities. In evaluating the ability to recover deferred tax assets within the jurisdictions from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations. In projecting future taxable income, historical results are adjusted for changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax-planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, three years of cumulative operating income (loss) are considered. Deferred income taxes have not been provided for U.S. tax liabilities or for additional foreign taxes on the unremitted earnings of foreign subsidiaries that have been indefinitely reinvested.
The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company’s global operations. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. A number of jurisdictions, including the European Union countries, have adopted the Pillar Two Framework established by the Organization for Economic Cooperation and Development (“OECD”), which generally imposes a minimum effective tax rate of 15% in each such jurisdiction. The Pillar Two Framework is highly complex and continues to undergo significant changes. The Company is continuing to evaluate the potential impact of the Pillar Two Framework and similar legislation, but based on current guidance, the Company believes that its results of operations, financial condition and cash flows will not be materially impacted by such Pillar Two Framework.
The Company records tax liabilities in accordance with ASC Topic 740 and adjusts these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in payments that are different from the current estimates of these tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information becomes available.
The Company recognizes a tax benefit from an uncertain tax position only when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. A tax position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement.
The Company recognizes interest related to income tax matters as interest income or interest expense and penalties related to income tax matters as “Income tax expense” in the consolidated statements of comprehensive income.
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Notes to Consolidated Financial Statements
Standards Adopted During 2025
Standard
Summary of guidance
Effect on financial statements
Income Taxes (Topic 740)
Issued December 2023
• Requires public companies to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.
• Requires companies to disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid.
• Requires companies to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign.
• Effective for annual periods beginning after December 15, 2024
• The Company adopted these requirements as of December 31, 2025, and included the required disclosures in the notes to the consolidated financial statements - see Note 11 - Income Taxes.
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FASB Standards issued but not adopted as of December 31, 2025
Standard
Summary of guidance
Effect on financial statements
Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures
(Subtopic 220-40)
Issued November 2024
• Requires companies to disclose the amounts of employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption.
• Requires companies to include certain amounts already required to be disclosed under current U.S. GAAP in the same disclosure as the other disaggregation requirements.
• Disclose the total amount of selling expenses and the company's definition of selling expenses
• Requires companies to disclose a qualitative description of amounts remaining in relevant expense captions that are not separately disaggregated.
• Effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.
• The Company is currently assessing the impact to its consolidated financial statements.
Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses for Accounts Receivable and Contract Assets
Issued July 2025
• Provides all companies with a practical expedient when estimating expected credit losses on current accounts receivable and/or current contract assets.
• In developing reasonable and supportable
forecasts as part of estimating expected credit
losses, all companies may elect a practical
expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset.
• Effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual periods.
• The Company is currently assessing the impact to its consolidated financial statements.
Intangibles - Goodwill and Other - Internal-Use Software - Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40)
Issued September 2025
• Requires companies to start capitalizing software costs when management has authorized and committed to funding the project and it is probable that the project will be completed, and the software will be used to perform the function intended.
• Requires companies to determine whether there is significant uncertainty associated with
development activities that would prevent it from reaching the probable-to-complete recognition threshold.
• Effective for annual reporting periods beginning after December 15, 2027, including interim reporting periods within those annual periods.
• The Company is currently assessing the impact to its consolidated financial statements.
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Notes to Consolidated Financial Statements
3. Trading Ac tivities and Related Risks
Trading activities expose the Company to market and credit risks. These risks are managed in accordance with established risk management policies and procedures. To accomplish this, management has established a risk management process that includes:
• a regular review of the risk management process by executive management as part of its oversight role;