Interactive Brokers Group, Inc. · NASDAQ:IBKR
Interactive Brokers — IPO Roadshow (April 2007)
28 slides from Interactive Brokers's IPO roadshow presentation, Apr 13, 2007
Slide 1: April 2007 Investor Presentation
April 2007 Investor Presentation
Slide 2: Disclaimer
1 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 be sold nor
Slide 3: The Offering
2 Ticker/Exchange IBKR/NASDAQ Shares Offered 20,000,000 class A shares Expected Pricing Week of April 30, 2007 Filing Range $23 - $27 per share Pro Forma Market Cap $10 billion (at midpoint) Placement Agents WR Hambrecht + Co, HSBC Securities, Fox-Pitt Kelton, Sandler O’Neill + Partners, E*TRADE Sec
Slide 4: Company Overview
'), Interactive Brokers . | ‘he Professions Gateway tothe Works Markets Company Overview
Slide 5: Company Overview
We are an automated, global Market Maker and Broker specializing in equities and derivatives Optimizing the allocation of resources on a global network of electronic platforms is a major trend of our times Electronic exchanges, market makers, brokers and customers form the network Over 60 exchanges
Slide 6: Company history timeline
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 7: Our Competitors
Our Competitors Market Making Large Broker Dealers: Goldman Sachs, Citibank, UBS, Morgan Stanley, Merrill Lynch Niche Players: Citadel, LaBranche, Group One, Wolverine, Peak6 Brokerage Prime Brokers Online Brokers, illustration: 6 Interactive (as of and for the year ended 12/31/06) Brokers Schwab op
Slide 8: Our Competitive Strengths
Our Competitive Strengths Automated proprietary platform – Automation – An overwhelming competitive advantage Execute on 65 electronic exchanges and ECNs, in 23 different countries, in 13 different currencies Transact 16% of the world’s and 21% of the US listed equity based options volume Executed,
Slide 9: 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 10: 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 11: Evolution of Market Making
Evolution of Market Making Short Term – depends on rapidly evolving market micro structure: Exchange fees and fee classes Priority and preference rules (including penny pricing) SEC clarification and enforcement of best execution requirements The frequency of major announcements that leak to certain
Slide 12: Timber Hill: Market Making
Timber Hill: Market Making 11
Slide 13: 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 12
Slide 14: 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 15: 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 263,000 trades per day average in 2006
Slide 16: 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 17: Interactive Brokers: Electronic Brokerage
Interactive Brokers: Electronic Brokerage 16
Slide 18: Universal Worldwide Trading Access
Universal Worldwide Trading Access One Universal Account – provides a single point of entry to all products and markets Access to 50+ exchanges worldwide Seamless trading across 10 currencies Broad Products and Services Suite Premier Trading Technology Professional interface Modular product offering
Slide 19: 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 20: 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 21: Brokerage Growth
Brokerage Growth Cleared Customers (execution and clearance): Customer accounts grew on average 44% per year and customer equity grew 97% per year, over the past 6 years 2006: 80 thousand customer accounts and $6.1 billion in customer equity Non-Cleared Customers (execution only): IB executes for at
Slide 22: Financial Summary
'), Interactive Brokers . | ‘he Professions Gateway tothe Works Markets Financial Summary n
Slide 23: Summary Financial Results
Summary Financial Results We remained profitable through varied market conditions 22 (In millions) 2001 2002 2003 2004 2005 2006 Revenues: Trading gains $596 $472 $488 $423 $640 $804 Commissions and execution fees 44 64 93 112 132 174 Interest revenues 66 55 59 80 273 672 Other income 11 8 11 7 54 8
Slide 24: Profitability and Low Cost Structure
Through heavy reliance on automation the company is able to trade on over 60 market centers and self-clear most of its stocks, options and futures worldwide with 532 employees at year end 2006 As a result, only 22% of 2006 expenses were due to compensation 64% of IBG expenses were variable in 2006 a
Slide 25: Net Revenue Diversification
2001 Revenues Market-Making 89% Commissions 7% Net Interest 2% Total net revenues = $667 million 2006 Revenues Market-Making 64% Commissions 14% Net Interest 15% Total net revenues = $1,252 million Other 7% Market Making: Over the past 3 years, 25% to 40% of trading revenues were generated from inte
Slide 26: Balance Sheet
$32 billion balance sheet, 99% liquid T-Bills Securities owned, marked to market daily Stocks borrowed (100% collateralized) Receivables from customers, collateralized by marketable securities Long term borrowing consists of a bank revolver and private notes issued to qualified customers (most valua
Slide 27: Post-Offering Corporate Structure
26 Post-Offering Corporate Structure
Slide 28: Interactive Brokers corporate structure
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