Interactive Brokers Group, Inc. · NASDAQ:IBKR
Interactive Brokers — IPO Roadshow (April 2008)
29 slides from Interactive Brokers's IPO roadshow presentation, Apr 29, 2008
Slide 1: 2008 Investor Presentation: How to build a global trading platform?
2008 Investor Presentation How to build a global trading platform? 99,000 professional traders from 145 countries executing more than 950,000 trades a day on 70 exchanges and market centers, in 25 countries, in 14 currencies is a good place to start when you have a long way to go.
Slide 2: Disclaimer
1 Disclaimer This presentation is not a prospectus and is not an offer to sell securities. A registration statement relating to the common stock of Interactive Brokers Group, Inc., has been filed with the Securities and Exchange Commission, but has not yet become effective. The common stock may not
Slide 3: Thomas Peterffy and CME Group advertisement
“Never settle for an ordinary vechile” THOMAS PETERFFY Founder, Interactive Brokers Group, L.L.C. A pioneer in the options and electronic trading market like Thomas Peterffy knows the importance of providing his clients with exceptional financial vehicles for managing risk. As one of the world’s lar
Slide 4: 2008 Follow On Offering
3 Ticker/Exchange IBKR/NASDAQ Global Select Market Shares Offered 50,000,000 class A shares Expected Pricing Week of May 5, 2008 Minimum Bid Price $33.50 per share Placement Agents WR Hambrecht + Co, Fox-Pitt Kelton, Cochran Caronia Waller, Sandler O’Neill + Partners 2008 Follow On Offering
Slide 5: Company Overview
>; Interactive Brokers @ mteecnancoyinenntcne Company Overview
Slide 6: Automated, global Market Maker and Broker specializing in equities and derivatives
We are an automated, global Market Maker and Broker specializing in equities and derivatives We positioned ourselves at the cross section of 4 broad historical trends: Globalization – integrating the worlds markets Adoption of technology – automation Spreading equity culture – growing investor class
Slide 7: Company history timeline from 1977
1977 – T. Peterffy buys a seat on the American Stock Exchange (AMEX). First to use computer generated fair values for options trading on the floor 1993 – In the USA our integrated market making system communicates with hand-held computers on exchange floors via radio waves Automated markets in: Swit
Slide 8: Our Strategies
®; Interactive Brokers Qu cenenemnne Our Strategies
Slide 9: Our Strategies
Our Strategies Accelerating adoption of electronic trading plays to our strengths Explosive volume growth across global derivatives exchanges Maintain and increase our market share Be the global broker for professional traders wherever they are and whatever they want to trade Use our market making t
Slide 10: Our Competitors
Our Competitors Market Making: Large Broker Dealers: Goldman Sachs, Citibank, UBS, Morgan Stanley, Merrill Lynch They have taken some big hits, they are disoriented – we continue to focus on building our platform Niche Players: Citadel, LaBranche, Group One, Wolverine, Peak6 Brokerage: Prime Brokers
Slide 11: Our Competitive Strengths
114 97 346 113 127 365 121 152 290 145 215 569 178 313 762 201 336 932 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 in Millions 2002 2003 2004 2005 2006 2007 Fixed Costs Variable Costs Profit Our Competitive Strengths Automated proprietary platform – Automation – An overwhelming competitive ad
Slide 12: Our Competitive Strengths, continued
Our Competitive Strengths, continued Experienced, technology oriented management team, with longevity and significant economic interest Complementary business lines – Market Making and Brokerage; extensive knowledge base and technological synergies Established franchise – deeply embedded in the exch
Slide 13: Evolution of Market Making
Evolution of Market Making Short Term - dependencies: Opening up economies of developing countries to private ownership and foreign competition Establishment of electronic exchanges, updating technologies, liberalization of exchange rules Exchange fees, classes of participants, priority rules, excha
Slide 14: Timber Hill: Market Making
Timber Hill: Market Making 13
Slide 15: Timber Hill Global Reach
Timber Hill Global Reach Leading market maker in exchange listed equity options globally Market makers hold preferential rights and obligations at exchanges in return for providing liquidity Unprecedented growth in options volume in both high and low volatility periods 14
Slide 16: Timber Hill Non-Directional Market Making
Timber Hill Non-Directional Market Making Market maker, not an investor in securities or the broad market Trading volumes drive profit generation; not the direction of the market Long gamma position protects against a severe market dislocation and decreased trading volumes As illustrated to the left
Slide 17: Timber Hill Risk Management
Timber Hill Risk Management Entire portfolio is evaluated several times a second and continuously rebalanced throughout the trading day Execute many small trades at tiny but favorable differential Global footprint allows risk management across multiple markets 395,000 trades per day average in 2007
Slide 18: Timber Hill Liquidity Management
Timber Hill Liquidity Management Ability to control assets and liabilities is important to managing liquidity In order to prevent the accumulation of excessive portfolio positions, Timber Hill uses the following tools, among others, to help avoid the over-extension of its capital base: Interest rate
Slide 19: Interactive Brokers: Electronic Brokerage
Interactive Brokers: Electronic Brokerage 18
Slide 20: Universal Worldwide Trading Access
Universal Worldwide Trading Access One Universal Account - provides a single point of entry to all products and markets Access to 60+ exchanges worldwide Seamless trading across 12 currencies Broad Products and Services Suite Premier Trading Technology Professional interface Modular product offering
Slide 21: Customer Trading Tools
Customer Trading Tools PROFESSIONAL TRADER INTERFACE: SINGLE, MULTI-PRODUCT SCREEN WITH REAL-TIME STREAMING QUOTES AND QUICK CLICK ORDER ENTRY AUTO RECOVERY: RE-ROUTES U.S. OPTIONS ORDERS IN CASE OF EXCHANGE MALFUNCTION, WITH IB UNDERTAKING THE RISK OF DOUBLE EXECUTIONS REAL TIME REPORTS: EXECUTION
Slide 22: Brokerage Risk Management
Brokerage Risk Management Real time risk management across all product classes and currencies Approval / Rejection of all new orders Immediate auto liquidation if equity falls below requirement No Margin Calls are needed - Customers are expected to actively manage their positions “Smart” liquidation
Slide 23: Brokerage Growth
Brokerage Growth 22 Cleared Customer Accounts & Assets US$ (billions) Accounts (000s) Cleared Customer Trades & Commissions 0 40 80 120 160 200 240 2002 2003 2004 2005 2006 2007 -20 20 60 100 140 180 220 260 Cleared DARTs Cleared Commissions DARTs (000s) Rev. US$ (millions) Cleared Customers (execut
Slide 24: Financial Summary
®; Interactive Brokers Qu cenenemnne Financial Summary 28
Slide 25: Summary Financial Results
(In millions) 2002 2003 2004 2005 2006 2007 1Q08 Revenues: Trading gains $472 $488 $423 $640 $804 $888 $379 Commissions and execution fees $64 $93 $112 $132 $174 $261 $88 Net interest income $13 $13 $22 $103 $188 $227 $31 Other income $8 $11 $7 $54 $86 $92 $31 Total net revenues $557 $605 $564 $929
Slide 26: Profitability: Low Cost Structure
25 Profitability Low Cost Structure 0 200 400 600 800 1,000 1,200 1,400 1,600 2002 2003 2004 2005 2006 2007 Fixed Costs Variable Costs Net Revenues US$ (millions) Through heavy reliance on automation the company is able to trade on over 70 market centers and self-clear most of its stocks, options an
Slide 27: Net Revenue Diversification
2002 Revenues Market-Making 85% Commissions 11% Net Interest 2% Total net revenues = $557 million 2007 Revenues Market-Making 60% Commissions 18% Net Interest 15% Total net revenues = $1,468 million Other 7% Market Making: Over the past 3 years, 25% to 41% of trading revenues were generated from int
Slide 28: Balance Sheet: Low Financial Leverage
0.0 1.0 2.0 3.0 4.0 2002 2003 2004 2005 2006 2007 Equity Debt US$ (billions) $34 billion total assets, 99% liquid as of 12/31/07 T-Bills Securities owned, marked to market daily Stocks borrowed (100% collateralized) Receivables from customers, collateralized by marketable securities Long term borrow
Slide 29: Pre-Offering Corporate Structure
28 Pre-Offering Corporate Structure This offering - Up to 12.5% additional interest sold to the public
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