Trading activity at Interactive Brokers LLC (NASDAQ:IBKR) lost momentum in July with volumes easing on a monthly comparison basis following strong gains in June. The broker, however, posted its third-best reading for Daily Average Revenue Trades (DARTs), a sign that trades continues to meaningfully accelerate with the pandemic volatility even thru the summer months.
During July 2020, the number of DARTs, a standard industry metric, were reported at 1.79 million transactions, a fall of -4 percent month-over-month from 1.86 million in June and a record 1.96 million in June. On a year-on-year basis, Interactive Brokers saw a brighter performance in its DARTs with July’s figure up 124 percent relative to nearly 800k transactions reported in the same month last year.
Interactive Brokers, whose two main divisions were online brokerage and market-making before it ceased the latter in 2018, has won more clients, with total July’s active accounts up to 913,000, or four percent higher from 876,000 accounts the previous month. The figure was higher by 40 percent year-over-year when compared to July 2019 (652,100 accounts).
Interactive Brokers had seemingly eased its recent restrictions on borrowed margins, which came amid fears over the impact of the spreading coronavirus on its traders’ bets. The company’s ending client margin loan balances were around $28.4 billion in July 2020. This figure is up 14 percent from $24.9 billion in June and was also higher by over seven percent than the prior year. That marks a return to pre- COVID-19 levels after which the company reduced clients’ exposure by a third when compared to February.
IB posts strong Q2 revenues despite oil losses
On average, in July 2020, Interactive Brokers charged clients commission fees of $2.78 per order relative to $2.83 in June. This figure includes exchange, clearing and regulatory fees, with the key products metrics coming out at $2.05 for stocks, $4.20 for equity options and $4.01 for futures orders.
Interactive Brokers said last month its second-quarter revenues rose seven percent year-over-year, to $523 million compared to $488 million in Q2 2019. The company had been forced to cover $104 million worth of its customers’ losses on April 20, the day when prices plunged below zero for the first time ever. The Greenwich, Connecticut-based broker reported earlier that it had suffered an aggregate provisionary loss of $88 million, but the figure swelled after IBKR made its final calculations for the second quarter.
Interactive said several customers had been caught on the wrong side of June plunge, having held long positions on cash-settled WTI futures at both CME and ICE Futures Europe. The negative settlement price meant customers incurred losses in excess of the equity in their accounts, forcing the broker to step in and pay the margin calls owed to clearing houses.
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