IBKR - Interactive Brokers

[benhacker]

Yeah, I always love when I run into funds who prime through JPM / GS but keep their personal money at IB.

Future business...

[kab60]

From Barrons: Thomas Peterffy, Interactive Brokers’ chairman and founder, says he has been working on the firm’s flagship platform, Trader Workstation, or TWS, for more than a quarter of a century. “We spend more and more on development every year, which gives the platform an increasing amount of functionality,” Peterffy says. “As we add features, it’s difficult for the average client to figure out what TWS can do, and how to get to the various features.” He recently realized that though the platform is his creation, even he isn’t certain how to navigate to some features.

http://www.barrons.com/articles/alexa-get-me-an-apple-quote-1486794340

[sae85400]

But their ads are getting better!

[rb]

Checkmate!

[kab60]

First Schwab lowered rates, now Fidelity undercuts. What do you guys think of this dynamic from IBKR's perspective?

[Sunrider]

They have a cost advantage and more functionality - long term, I'd bet on the lowest cost provider to last the longest.

Just my 0.02.
C.

First Schwab lowered rates, now Fidelity undercuts. What do you guys think of this dynamic from IBKR's perspective?

[Travis Wiedower]

IB doesn't compete a ton with those guys so I doubt it matters much. With that being said, if the retail brokers cut their own margins (and thus profitability) that can only help IB. They already have the lowest prices and highest margins. If a small RIA or something is seriously considering IB vs Schwab, a $1 or $2 per trade decrease at Schwab isn't going to change anything.

[roark33]

I can't understand why everyone thinks price cuts is good for IB.  If your main advantage starts to disappear, that's is not good for your competitive position.  The "customer service" edge at the other brokerages is huuuge, but not enough to justify the large discrepancy in pricing, however, if that discrepancy narrows, fewer people will select IB.

[KJP]

IB doesn't compete a ton with those guys so I doubt it matters much. With that being said, if the retail brokers cut their own margins (and thus profitability) that can only help IB. They already have the lowest prices and highest margins. If a small RIA or something is seriously considering IB vs Schwab, a $1 or $2 per trade decrease at Schwab isn't going to change anything.

I also don't understand how other brokers cutting their margins is good for IB.  If the other brokers are going to maintain their customer service and simply accept structurally lower margins, how does that help IB?  Maybe it doesn't make a real difference to IB at the end of the day because they aren't really targeting (or making most of their profits on) retail investors.  But I don't see how it helps them.

[Travis Wiedower]

I guess I'm more thinking long-term that if their (non-direct) competitors are lowering their margins those  business models are now worse off. Thus, those retail brokers will have less money to invest in themselves and a long, drawn out price war could be the demise of some of the retail brokers.

Me saying retail brokers cutting their prices "can only help IB" was probably a stretch. You're absolutely right that equity pricing (don't forget their massive advantage in options) is a major advantage of theirs and closing that gap isn't a good thing, at least on the surface. But IB makes the vast majority of their money off active, professional traders who (should) care a lot more about pricing than customer service. Again, I think the type of person who would have gone to IB, but who will now go to a retail broker because of the $2/trade decrease is an absolute fringe case and one that we'll never even notice in IB's financials.