US automated forex broker Interactive Brokers (NASDAQ GS: IBKR) reported that its Q3 2016 client Daily Average Revenue Trades (DARTs) (for cleared and execution-only customers) dropped 11% in comparison to Q3 2015 to 609 000 per day. Cleared DARTs were 564 thousand, 9% lower than the same period last year.
At the same time, the electronic brokerage pretax profit margin for this quarter was 56%, down from 61% in the year-ago quarter. The segment income before taxes decreased 12% over the year and was $162 million. The net revenues of the electronic brokerage in the quarter that ended on September 30, 2016, dropped 4% to $288 million.
According to the Interactive Brokers’ statement, this was mainly due to lower commissions and execution fees (down 15% over the year) and mark-to-market losses on its U.S. government securities portfolio, partially offset by higher net interest income. The brokerage also notes that unlike Q3 2015, which saw unusually active trading, in this year’s third quarter trading was rather inactive.
In Q3 2016 the number of customer accounts rose 15% to 370 000 and customer equity increased 33% to $82.7 billion, compared to the same quarter of 2015.
The market making segment income before income taxes dropped 85% to $7 million, mainly due to lower trading volumes and decreases in volatility and in the actual-to-implied volatility ratio. The Q3 2016 pre-tax margin of Interactive Brokers from the segment dropped to 16%, from 51% in Q3 2015.
Obviously, the downward quarterly trend continues from the previous quarter of 2016, when Interactive Brokers reported a drop in DARTs and pre-tax income dropped from Q1 2016.
Connecticut-based Interactive Brokers is a broker and a market maker. It, together with its numerous subsidiaries, offers online automated trading of stocks, options, futures, forex, bonds, contracts for difference (CFDs) and funds to traders, investors and institutions in over 100 market across the globe. It has offices in the North America, Europe, Australia, and Asia. The group companies holds licenses by the relevant authorities in the US and the UK.