10-Q – 2025-11-05 – ibkr-20250930x10q.htm

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 quarter, increased $165 million, or 21%, compared to the prior-year quarter, to $967 million. The increase in net interest income was driven by stronger securities lending activity and higher average customer margin loans and customer credit balances, partially offset by lower benchmark interest rates.

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Net interest income on customer balances, for the current quarter, increased $48 million compared to the prior-year quarter, driven by increases of $34.9 billion, $20.1 billion and $16.2 billion in average customer credit balances, segregated cash and securities, and margin loans, respectively. Yields on all three components decreased as rates have declined worldwide. See the “Business Environment” section above in this Item 2 for a further discussion about the change in interest rates in the current quarter.

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.

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.

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.

In the current quarter, average securities borrowed balances increased 45%, to $9.0 billion, and average securities loaned balances increased 45%, to $20.7 billion, compared to the prior-year quarter. 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 quarter, net interest earned from securities lending transactions increased $117 million, or 731%, compared to the prior-year quarter, driven by a higher level of short sale activity and a significant rise in the notional value of the securities we lent. However, as noted above, the rise in benchmark interest rates from near zero in 2022 has 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.

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 $314 million in the current quarter, compared to $156 million in the prior-year quarter. 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.

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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.

Three Months Ended September 30,

2025

2024

(in millions)

Average interest-earning assets

Segregated cash and securities

$
81,906 

$
61,813 

Customer margin loans

70,805 

54,647 

Securities borrowed

9,037 

6,241 

Other interest-earning assets

16,037 

11,678 

FDIC sweeps 1,3

5,962 

4,330 

$
183,747 

$
138,709 

Average interest-bearing liabilities

Customer credit balances

$
141,763 

$
106,865 

Securities loaned

20,691 

14,258 

Other interest-bearing liabilities

361 

1 

$
162,815 

$
121,124 

Net interest income

Segregated cash and securities, net

$
786 

$
763 

Customer margin loans 2

821 

787 

Securities borrowed and loaned, net

133 

16 

Customer credit balances, net 2

(945)

(936)

Other net interest income 1,3

204 

196 

Net interest income 3

$
999 

$
826 

Net interest margin ("NIM")

2.16%

2.37%

Annualized Yields

Segregated cash and securities

3.81%

4.91%

Customer margin loans

4.60%

5.73%

Customer credit balances

2.64%

3.48%

______________________________
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 Company's condensed consolidated statements of financial condition. Income derived from program deposits is reported in other net interest income in the table above.

2. 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).

3. 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 condensed consolidated statements of comprehensive income. For the three months ended September 30, 2025 and 2024, $10 million and $7 million were reported in other fees and services, respectively; and $22 million and $17 million were reported in other income, respectively.

Non - Interest Expenses

Non-interest expenses, for the current quarter, decreased $113 million, or 25%, compared to the prior-year quarter, to $343 million, mainly due to a $91 million decrease in general and administrative expenses, a $24 million decrease in execution, clearing and distribution fees, and a $9 million decrease in customer bad debt expense; partially offset by an $11 million increase in employee compensation and benefits. As a percentage of total net revenues, non-interest expenses were 21% for the current quarter and 33% for the prior-year quarter.

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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 quarter, decreased $24 million, or 21%, compared to the prior-year quarter, to $92 million, mainly driven by a $17 million decrease in regulatory fees as the SEC Section 31 transaction fee rate was reduced to zero on May 14, 2025, and by greater capture of liquidity rebates from certain exchanges on higher customer trading volumes in stocks and options; partially offset by a new FINRA Consolidated Audit Trail (“CAT”) fee, which was initiated in the fourth quarter of 2024. 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 6% for the current quarter and 8% for the prior-year quarter.

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 quarter, increased $11 million, or 8%, compared to the prior-year quarter, to $156 million, associated with a combination of staffing increases and inflation. The average number of employees increased 5% to 3,109 for the current quarter, compared to 2,960 for the prior-year quarter. As we continue to grow, our focus on automation has allowed us to maintain a relatively small staff. As a percentage of total net revenues, employee compensation and benefits expenses were 9% for the current quarter and 11% for the prior-year quarter.

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 quarter, decreased $2 million, or 8%, compared to the prior-year quarter, to $24 million, mainly due to lower depreciation and amortization expense. As a percentage of total net revenues, occupancy, depreciation and amortization expenses were 1% for the current quarter and 2% for the prior-year quarter.

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 quarter, increased $2 million, or 22%, compared to the prior-year quarter, to $11 million. As a percentage of total net revenues, communications expenses were 1% for both the current quarter and the prior-year quarter.

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 quarter, decreased $91 million, or 59%, compared to the prior-year quarter, to $62 million, driven primarily by the non-recurrences of $88 million related to a legal settlement and of $12 million related to the consolidation of our European subsidiaries; partially offset by a $10 million increase in advertising expenses . As a percentage of total net revenues, general and administrative expenses were 4% for the current quarter and 11% for the prior-year quarter.

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 quarter, decreased $9 million, compared to the prior-year quarter, driven by a net recovery of $2 million in the current quarter and the non-recurrence of customer losses during short periods of extreme market volatility in the prior-year quarter.

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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 quarter , increased $51 million, or 68%, compared to the prior-year quarter, to $126 million, primarily due to (1) higher income before taxes at our operating subsidiaries outside the U.S. and a higher income tax rate in a foreign jurisdiction 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.; and (3) IBG, Inc.’s higher average ownership percentage of IBG LLC, which rose from 25.7% in the prior-year quarter to 26.2% in the current quarter.

The table below presents information about our income tax expense for the periods indicated.

Three Months Ended September 30,

2025

2024

(in millions, except %)

Consolidated

Consolidated income before income taxes
$
1,312

$
909

Exclude IBG, Inc. stand-alone (income) loss before income taxes

-

1

Add-back IBG LLC net gain (loss) on IBKR shares eliminated in consolidation 1

2

-

Operating subsidiaries income before income taxes
$
1,314

$
910

Operating subsidiaries

Income before income taxes
$
1,314

$
910

Income tax expense

62

35

Net income available to members
$
1,252

$
875

IBG, Inc.

Average ownership percentage in IBG LLC

26.2%

25.7%

Net income available to IBG, Inc. from operating subsidiaries
$
328

$
225

IBG, Inc. stand-alone income (loss) before income taxes

-

(1)

Elimination of IBG, Inc.'s portion of IBG LLC net (gain) loss on IBKR shares 1

(1)

-

Income before income taxes

327

224

Income tax expense

64

40

Net income available to common stockholders
$
263

$
184

Consolidated income tax expense

Income tax expense attributable to operating subsidiaries
$
62

$
35

Income tax expense attributable to IBG, Inc.

64

40

Consolidated income tax expense
$
126

$
75

______________________________
1. Represents the net gains or losses from the Company’s common stock (IBKR shares) held in treasury for distribution to eligible customers participating in one or more promotions.

Operating Results

Income before income taxes, for the current quarter, increased $403 million, or 44%, compared to the prior-year quarter, to $1,312 million. Pretax profit margin was 79% for the current quarter and 67% for the prior-year quarter.

Comparing our operating results for the current quarter to the prior-year quarter using non-GAAP financial measures, adjusted net revenues were $1,610 million, up 21%; adjusted income before income taxes was $1,267 million, up 45%; and adjusted pre-tax profit margin was 79% for the current quarter compared to 66% for the prior-year quarter. See the “Non-GAAP Financial Measures” section below in this Item 2 for additional details.

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Nine Months Ended September 30, 2025 (“current nine-month period”) compared to the Nine Months Ended September 30, 2024 (“prior-year nine-month period”)

Net Revenues

Total net revenues, for the current nine-month period, increased $764 million, or 20%, compared to the prior-year nine-month period, to $4,562 million. The increase in net revenues was due to higher commissions, net interest income, other income, and other fees and services.

Commissions

Commissions, for the current nine-month period, increased $347 million, or 28%, compared to the prior-year nine-month period, to $1,567 million, driven by higher customer trading volumes across all product types. Total customer options and futures contract and stock share volumes increased 25%, 9% and 49%, respectively. Total DARTs for the current nine-month period increased 44% to 3.6 million, compared to 2.5 million for the prior-year nine-month period. Average commission per commissionable order for cleared customers, for the current nine-month period, decreased 8% to $2.70, compared to $2.92 for the prior-year nine-month period, mainly due to greater capture of liquidity rebates passed through to customers.

Other Fees and Services

Other fees and services, for the current nine-month period, increased $7 million, or 4%, compared to the prior-year nine-month period, to $206 million, driven by a $7 million increase in FDIC sweep fees due to higher customer balances, a $6 million increase in market data fees due to higher number of customers, and a $2 million increase in payments for order flow from exchange-mandated programs driven by higher customer trading volumes; partially offset by a $10 million decrease in risk exposure fees as customers exhibited more cautious risk-taking behavior.

Other Income

Other income, for the current nine-month period, increased $154 million, or 405%, compared to the prior-year nine-month period, to $192 million. This increase was mainly due to (1) $85 million related to our investing activities, (2) the non-recurrence of a loss of $48 million on positions taken over as a 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; and (3) $16 million related to our currency diversification strategy, which gained $19 million in the current nine-month period compared to $3 million in the prior-year nine-month period.

Interest Income and Interest Expense

Net interest income (interest income less interest expense), for the current nine-month period, increased $256 million, or 11%, compared to the prior-year nine-month period, to $2,597 million. The increase in net interest income was driven by stronger securities lending activity and higher average customer margin loans and customer credit balances, partially offset by lower benchmark interest rates. In the current nine-month period, net interest income includes a $26 million one-time credit related to recovery of taxes withheld at source.

Net interest income on customer balances, for the current nine-month period, increased $115 million compared to the prior-year nine-month period, driven by increases of $27.2 billion, $14.9 billion and $14.1 billion in average customer credit balances, segregated cash and securities, and margin loans, respectively. Yields on all three components decreased as rates have declined worldwide. See the “Business Environment” section above in this Item 2 for a further discussion about the change in interest rates in the current nine-month period.

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.

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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.

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.

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.

In the current nine-month period, average securities borrowed balances increased 20%, to $7.0 billion, and average securities loaned balances increased 36%, to $18.0 billion, compared to the prior-year nine-month period. 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 nine-month period, net interest earned from securities lending transactions increased $137 million, or 204%, compared to the prior-year nine-month period, driven by a higher level of short sale activity and a significant rise in the notional value of the securities we lent. However, as noted above, the rise in benchmark interest rates from near zero in 2022 has 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.

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 $751 million in the current nine-month period, compared to $517 million in the prior-year nine-month period. 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.

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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.

Nine Months Ended September 30,

2025

2024

(in millions)

Average interest-earning assets

Segregated cash and securities

$
75,934 

$
61,000 

Customer margin loans

65,380 

51,240 

Securities borrowed

6,995 

5,836 

Other interest-earning assets

14,784 

10,949 

FDIC sweeps 1,4

5,329 

4,071 

$
168,422 

$
133,096 

Average interest-bearing liabilities

Customer credit balances

$
130,262 

$
103,028 

Securities loaned

18,007 

13,227 

Other interest-bearing liabilities

160 

1 

$
148,429 

$
116,256 

Net interest income

Segregated cash and securities, net 2

$
2,205 

$
2,267 

Customer margin loans 3

2,305 

2,220 

Securities borrowed and loaned, net

204 

67 

Customer credit balances, net 3

(2,619)

(2,711)

Other net interest income 1,4

559 

550 

Net interest income 4

$
2,654 

$
2,393 

Net interest margin ("NIM")

2.11%

2.40%

Annualized Yields

Segregated cash and securities

3.88%

4.96%

Customer margin loans

4.71%

5.79%

Customer credit balances

2.69%

3.51%

______________________________
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 Company's condensed 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 nine months ended September 30, 2025, excludes $26 million of interest income, recorded in the condensed 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 condensed consolidated statements of comprehensive income. For the nine months ended September 30, 2025 and 2024, $27 million and $20 million were reported in other fees and services, respectively; and $56 million and $32 million were reported in other income, respectively.

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Non - Interest Expenses

Non-interest expenses, for the current nine-month period, decreased $52 million, or 5%, compared to the prior-year nine-month period, to $1,091 million, mainly due to a $70 million decrease in general and administrative expenses, a $14 million decrease in customer bad debt expense, a $5 million decrease in occupancy, depreciation and amortization expense, and a $3 million decrease in execution, clearing and distribution fees; partially offset by a $37 million increase in employee compensation and benefits. As a percentage of total net revenues, non-interest expenses were 24% for the current nine-month period and 30% for the prior-year nine-month period.

Execution, Clearing and Distribution Fees

Execution, clearing and distribution fees, for the current nine-month period, decreased $3 million, or 1%, compared to the prior-year nine-month period, to $329 million, mainly driven by greater capture of liquidity rebates from certain exchanges due to higher trading volumes in stocks and options; mostly offset by higher clearing and regulatory fees due to higher trading volumes and also due to a new FINRA CAT fee, which was initiated in the fourth quarter of 2024. 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 nine-month period and 9% for the prior-year nine-month period .

Employee Compensation and Benefits

Employee compensation and benefits expenses, for the current nine-month period, increased $37 million, or 8%, compared to the prior-year nine-month period, to $473 million associated with a combination of staffing increases, inflation, and a $7 million 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 3,061 for the current nine-month period, compared to 2,951 for the prior-year nine-month period. As we continue to grow, our focus on automation has allowed us to maintain a relatively small staff. As a percentage of total net revenues, employee compensation and benefits expenses were 10% for the current nine-month period and 11% for the prior-year nine-month period.

Occupancy, Depreciation and Amortization

Occupancy, depreciation and amortization expenses, for the current nine-month period, decreased $5 million, or 6%, compared to the prior-year nine-month period, to $72 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 nine-month period and the prior-year nine-month period.

Communications

Communications expenses, for the current nine-month period increased $3 million, or 10%, compared to the prior-year nine-month period, to $32 million. As a percentage of total net revenues, communications expenses were 1% for both the current nine-month period and the prior-year nine-month period.

General and Administrative

General and administrative expenses, for the current nine-month period, decreased $70 million, or 27%, compared to the prior-year nine-month period, to $185 million, primarily due to the non-recurrences of $88 million related to a legal settlement and of $12 million related to the consolidation of our European subsidiaries; partially offset by a $27 million increase in advertising expenses. As a percentage of total net revenues, general and administrative expenses were 4% for the current nine-month period and 7% for the prior-year nine-month period.

Customer Bad Debt

Customer bad debt expense, for the current nine-month period, decreased $14 million, compared to the prior-year nine-month period, to less than $1 million, mainly driven by the non-recurrence of customer losses during short periods of extreme market volatility in the prior-year nine-month period.

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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 nine-month period , increased $98 million, or 45%, compared to the prior-year nine-month period, to $315 million, primarily due to (1) higher income before taxes at our operating subsidiaries outside the U.S. and a higher income tax rate in a foreign jurisdiction 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.; and (3) IBG, Inc.’s higher average ownership percentage of IBG LLC, which rose from 25.6% in the prior-year nine-month period to 26.0% in the current nine-month period.

The table below presents information about our income tax expense for the periods indicated.

Nine Months Ended September 30,

2025

2024

(in millions, except %)

Consolidated

Consolidated income before income taxes
$
3,471

$
2,655

Exclude IBG, Inc. stand-alone (income) loss before income taxes

-

2

Add-back IBG LLC net gain (loss) on IBKR shares eliminated in consolidation 1

14

4

Operating subsidiaries income before income taxes
$
3,485

$
2,661

Operating subsidiaries

Income before income taxes
$
3,485

$
2,661

Income tax expense

154

105

Net income available to members
$
3,331

$
2,556

IBG, Inc.

Average ownership percentage in IBG LLC

26.0%

25.6%

Net income available to IBG, Inc. from operating subsidiaries
$
865

$
652

IBG, Inc. stand-alone income (loss) before income taxes

-

(1)

Elimination of IBG, Inc.'s portion of IBG LLC net (gain) loss on IBKR shares 1

(4)

(1)

Income before income taxes

861

650

Income tax expense

161

112

Net income available to common stockholders
$
700

$
538

Consolidated income tax expense

Income tax expense attributable to operating subsidiaries
$
154

$
105

Income tax expense attributable to IBG, Inc.

161

112

Consolidated income tax expense
$
315

$
217

______________________________
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.

1
Operating Results

Income before income taxes, for the current nine-month period, increased $816 million, or 31%, compared to the prior-year nine-month period, to $3,471 million. Pretax profit margin was 76% for the current nine-month period and 70% for the prior-year nine-month period.

Comparing our operating results for the current nine-month period to the prior-year nine-month period using non-GAAP financial measures, adjusted net revenues were $4,486 million, up 17%; adjusted income before income taxes was $3,395 million, up 26%; and adjusted pre-tax profit margin was 76% for the current nine-month period compared to 70% for the prior-year nine-month period. See the “Non-GAAP Financial Measures” section below in this Item 2 for additional details.
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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 and our net mark-to-market gains (losses) on investments.

• We define adjusted income before income taxes as income before income taxes adjusted to remove the effect of our currency diversification strategy and our net mark-to-market gains (losses) on investments.

• 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 and our net mark-to-market gains (losses) on investments.

• 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 .

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.

Three Months Ended September 30,

Nine Months Ended September 30,

2025

2024

2025

2024

Adjusted net revenues (in millions)

Net revenues - GAAP

$
1,655

$
1,365

$
4,562

$
3,798

Non-GAAP adjustments

Currency diversification strategy, net

(4)

(25)

(19)

(3)

Mark-to-market on investments

(41)

(13)

(57)

38

Total non-GAAP adjustments

(45)

(38)

(76)

35

Adjusted net revenues

$
1,610

$
1,327

$
4,486

$
3,833

Adjusted income before income taxes (in millions)

Income before income taxes - GAAP

$
1,312

$
909

$
3,471

$
2,655

Non-GAAP adjustments

Currency diversification strategy, net

(4)

(25)

(19)

(3)

Mark-to-market on investments

(41)

(13)

(57)

38

Total non-GAAP adjustments

(45)

(38)

(76)

35

Adjusted income before income taxes

$
1,267

$
871

$
3,395

$
2,690

Adjusted pre-tax profit margin

79%

66%

76%

70%

Adjusted net income available for common stockholders (in millions)

Net income available for common stockholders - GAAP

$
263

$
184

$
700

$
538

Non-GAAP adjustments

Currency diversification strategy, net

(1)

(6)

(5)

(1)

Mark-to-market on investments

(11)

(3)

(15)

10

Income tax effect of above adjustments 1

3

2

5

(2)

Total non-GAAP adjustments

(9)

(8)

(15)

7

Adjusted net income available for common stockholders

$
253

$
176

$
684

$
545

Adjusted diluted EPS (in dollars, except share amounts)

Diluted EPS - GAAP

$
0.59

$
0.42

$
1.58

$
1.24

Non-GAAP adjustments

Currency diversification strategy, net

(0.00)

(0.01)

(0.01)

(0.00)

Mark-to-market on investments

(0.02)

(0.01)

(0.03)

0.02

Income tax effect of above adjustments 1

0.01

0.01

0.02

(0.00)

Total non-GAAP adjustments

(0.02)

(0.02)

(0.03)

0.02

Adjusted diluted EPS

$
0.57

$
0.40

$
1.55

$
1.25

Diluted weighted average common shares outstanding

446,528,983

438,145,440

442,507,940

435,096,780

Note: Amounts may not add due to rounding.
______________________________
1. The income tax effect is estimated using the statutory income tax rates applicable to the Company.

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Liquidity 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 September 30, 2025, total assets were $200.2 billion of which $198.7 billion, or 99.2%, 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 September 30, 2025, liability balances in connection with securities loaned and payables to customers were higher than their average monthly balances during the current quarter. Short-term borrowing balance was lower than its average monthly balance during the current quarter.

Cash and cash equivalents held by our non - U.S. operating subsidiaries as of September 30, 2025, were $2,073 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 September 30, 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. 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 22% to $19.5 billion as of September 30, 2025, from $16.0 billion as of September 30, 2024. This increase is attributable to total comprehensive income, partially offset by distributions and dividends paid during the last four quarters.

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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.

Nine Months Ended September 30,

2025

2024

(in millions)

Net cash provided by operating activities

$
14,202

$
6,886

Net cash used in investing activities

(112)

(62)

Net cash used in financing activities

(786)

(647)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

375

41

Increase in cash, cash equivalents, and restricted cash

$
13,679

$
6,218

Our cash, cash equivalents, and restricted cash (i.e., cash and cash equivalents that are subject to withdrawal or usage restrictions) increased by $13,679 million to $53.9 billion for the nine months ended September 30, 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 $14.2 billion in net cash from operating activities mainly driven by customer credit balances and securities loaned which increased $34.1 billion and $10.8 billion, respectively; partially offset by receivables from customers, securities segregated for regulatory purposes and securities borrowed, which increased by $13.2 billion, $10.8 billion, and $6.2 billion, respectively.

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 $112 million in our investing activities primarily for purchases of property, equipment, and intangible assets and other investments.

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 $786 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.

Nine months Ended September 30, 2024 : For a discussion of changes in cash flows for the nine months ended September 30, 2024 refer to our Quarterly Report on Form 10-Q filed with the SEC on November 7, 2024.

Regulatory Capital Requirements

As of September 30, 2025, all operating subsidiaries were in compliance with their respective regulatory capital requirements. For additional information regarding our regulatory capital requirements see Note 15 – ‘‘Regulatory Requirements’’ to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Capital Expenditures

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 $45  million and $34 million for the nine months ended September 30, 2025 and 2024, 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.

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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 September 30, 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 I, Item 3 of this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures about Market Risk.”

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 September 30, 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 condensed 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 condensed consolidated statements of financial condition.

Critical 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 unaudited condensed consolidated financial statements for a summary of our significant accounting policies in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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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.

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, on December 15, 2022, the EU formally adopted the EU’s Pillar Two Directive, effective January 1, 2024, which provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Cooperation and Development (“OECD”) Pillar Two Framework. A significant number of other countries have either already or are expected to implement similar legislation with varying effective dates. 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 unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on form 10-Q.

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ITEM 3. QUANTITATIVE 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 condensed 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 condensed consolidated statements of financial condition and condensed 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 0.46% as of September 30, 2025 compared to September 30, 2024. As of September 30, 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 condensed consolidated financial statements: (1) as a component of “Other income” in the condensed consolidated statements of comprehensive income and (2) as OCI in the condensed consolidated statements of financial condition and the condensed consolidated statements of comprehensive income. The full effect of the GLOBAL is captured in the condensed 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 9/30/2024

As of 9/30/2025

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

75.4%

$
12,060 

1.0000

0.720

75.0%

$
14,612 

-0.3%

EUR

0.09

1.1135

0.100

10.5%

1,679 

1.1734

0.106

11.0%

2,143 

0.5%

JPY

3.91

0.0070

0.027

2.8%

456 

0.0068

0.026

2.8%

537 

-0.1%

GBP

0.02

1.3376

0.027

2.8%

448 

1.3445

0.027

2.8%

546 

0.0%

CHF

0.02

1.1826

0.024

2.5%

396 

1.2556

0.025

2.6%

510 

0.1%

CNH

0.13

0.1427

0.019

1.9%

311 

0.1403

0.018

1.9%

370 

0.0%

INR

1.10

0.0119

0.013

1.4%

220 

0.0113

0.012

1.3%

251 

-0.1%

CAD

0.02

0.7394

0.011

1.2%

186 

0.7184

0.011

1.1%

219 

0.0%

AUD

0.02

0.6913

0.010

1.1%

174 

0.6613

0.010

1.0%

201 

-0.1%

HKD

0.04

0.1287

0.005

0.5%

75 

0.1285

0.004

0.5%

91 

0.0%

0.955 

100.0%

$
16,005 

0.960 

100.0%

$
19,480 

0.0%

Interest Rate Risk

We had no variable - rate debt outstanding as of September 30, 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 substantially 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 September 30, 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 $33 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

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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.

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 September 30, 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 $35 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 September 30, 2025, we had $77.6 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.

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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.

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.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective, in all material respects, to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. 

In addition, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the period covered by this report quarter that has materially affected, or is likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting related to our employees working remotely.

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PART II OTHER INFORMATION
ITEM 1 . LEGAL PROCEEDINGS

There have been no material changes to the legal proceedings disclosed under Part 1, Item 3 of our Annual Report on Form 10-K filed with the SEC on February 27, 2025, except as updated in Note 13 - “Commitments, Contingencies, and Guarantees” to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2025.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Part 1, Item 1A of our Annual Report on Form 10-K filed with the SEC on February 27, 2025.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of IBG LLC membership interests, held by Holdings, by the Company are governed by the Amended Exchange Agreement, which was filed on Exhibit 10.1 to the Quarterly Report on Form 10-Q for Quarterly Period Ended September 30, 2015 filed by the Company on November 9, 2015. At the time of the Company’s IPO in 2007, three hundred sixty (360) million shares, 1.440 billion shares on a post-split basis, of authorized common stock were reserved for future sales and redemptions.

On an annual basis, each holder of a membership interest may request that some or all of that holder’s interest be redeemed by Holdings. We expect Holdings to use the net proceeds it receives from such sales to redeem an identical number of Holdings membership interests from the requesting holders.

With the consent of Holdings and the Company (on its own behalf and acting as the sole managing member of IBG LLC), IBG LLC agreed in July 2025 to redeem certain membership interests from Holdings through the sale of common stock and the distribution of the proceeds of such sale to the beneficial owners of such membership interests.

On July 30, 2025, the Company filed a Prospectus Supplement on Form 424B5 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 interest in IBG LLC. The acquired shares were distributed in-kind to the members of Holdings who elected to redeem a portion of their Holdings membership interests.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None
I TEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

The following table discloses the adoption of Rule 10b5-1 trading plans for the sale of shares of our common stock by our directors and officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended) during the three months ended September 30, 2025, each of which is intended to satisfy the affirmative defense conditions of Rule 10b-51(c) under the Exchange Act.

Name

Title

Plan Adoption and/or Termination

Plan Adoption Date

Plan Expiration Date

Purchase or Sale

Aggregate Number of IBKR shares to be Sold

Thomas Peterffy

Chairman of the Board of Directors

Adoption

July 30, 2025

February 8, 2026 1

Sale

6,064,728 2

________________________
1. Or upon the earlier completion of all authorized transactions under the plan.

2. Shares held through Conyers Investments LLC, which is indirectly wholly owned by Thomas Peterffy. Mr. Peterffy is also a manager of Conyers Investments LLC with the unilateral power to vote or sell the shares.

Other than as disclosed above, no other director or officer adopted, modified or terminated a contract, instruction or written plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a “non-Rule 10b5-1 trading arrangement”, as defined in Item 408(c) of Regulation S-K.

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ITEM 6 . Exhibits

Exhibit
‎ Number

Description

3.1
Second Amended and Restated Certificate of Incorporation of Interactive Brokers Group, Inc. (filed as exhibit 3.1 to the Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 2025 filed by the Company on August 6, 2025) .**

3.2
Amended bylaws of Interactive Brokers Group, Inc. (filed as Exhibit 3.1 to the Form 8-K filed by the Company on February 24, 2016). **

4.1
Description of the Registrant’s Securities (filed as Exhibit 4.1 to the Annual Report on Form 10-K for the Year Ended December 31, 2024 filed by the Company on February 27, 2025). **

10.1
Amended and Restated Operating Agreement of IBG LLC (filed as Exhibit 10.1 to the Quarterly Report on Form 10 - Q for the Quarterly Period Ended March 31, 2007 filed by the Company on June 15, 2007). **

10.2
Form of Limited Liability Company Operating Agreement of IBG Holdings LLC (filed as Exhibit 10.5 to Amendment No. 1 to the Registration Statement on Form S - 1 filed by the Company on February 12, 2007). **

10.3
Exchange Agreement by and among Interactive Brokers Group, Inc., IBG Holdings LLC, IBG LLC and the Members of IBG LLC (filed as Exhibit 10.3 to the Quarterly Report on Form 10 - Q for the Quarterly Period Ended September 
 30, 2009 filed by the Company on November 11, 2009). **

10.4
Tax Receivable Agreement by and between Interactive Brokers Group, Inc. and IBG Holdings LLC (filed as Exhibit 10.3 to the Quarterly Report on Form 10 - Q for the Quarterly Period Ended March 31, 2007 filed by the Company on June 15, 2007). **

10.5
Interactive Brokers Group, Inc. 2007 Stock Incentive Plan (filed as exhibit 10.5 to the Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 2025 filed by the Company on August 6, 2025). **+

10.6
Interactive Brokers Group, Inc. Amendment to the Exchange Agreement (filed as Exhibit 10.1 to the Form 8 - K filed by the Company on June 6, 2012). **+

10.7
Second Amendment to Exchange Agreement by and among Interactive Brokers Group, Inc., IBG Holdings LLC, IBG (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the Quarterly Period Ended September 30, 2015 filed by the Company on November 9, 2015). **

10.8
First Amendment to Limited Liability Company Agreement of IBG Holdings LLC (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q for the Quarterly Period Ended September 30, 2015 filed by the Company on November 9, 2015). **

19.1
Insider Trading Policies and Procedures Description of the Registrant’s Securities (filed as Exhibit 19.1 to the Annual Report on Form 10-K for the Year Ended December 31, 2024 filed by the Company on February 27, 2025). **

31.1
Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.

31.2
Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.

32.1
Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.

32.2
Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.

101.INS
XBRL Instance Document*

101.SCH
XBRL Extension Schema*

101.CAL
XBRL Extension Calculation Linkbase*

101.DEF
XBRL Extension Definition Linkbase*

101.LAB
XBRL Extension Label Linkbase*

101.PRE
XBRL Extension Presentation Linkbase*

104
Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document.

**   Previously filed; incorporated herein by reference.

+     These exhibits relate to management contracts or compensatory plans or arrangements.

*     Attached as Exhibit 101 to this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025, are the following materials formatted in iXBRL (Inline eXtensible Business Reporting Language) (i) the Condensed Consolidated Statements of Financial Condition, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statement of Changes in Stockholders’ Equity and (v) Notes to the Condensed Consolidated Financial Statements tagged in detail levels 1 - 4.

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SIGNA TURES
Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INTERACTIVE BROKERS GROUP, INC.

/s/ Paul J. Brody

Name:
Paul J. Brody

Title:
Chief Financial Officer, Treasurer and Secretary

(Signing both in his capacity as a duly authorized officer and as principal financial officer of the registrant)

Date: November 5, 2025