Documentation and Entity Inform
Documentation and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 06, 2020 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-33440 | |
Entity Registrant Name | INTERACTIVE BROKERS GROUP, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 30-0390693 | |
Entity Address, Address Line One | One Pickwick Plaza | |
Entity Address, City or Town | Greenwich | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06830 | |
City Area Code | 203 | |
Local Phone Number | 618-5800 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock, par value $.01 per share | |
Trading Symbol | IBKR | |
Security Exchange Name | NASDAQ | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --12-31 | |
Fiscal Period Focus | Q2 | |
Fiscal Year Focus | 2020 | |
Entity Central Index Key | 0001381197 | |
Amendment Flag | false | |
Common Class A [Member] | ||
Common Stock Shares Outstanding | 90,766,847 | |
Common Class B [Member] | ||
Common Stock Shares Outstanding | 100 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 3,292 | $ 2,882 |
Cash segregated for regulatory purposes | 12,789 | 9,400 |
Securities - segregated for regulatory purposes | 29,316 | 17,824 |
Securities borrowed | 3,995 | 3,916 |
Securities purchased under agreements to resell | 1,401 | 3,111 |
Financial instruments owned, at fair value: | ||
Financial instruments owned | 405 | 1,755 |
Financial instruments owned and pledged as collateral | 47 | 161 |
Total financial instruments owned, at fair value | 452 | 1,916 |
Receivables: | ||
Customers, less allowance for doubtful accounts of $17 and $86 as of September 30, 2020 and December 31, 2019 | 30,343 | 31,304 |
Receivables from brokers, dealers and clearing organizations | 2,575 | 685 |
Interest receivable | 69 | 158 |
Total receivables | 32,987 | 32,147 |
Other assets | 466 | 480 |
Total assets | 84,698 | 71,676 |
Liabilities and equity | ||
Short-term borrowings | 628 | 16 |
Securities loaned | 5,738 | 4,410 |
Securities sold under agreements to repurchase | 1,909 | |
Financial instruments sold, not yet purchased, at fair value | 187 | 457 |
Payables | ||
Payable to customers | 68,830 | 56,248 |
Payables to brokers, dealers and clearing organizations | 313 | 220 |
Affiliate | 129 | 152 |
Accounts payable, accrued expenses and other liabilities | 324 | 295 |
Interest Payable | 3 | 29 |
Total payables | 69,599 | 56,944 |
Total liabilities | 76,152 | 63,736 |
Commitments, contingencies and guarantees (see Note 13) | ||
Stockholders' equity | ||
Additional paid-in capital | 985 | 934 |
Retained earnings | 621 | 520 |
Accumulated other comprehensive income, net of income taxes of $0 and $0 as of September 30, 2020 and December 31, 2019 | 5 | |
Treasury stock, at cost, 132,632 and 138,930 shares as of September 30, 2020 and December 31, 2019 | (3) | (3) |
Total stockholders' equity | 1,609 | 1,452 |
Noncontrolling interests | 6,937 | 6,488 |
Total equity | 8,546 | 7,940 |
Total liabilities and stockholders' equity | 84,698 | 71,676 |
Common Class A [Member] | ||
Stockholders' equity | ||
Common stock, $0.01 par value per share | 1 | 1 |
Common Class B [Member] | ||
Stockholders' equity | ||
Common stock, $0.01 par value per share |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Allowance for credit losses | $ 17 | $ 86 |
Accumulated other comprehensive income tax | $ 0 | $ 0 |
Treasury stock shares | 132,632 | 138,930 |
Common Class A [Member] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 79,187,067 | 76,889,040 |
Common stock, shares outstanding | 79,054,435 | 76,750,110 |
Common Class B [Member] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Shares authorized | 100 | 100 |
Common stock, shares issued | 100 | 100 |
Common stock, shares outstanding | 100 | 100 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Commissions | $ 279 | $ 187 | $ 824 | $ 538 |
Other fees and services | 45 | 35 | 123 | 105 |
Other income (loss) | 29 | (47) | 25 | (2) |
Total non-interest income | 353 | 175 | 972 | 641 |
Interest income | 240 | 468 | 853 | 1,308 |
Interest expense | (45) | (177) | (206) | (512) |
Total net interest income | 195 | 291 | 647 | 796 |
Total net revenues | 548 | 466 | 1,619 | 1,437 |
Non-interest expenses: | ||||
Execution, clearing and distribution fees | 74 | 68 | 227 | 192 |
Employee compensation and benefits | 77 | 67 | 239 | 213 |
Occupancy, depreciation and amortization | 17 | 15 | 51 | 43 |
Communications | 6 | 7 | 19 | 19 |
General and administrative | 37 | 30 | 206 | 80 |
Customer bad debt | 3 | (2) | 13 | 45 |
Total non-interest expenses | 214 | 185 | 755 | 592 |
Income before income taxes | 334 | 281 | 864 | 845 |
Income tax expense | 32 | 20 | 65 | 50 |
Net income | 302 | 261 | 799 | 795 |
Less net income attributable to noncontrolling interests | 256 | 225 | 675 | 678 |
Net income available for common stockholders | $ 46 | $ 36 | $ 124 | $ 117 |
Earnings per share: | ||||
Basic | $ 0.59 | $ 0.46 | $ 1.60 | $ 1.54 |
Diluted | $ 0.58 | $ 0.45 | $ 1.58 | $ 1.52 |
Weighted average common shares outstanding: | ||||
Weighted Average Number of Shares Outstanding, Basic | 78,509,625 | 76,742,789 | 77,543,008 | 75,910,080 |
Weighted Average Number of Shares Outstanding, Diluted | 79,120,548 | 77,348,976 | 78,243,699 | 76,646,487 |
Comprehensive income: | ||||
Net income available for common stockholders | $ 46 | $ 36 | $ 124 | $ 117 |
Other comprehensive income: | ||||
Cumulative translation adjustment, before income taxes | 8 | (6) | 5 | (3) |
Other comprehensive income (loss), net of tax | 8 | (6) | 5 | (3) |
Comprehensive income available for common stockholders | 54 | 30 | 129 | 114 |
Comprehensive income attributable to noncontrolling interests: | ||||
Net income attributable to noncontrolling interests | 256 | 225 | 675 | 678 |
Other comprehensive income - cumulative translation adjustment | 37 | (22) | 24 | (11) |
Comprehensive income attributable to noncontrolling interests | $ 293 | $ 203 | $ 699 | $ 667 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 799 | $ 795 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Deferred income taxes | 12 | 17 |
Depreciation and amortization | 31 | 21 |
Amortization of right-of-use assets | 14 | 15 |
Employee stock plan compensation | 46 | 43 |
Unrealized (gain) loss on other investments, net | (8) | (22) |
Bad debt expense | 13 | 45 |
Impairment loss | 13 | 1 |
Change in operating assets and liabilities: | ||
Securities - segregated for regulatory purposes | (11,492) | (5,651) |
Securities borrowed | (79) | (679) |
Securities purchased under agreements to resell | 1,710 | (149) |
Financial instruments owned, at fair value | 1,456 | 250 |
Receivables from customers | 948 | 1,002 |
Other receivables | (1,801) | (153) |
Other assets | (4) | (148) |
Securities loaned | 1,328 | (82) |
Securities sold under agreements to repurchase | (1,909) | |
Financial instruments sold but not yet purchased, at fair value | (270) | 296 |
Payable to customers | 12,582 | 6,481 |
Other payables | 83 | 96 |
Net cash provided by operating activities | 3,472 | 2,178 |
Cash flows from investing activities: | ||
Purchases of other investments | (2) | (19) |
Distributions received and proceeds from sales of other investments | 5 | 4 |
Purchase of property, equipment and intangible assets | (31) | (62) |
Net cash used in investing activities | (28) | (77) |
Cash flows from financing activities: | ||
Short-term borrowings, net | 612 | (2) |
Dividends paid to stockholders | (23) | (23) |
Distributions from IBG LLC to noncontrolling interests | (247) | (303) |
Repurchases of common stock for employee tax withholding under stock incentive plans | (17) | (27) |
Proceeds from sales of treasury stock | 18 | 26 |
Payments made under the Tax Receivable Agreement | (17) | (29) |
Net cash provided by (used in) financing activities | 326 | (358) |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 29 | (14) |
Net increase in cash, cash equivalents, and restricted cash | 3,799 | 1,729 |
Cash, cash equivalents, and restricted cash at beginning of period | 12,282 | 10,100 |
Cash, cash equivalents, and restricted cash at end of period | 16,081 | 11,829 |
Cash, cash equivalents, and restricted cash | ||
Cash, cash equivalents, and restricted cash | 16,081 | 11,829 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 232 | 515 |
Cash paid for taxes, net | 43 | 41 |
Cash paid for amounts included in lease liabilities | 16 | 15 |
Non-cash financing activities: | ||
Issuance of common stock in exchange of member interests in IBG LLC | 52 | 1 |
Redemption of member interests from IBG Holdings LLC | (52) | (1) |
Adjustments to additional paid-in capital for changes in proportionate ownership in IBG LLC | 21 | 24 |
Adjustments to noncontrolling interests for changes in proportionate ownership in IBG LLC | $ (21) | $ (24) |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Millions | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income [Member] | Total Stockholders' Equity [Member] | Non-controlling Interests [Member] | Total |
Balance at Dec. 31, 2018 | $ 1 | $ 898 | $ (3) | $ 390 | $ (4) | $ 1,282 | $ 5,874 | $ 7,156 |
Balance (in shares) at Dec. 31, 2018 | 75,230,400 | |||||||
Common Stock distributed pursuant to stock incentive plans (in shares) | 905 | |||||||
Compensation for stock grants vesting in the future | 3 | 3 | 13 | 16 | ||||
Dividends paid to stockholders | (8) | (8) | (8) | |||||
Distributions from IBG LLC to noncontrolling interests | (60) | (60) | ||||||
Comprehensive income | 49 | (1) | 48 | 274 | 322 | |||
Balance at Mar. 31, 2019 | $ 1 | 901 | (3) | 431 | (5) | 1,325 | 6,101 | 7,426 |
Balance (in shares) at Mar. 31, 2019 | 75,231,305 | |||||||
Common Stock distributed pursuant to stock incentive plans (in shares) | 1,625,479 | |||||||
Compensation for stock grants vesting in the future | 2 | 2 | 12 | 14 | ||||
Repurchase of common stock for employee tax withholding under stock incentive plans | (27) | (27) | (27) | |||||
Sales of treasury stock | 27 | 27 | (1) | 26 | ||||
Dividends paid to stockholders | (7) | (7) | (7) | |||||
Distributions from IBG LLC to noncontrolling interests | (38) | (38) | ||||||
Adjustments for changes in proportionate ownership in IBG LLC | 24 | 24 | (24) | |||||
Comprehensive income | 32 | 4 | 36 | 190 | 226 | |||
Balance at Jun. 30, 2019 | $ 1 | 927 | (3) | 456 | (1) | 1,380 | 6,240 | 7,620 |
Balance (in shares) at Jun. 30, 2019 | 76,856,784 | |||||||
Issuance of common stock in follow-on offering, shares | 21,075 | |||||||
Common Stock distributed pursuant to stock incentive plans (in shares) | 441 | |||||||
Compensation for stock grants vesting in the future | 3 | 3 | 10 | 13 | ||||
Dividends paid to stockholders | (8) | (8) | (8) | |||||
Distributions from IBG LLC to noncontrolling interests | (205) | (205) | ||||||
Comprehensive income | 36 | (6) | 30 | 203 | 233 | |||
Balance at Sep. 30, 2019 | $ 1 | 930 | (3) | 484 | (7) | 1,405 | 6,248 | 7,653 |
Balance (in shares) at Sep. 30, 2019 | 76,878,300 | |||||||
Balance at Dec. 31, 2019 | $ 1 | 934 | (3) | 520 | 1,452 | 6,488 | 7,940 | |
Balance (in shares) at Dec. 31, 2019 | 76,889,040 | |||||||
Common Stock distributed pursuant to stock incentive plans (in shares) | 311 | |||||||
Compensation for stock grants vesting in the future | 3 | 3 | 13 | 16 | ||||
Dividends paid to stockholders | (8) | (8) | (8) | |||||
Distributions from IBG LLC to noncontrolling interests | (53) | (53) | ||||||
Comprehensive income | 46 | (7) | 39 | 213 | 252 | |||
Balance at Mar. 31, 2020 | $ 1 | 937 | (3) | 558 | (7) | 1,486 | 6,661 | 8,147 |
Balance (in shares) at Mar. 31, 2020 | 76,889,351 | |||||||
Common Stock distributed pursuant to stock incentive plans (in shares) | 1,297,716 | |||||||
Compensation for stock grants vesting in the future | 2 | 2 | 11 | 13 | ||||
Repurchase of common stock for employee tax withholding under stock incentive plans | (17) | (17) | (17) | |||||
Sales of treasury stock | 17 | 17 | 1 | 18 | ||||
Dividends paid to stockholders | (7) | (7) | (7) | |||||
Distributions from IBG LLC to noncontrolling interests | (129) | (129) | ||||||
Adjustments for changes in proportionate ownership in IBG LLC | 21 | 21 | (21) | |||||
Comprehensive income | 32 | 4 | 36 | 193 | 229 | |||
Balance at Jun. 30, 2020 | $ 1 | 960 | (3) | 583 | (3) | 1,538 | 6,716 | 8,254 |
Balance (in shares) at Jun. 30, 2020 | 78,187,067 | |||||||
Issuance of common stock in follow-on offering | 20 | 20 | (20) | |||||
Issuance of common stock in follow-on offering, shares | 1,000,000 | |||||||
Common stock distributed pursuant to stock incentive plans | 4 | 4 | 13 | 17 | ||||
Deferred tax benefit retained - follow-on offering | 1 | 1 | 1 | |||||
Dividends paid to stockholders | (8) | (8) | (8) | |||||
Distributions from IBG LLC to noncontrolling interests | (65) | (65) | ||||||
Comprehensive income | 46 | 8 | 54 | 293 | 347 | |||
Balance at Sep. 30, 2020 | $ 1 | $ 985 | $ (3) | $ 621 | $ 5 | $ 1,609 | $ 6,937 | $ 8,546 |
Balance (in shares) at Sep. 30, 2020 | 79,187,067 |
Organization Of Business
Organization Of Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization Of Business [Abstract] | |
Organization Of Business | 1. Organization of Business Interactive Brokers Group, Inc. (“IBG, Inc.”) is a Delaware holding company whose primary asset is its ownership of approximately 19.0 % of the membership interests of IBG LLC, which, in turn, owns operating subsidiaries (collectively, “IBG LLC”). IBG, Inc. together with IBG LLC and its consolidated subsidiaries (collectively, “the Company”), is an automated global electronic broker specializing in executing and clearing trades in stocks, options, futures, foreign exchange instruments, bonds, mutual funds and exchange traded funds (“ETFs”) on more than 135 electronic exchanges and market centers around the world and offering custody, prime brokerage, securities and margin lending services to customers. In the United States of America (“U.S.”), the Company conducts its business primarily from its headquarters in Greenwich, Connecticut and from Chicago, Illinois. Abroad, the Company conducts its business through offices located in Canada, the United Kingdom, Luxembourg, Switzerland, India, China (Hong Kong and Shanghai), Japan, Singapore, and Australia. As of September 30, 2020, the Company had 1,923 employees worldwide. IBG LLC is a Connecticut limited liability company that conducts its business through its significant operating subsidiaries: Interactive Brokers LLC (“IB LLC”); Interactive Brokers Canada Inc. (“IBC”); Interactive Brokers (U.K.) Limited (“IBUK”); Interactive Brokers Luxembourg SARL (“IBLUX”); IBKR Financial Services AG (“IBKRFS”); Interactive Brokers (India) Private Limited (“IBI”), Interactive Brokers Hong Kong Limited (“IBHK”), Interactive Brokers Securities Japan, Inc. (“IBSJ”), Interactive Brokers Singapore Private Limited ("IBSG"), and Interactive Brokers Australia Pty Limited (“IBA”). Certain of the operating subsidiaries are members of various securities and commodities exchanges in North America, Europe and the Asia/Pacific region and are subject to regulatory capital and other requirements (see Note 15). IB LLC, IBC, IBUK, IBLUX, IBI, IBHK, IBSJ, IBSG, and IBA carry securities accounts for customers or perform custodial functions relating to customer securities. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies Basis of Presentation These condensed consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10 - Q. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2019 Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 28, 2020. The condensed consolidated financial information as of December 31, 2019 has been derived from the audited financial statements not included herein. These condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the periods presented. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. In March 2020, the World Health Organization recognized the outbreak of the Coronavirus Disease 2019 (“COVID-19”) caused by a novel strain of the coronavirus as a pandemic. The pandemic affects all countries in which we operate. The response of governments and societies to the COVID-19 pandemic, which includes temporary closures of businesses; social distancing; travel restrictions, “shelter in place” and other governmental regulations; and reduced consumer spending due to job losses, has significantly impacted market volatility and general economic conditions. The impact of the COVID-19 pandemic on the Company could be significant but currently cannot be quantified, as it will depend on numerous evolving factors that currently cannot be accurately predicted, including, but not limited to the duration and spread of the pandemic; its impact on our customers, employees and vendors; governmental regulations in response to the pandemic; and the overall impact of the pandemic on the economy and society; among other factors. Any of these events could have significant accounting and financial reporting implications (i.e., reassessing accounting estimates related to credit losses, valuation of certain investments, deferred tax assets and contingency reserves). We have reviewed our assumptions related to the above estimates and have not made any adjustments. Principles of Consolidation, including Noncontrolling Interests These condensed consolidated financial statements include the accounts of IBG, Inc. and its majority and wholly owned subsidiaries. As sole managing member of IBG LLC, IBG, Inc. exerts control over IBG LLC’s operations. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “ Consolidation, ” the Company consolidates IBG LLC’s financial statements and records the interests in IBG LLC that it does not own as noncontrolling interests. The Company’s policy is to consolidate all other entities in which it owns more than 50% unless it does not have control. All inter - company balances and transactions have been eliminated. Condensed Consolidated Statements of Comprehensive Income and Operating Business Segment Presentation Changes As previously disclosed in the Company’s 10-Q for the quarter ended March 31, 2017 and in subsequent filings, the Company intended to eliminate the reporting of separate operating business segments upon its determination that the continued wind-down of the Company’s market making activity rendered it no longer reportable as a business segment. Pursuant to the requirements of FASB ASC Topic 280, “ Segment Reporting, ” the Company performed a quantitative and a qualitative assessment of its business and determined that its remaining market making activity no longer supports the Company’s reporting of separate business segments. Accordingly, effective the first quarter of 2020 the Company discontinued the reporting of separate business segments. Since the Company’s decision to wind down its market making activities, management has continued to shift its focus to growing and strengthening the Company’s electronic brokerage business. The Company believes the elimination of segment reporting aligns its financial reporting with its business strategy and management’s focus on the electronic brokerage business. For each of the eight quarters during 2018 and 2019, the market making segment’s contribution to the Company’s consolidated net revenues, income before income taxes, and total assets did not exceed 7 %, 4 %, and 6 %, respectively. As a result, effective the first quarter of 2020, the Company modified the presentation of its segment financial information with retrospective application to all prior periods presented. In addition, effective the first quarter of 2020, the Company changed the presentation of its condensed consolidated statements of comprehensive income to better align with its business strategy. As a result, the Company made the following reclassifications to amounts reported in its condensed consolidated statement of comprehensive income for the three and nine months ended September 30, 2019: Other fees and services – reclassified $ 35 million and $ 105 million for the three and nine months ended September 30, 2019 previously reported as other income to other fees and services, which includes market data fees, account activity fees, risk exposure fees, order flow income from options exchange-mandated programs, and revenues from other fees and services. These items have been historically reported as a component of other income. Other income – reclassified $ 7 million and $ 20 million for the three and nine months ended September 30, 2019 previously reported as trading gains to other income as a component of “principal transactions.” Other income includes gains (losses) from principal transactions; the impact of the currency diversification strategy; gains (losses) from equity method investments; and other revenues not directly attributable to the Company’s core business offerings. Previously reported amounts in the condensed consolidated statements of comprehensive income and notes to the condensed consolidated financial statements have been adjusted to conform to the current presentation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these condensed consolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Therefore, actual results could differ materially from those estimates. Such estimates include the allowance for credit losses, valuation of certain investments, compensation accruals, current and deferred income taxes, and contingency reserves. Fair Value Substantially all of the Company’s assets and liabilities, including financial instruments, are carried at fair value based on published market prices and are marked to market, or are assets and liabilities which are short - term in nature and are carried at amounts that approximate fair value. The Company applies the fair value hierarchy in accordance with FASB ASC Topic 820, “ Fair Value Measurement” (“ASC Topic 820”) , to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Quoted prices for similar assets in an active market, quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly. Level 3 Prices or valuations that require inputs that are both significant to fair value measurement and unobservable. Financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are generally classified as Level 1 of the fair value hierarchy. The Company’s Level 1 financial instruments, which are valued using quoted market prices as published by exchanges and clearing houses or otherwise broadly distributed in active markets, include active listed stocks, options, warrants, and U.S. and foreign government securities. The Company does not adjust quoted prices for financial instruments classified as Level 1 of the fair value hierarchy, even in the event that the Company may hold a large position whereby a purchase or sale could reasonably impact quoted prices. Currency forward contracts are valued using broadly distributed bank and broker prices, and are classified as Level 2 of the fair value hierarchy since inputs to their valuation can be generally corroborated by market data. Other securities that are not traded in active markets are also classified as Level 2 of the fair value hierarchy. Level 3 financial instruments are comprised of securities that have been delisted or otherwise are no longer tradable in active markets and have been valued by the Company based on internal estimates. Earnings per Share Earnings per share (“EPS”) is computed in accordance with FASB ASC Topic 260, “ Earnings per Share .” Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s stock-based compensation plans, with no adjustments to net income available for common stockholders for potentially dilutive common shares. Current Expected Credit Losses On January 1, 2020, the Company adopted FASB ASC Topic 326 – “Financial Instruments – Credit Losses” (“ASC Topic 326”) which replaces the incurred loss methodology with the current expected credit loss (“CECL”) methodology. The new guidance applies to financial assets measured at amortized cost, held-to-maturity debt securities and off-balance sheet credit exposures. For on-balance sheet assets, an allowance must be recognized at the origination or purchase of in-scope assets and represents the expected credit losses over the contractual life of those assets. Expected credit losses on off-balance sheet credit exposures must be estimated over the contractual period the Company is exposed to credit risk as a result of a present obligation to extend credit. The Company adopted ASC Topic 326 using the modified retrospective approach for all in-scope assets, which did not result in an adjustment to the opening balance in retained earnings. Results for reporting periods beginning after January 1, 2020 are presented under ASC Topic 326 while prior periods continue to be reported in accordance with previously applicable U.S. GAAP. The impact to the current period is not material since the Company’s in-scope assets are primarily subject to collateral maintenance provisions for which the Company elected to apply the practical expedient of reporting the difference between the fair value of collateral and the amortized cost for the in-scope assets as the allowance for current expected credit losses. Cash and Cash Equivalents Cash and cash equivalents consist of deposits with banks and all highly liquid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes or to meet margin requirements at clearing houses and clearing banks. Cash and Securities - Segregated for Regulatory Purposes As a result of customer activities, certain operating subsidiaries are obligated by rules mandated by their primary regulators to segregate or set aside cash or qualified securities to satisfy such regulations, which have been promulgated to protect customer assets. Restricted cash represents cash and cash equivalents that are subject to withdrawal or usage restrictions. Cash segregated for regulatory purposes meets the definition of restricted cash and is included in “cash, cash equivalents, and restricted cash” in the condensed consolidated statements of cash flows. The table below presents the composition of the Company’s securities segregated for regulatory purposes for the periods indicated. September 30, December 31, 2020 2019 (in billions) U.S. government securities $ 5.0 $ 3.8 Securities purchased under agreements to resell 1 24.3 14.0 $ 29.3 $ 17.8 ___________________________ (1) These balances are collateralized by U.S. government securities. Securities Borrowed and Securities Loaned Securities borrowed and securities loaned are recorded at the amount of the cash collateral advanced or received. Securities borrowed transactions require the Company to provide counterparties with collateral, which may be in the form of cash, letters of credit or other securities. With respect to securities loaned, the Company receives collateral, which may be in the form of cash or other securities in an amount generally in excess of the fair value of the securities loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as permitted contractually. The Company’s policy is to net, in the condensed consolidated statements of financial condition, securities borrowed and securities loaned entered into with the same counterparty that meet the offsetting requirements prescribed in FASB ASC Topic 210-20, “Balance Sheet – Offsetting” (“ASC Topic 210-20”). Securities lending fees received and paid by the Company are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income. Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase Securities purchased under agreements to resell and securities sold under agreements to repurchase, which are reported as collateralized financing transactions, are recorded at contract value, which approximates fair value. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company’s policy is to net, in the condensed consolidated statements of financial condition, securities purchased under agreements to resell transactions and securities sold under agreements to repurchase transactions entered into with the same counterparty that meet the offsetting requirements prescribed in ASC Topic 210-20. Financial Instruments Owned and Financial Instruments Sold, But Not Yet Purchased, at Fair Value Financial instrument transactions are accounted for on a trade date basis. Financial instruments owned and financial instruments sold, but not yet purchased are stated at fair value based upon quoted market prices, or if not available, are valued by the Company based on internal estimates (see Fair Value above). The Company’s financial instruments pledged to counterparties where the counterparty has the right, by contract or custom, to sell or repledge the financial instruments are reported as financial instruments owned and pledged as collateral in the condensed consolidated statements of financial condition. Customer Receivables and Payables Customer securities transactions are recorded on a settlement date basis and customer commodities transactions are recorded on a trade date basis. Receivables from and payables to customers include amounts due on cash and margin transactions, including futures contracts transacted on behalf of customers. Securities owned by customers, including those that collateralize margin loans or other similar transactions, are not reported in the condensed consolidated statements of financial condition. Amounts receivable from customers that are determined by management to be uncollectible are recorded as customer bad debt expense in the condensed consolidated statements of comprehensive income. Receivables from and Payables to Brokers, Dealers and Clearing Organizations Receivables from and payables to brokers, dealers and clearing organizations include net receivables and payables from unsettled trades, including amounts related to futures and options on futures contracts executed on behalf of customers, amounts receivable for securities not delivered by the Company to the purchaser by the settlement date (“fails to deliver”) and cash deposits. Payables to brokers, dealers and clearing organizations also include amounts payable for securities not received by the Company from a seller by the settlement date (“fails to receive”). Investments The Company makes certain strategic investments related to its business which are included in other assets in the consolidated statements of financial condition. The Company accounts for these investments as follows: Under the equity method of accounting as required under FASB ASC Topic 323, “ Investments - Equity Method and Joint Ventures. ” These investments, including where the investee is a limited partnership or limited liability company, are recorded at the fair value amount of the Company’s initial investment and are adjusted each period for the Company’s share of the investee’s income or loss. Contributions paid to and distributions received from equity method investees are recorded as additions or reductions, respectively, to the respective investment balance. At fair value if the investment in equity securities has a readily determinable fair value. At adjusted cost if the investment does not have a readily determinable fair value. Adjusted cost represents the historical cost, less impairment, if any. If the Company identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer, the Company measures the equity security at fair value as of the date that the observable transaction occurred in accordance with FASB ASC Topic 321, “Investments in Equity Securities.” A judgmental aspect of accounting for investments is evaluating whether a decline in the value of an investment has occurred. The evaluation of an impairment is dependent on specific quantitative and qualitative factors and circumstances surrounding an investment, including recurring operating losses, credit defaults and subsequent rounds of financing. Most of the Company’s equity investments do not have readily determinable market values. All investments are reviewed for changes in circumstances or occurrence of events that suggest the Company’s investment may not be recoverable. An impairment loss, if any, is recognized in the period the determination is made . The table below presents the composition of the Company’s investments for the periods indicated. September 30, December 31, 2020 2019 (in millions) Equity method investments 1 $ 9 $ 22 Investments in equity securities at adjusted cost 2 7 5 Investments in equity securities at fair value 2 48 36 Investments in exchange memberships and equity securities of certain exchanges 2 3 3 $ 67 $ 66 ___________________________ (1) The Company’s share of income or losses is included in other income in the condensed consolidated statements of comprehensive income. (2) These investments do not qualify for equity method of accounting and the dividends received are included in other income in the condensed consolidated statements of comprehensive income. Property, Equipment, and Intangible Assets Property, equipment, and intangible assets, which are included in other assets in the condensed consolidated statements of financial condition, consist of leasehold improvements, computer equipment, software developed for the Company’s internal use, office furniture and equipment . Property and equipment are recorded at historical cost, less accumulated depreciation and amortization. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation and amortization are computed using the straight - line method. Equipment is depreciated over the estimated useful lives of the assets, while leasehold improvements are amortized over the lesser of the estimated economic useful life of the asset or the term of the lease. Computer equipment is depreciated over three to five years and office furniture and equipment are depreciated over five to seven years . Intangible assets with a finite life are amortized on a straight-line basis over their estimated useful lives of three years , and tested for recoverability whenever events indicate that the carrying amounts may not be recoverable. Qualifying costs for internally developed software are capitalized and amortized over the expected useful life of the developed software, not to exceed three years . Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the condensed consolidated statements of financial condition and any resulting gain or loss is recorded in other income in the condensed consolidated statements of comprehensive income. Fully depreciated (or amortized) assets are retired periodically throughout the year. Leases The Company reviews all relevant contracts to determine if the contract contains a lease at its inception date. A contract contains a lease if the contract conveys to the company the right to control the use of an underlying asset for a period of time in exchange for consideration. If the Company determines that a contract contains a lease, it recognizes, in the condensed consolidated statements of financial condition, a lease liability and a corresponding right-of-use asset on the commencement date of the lease. The lease liability is initially measured at the present value of the future lease payments over the lease term using the rate implicit in the lease or, if not readily determinable, the Company’s secured incremental borrowing rate. An operating lease right-of-use asset is initially measured at the value of the lease liability minus any lease incentives and initial direct costs incurred plus any prepaid rent. The Company’s leases are classified as operating leases and consist of real estate leases for office space, data centers and other facilities. Each lease liability is measured using the Company’s secured incremental borrowing rate, which is based on an internally developed yield curve using interest rates of third parties’ corporate debt issued with a similar risk profile as the Company and a duration similar to the lease term. The Company’s leases have remaining terms of one to twelve years, some of which include options to extend the lease term, and some of which include options to terminate the lease upon notice. The Company considers these options when determining the lease term used to calculate the right-of-use asset and the lease liability when the Company is reasonably certain it will exercise such option. The Company’s operating leases contain both lease components and non-lease components . Non-lease components are distinct elements of a contract that are not related to securing the use of the underlying assets, such as common area maintenance and other management costs. The Company elected to measure the lease liability by combining the lease and non-lease components as a single lease component. As such, the Company includes the fixed payments and any payments that depend on a rate or index that relate to the lease and non-lease components in the measurement of the lease liability. Some of the non-lease components are variable in nature and not based on an index or rate, and as a result, are not included in the measurement of the right-of-use asset or lease liability. Operating lease expense is recognized on a straight-line basis over the lease term and is included in occupancy, depreciation and amortization, expense in the Company’s condensed consolidated statements of comprehensive income. Comprehensive Income and Foreign Currency Translation The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to FASB ASC Topic 220, “ Comprehensive Income. ” Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The Company’s OCI is comprised of gains and losses resulting from translating foreign currency financial statements of non-U.S. subsidiaries , net of related income taxes, where applicable. In general, the practice and intention of the Company is to reinvest the earnings of its non - U.S. subsidiaries in those operations, therefore tax is usually not accrued on OCI. The Company’s non - U.S. domiciled subsidiaries have a functional currency that is other than the U.S. dollar. Such subsidiaries’ assets and liabilities are translated into U.S. dollars at period - end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary’s functional currency to the U.S. dollar (as described above) are reported net of tax, where applicable, in accumulated OCI in the condensed consolidated statements of financial condition. Revenue Recognition Commissions Commissions earned for executing and/or clearing transactions are accrued on a trade date basis and are reported as commissions in the condensed consolidated statements of comprehensive income. Commissions also include payments for order flow income related to IBKR Lite SM customers. See Note 8 for further information on revenue from contracts with customers. Other fees and services The Company earns fee income on services provided to customers, which includes market data fees, risk exposure fees, payments for order flow from exchange-mandated programs, minimum activity fees, and other fees and services charged to customers. Fee income is recognized either daily or monthly. See Note 8 for further information on revenue from contracts with customers. Interest Income and Expense The Company earns interest income and incurs interest expense primarily in connection with its electronic brokerage customer business and its securities lending activities, which are recorded on an accrual basis and are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income. Principal Transactions Principal transactions include gains and losses as a result of changes in the fair value of financial instruments owned, at fair value, financial instruments sold, but not yet purchased, at fair value, and other investments measured at fair value (i.e., unrealized gains and losses) and realized gains and losses related to the Company’s principal transactions. Included are net gains and losses on stocks, options, U.S. and foreign government securities, futures, foreign exchange and other derivative instruments. Dividends are integral to the valuation of stocks. Accordingly, dividends income and expense attributable to financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value, are reported on a net basis in other income in the condensed consolidated statements of comprehensive income. Foreign Currency Gains and Losses Foreign currency balances are assets and liabilities in currencies other than the Company’s functional currency. At every reporting date, the Company revalues its foreign currency balances to its functional currency at the spot exchange rate and records the associated foreign currency gains and losses. These foreign currency gains and losses are reported in the condensed consolidated statements of comprehensive income, as follows: (a) foreign currency gains and losses related to the Company’s currency diversification strategy are reported in other income; (b) foreign currency gains and losses arising from currency swap transactions are reported in interest income or interest expense; and (c) all other foreign currency gains and losses are reported in other income . Rebates Rebates consist of volume discounts, credits or payments received from exchanges or other market centers related to the placement and/or removal of liquidity from the marketplace and are recorded on an accrual basis. Rebates are recorded net within execution, clearing and distribution fees in the condensed consolidated statements of comprehensive income. Rebates received for trades executed on behalf of customers that elect tiered pricing are passed, in whole or part, to these customers; and such pass-through amounts are recorded net within commissions in the condensed consolidated statements of comprehensive income. Stock - Based Compensation The Company follows FASB ASC Topic 718, “ Compensation - Stock Compensation” (“ASC Topic 718”) , to account for its stock - based compensation plans. ASC Topic 718 requires all share - based payments to employees to be recognized in the consolidated financial statements using a fair value - based method. Grants, which are denominated in U.S. dollars, are communicated to employees in the year of grant, thereby establishing the fair value of each grant. The fair value of awards granted to employees are generally expensed as follows: 50 % in the year of grant in recognition of the plans’ post-employment provisions (as described below) and the remaining 50 % over the related vesting period utilizing the “graded vesting” method permitted under ASC Topic 718. In the case of “retirement eligible” employees (those employees older than 59), 100 % of awards are expensed when granted. Awards granted under stock - based compensation plans are subject to the plans’ post-employment provisions in the event an employee ceases employment with the Company. The plans provide that employees who discontinue employment with the Company without cause and continue to meet the terms of the plans’ post - employment provisions will be eligible to earn 50 % of previously granted but not yet earned awards, unless the employee is over the age of 59, in which case the employee would be eligible to receive 100 % of previously granted but not yet earned awards. Income Taxes The Company accounts for income taxes in accordance with FASB ASC Topic 740, “ Income Taxes” (“ASC Topic 740”) . The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits are based on enacted tax laws (see Note 11) and reflect management’s best assessment of estimated future taxes to be paid. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Determining income tax expense requires significant judgment and estimates. Deferred income tax assets and liabilities arise from temporary differences between the tax and financial statement recognition of underlying assets and liabilities. In evaluating the ability to recover deferred tax assets within the jurisdictions from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax - planning strategies, and results of recent operations. In projecting future taxable income, historical results are adjusted for changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax - planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, three years of cumulative operating income (loss) are considered. Deferred income taxes have not been provided for U.S. tax liabilities or for ad |
Trading Activities And Related
Trading Activities And Related Risks | 9 Months Ended |
Sep. 30, 2020 | |
Trading Activities And Related Risks [Abstract] | |
Trading Activities And Related Risks | 3. Trading Activities and Related Risks Trading activities expose the Company to market and credit risks. These risks are managed in accordance with established risk management policies and procedures. To accomplish this, management has established a risk management process that includes: a regular review of the risk management process by executive management as part of its oversight role; defined risk management policies and procedures supported by a rigorous analytic framework; and articulated risk tolerance levels as defined by executive management that are regularly reviewed to ensure that the Company’s risk - taking is consistent with its business strategy, its capital structure, and current and anticipated market conditions. Market Risk The Company is exposed to various market risks. Exposures to market risks arise from equity price risk, foreign currency exchange rate fluctuations and changes in interest rates. The Company seeks to mitigate market risk associated with trading inventories by employing hedging strategies that correlate rate, price and spread movements of trading inventories and related financing and hedging activities. The Company uses a combination of cash instruments and exchange traded derivatives to hedge its market exposures. The Company does not apply hedge accounting. The following discussion describes the types of market risk faced: Equity Price Risk Equity price risk arises from the possibility that equity security prices will fluctuate, affecting the value of equity securities and other instruments that derive their value from a particular stock, a defined basket of stocks, or a stock index. The Company is subject to equity price risk primarily in financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value. The Company attempts to limit such risks by continuously reevaluating prices and by diversifying its portfolio across many different options, futures and underlying securities and avoiding concentrations of positions based on the same underlying security. Currency Risk Currency risk arises from the possibility that fluctuations in foreign exchange rates will impact the value of financial instruments. The Company manages this risk using spot (i.e., cash) currency transactions, currency futures contracts and currency forward contracts. The Company actively manages its currency exposure using a currency diversification strategy that is based on a defined basket of currencies internally referred to as the “GLOBAL.” These strategies minimize the fluctuation of the Company’s net worth as expressed in GLOBALs, thereby diversifying its risk in alignment with these global currencies, weighted by the Company’s view of their importance. As the Company’s financial results are reported in U.S. dollars, the change in the value of the GLOBAL as expressed in U.S. dollars affects the Company’s earnings. The impact of this currency diversification strategy in the Company’s earnings is included in other income in the condensed consolidated statements of comprehensive income. As a result of a periodic assessment, effective as of the close of business on June 30, 2020, the Company reduced the number of currencies in the GLOBAL from 14 to 10 and realigned the relative weights of each component to better reflect the global diversification of its business going forward. The Company removed the Danish krone (DKK), the Mexican peso (MXN), the Norwegian krone (NOK) and the Swedish krona (SEK). Interest Rate Risk Interest rate risk arises from the possibility that changes in interest rates will affect the value of financial instruments. The Company is exposed to interest rate risk on cash and margin balances, positions carried in equity and fixed income securities, options, futures and on its borrowings. These risks are managed through investment policies and by entering into interest rate futures contracts. Credit Risk The Company is exposed to risk of loss if a customer, counterparty or issuer fails to perform its obligations under contractual terms (“default risk”). Both cash instruments and derivatives expose the Company to default risk. The Company has established policies and procedures for mitigating credit risk on principal transactions, including reviewing and establishing limits for credit exposure, maintaining collateral, and continually assessing the creditworthiness of counterparties. The Company’s credit risk is limited as contracts entered into are settled directly at securities and commodities clearing houses or are settled through member firms and banks with substantial financial and operational resources. Over-the-counter transactions, such as securities lending and contracts for differences (“CFDs”), are marked to market daily and are conducted with counterparties that have undergone a thorough credit review. The Company seeks to control the risks associated with its customer margin activities by requiring customers to maintain collateral in compliance with regulatory and internal guidelines. In the normal course of business, the Company executes, settles, and finances various customer securities transactions. Execution of these transactions includes the purchase and sale of securities which exposes the Company to default risk arising from the potential that customers or counterparties may fail to satisfy their obligations. In these situations, the Company may be required to purchase or sell financial instruments at unfavorable market prices to satisfy obligations to customers or counterparties. Liabilities to other brokers and dealers related to unsettled transactions (i.e., securities fails to receive) are recorded at the amount for which the securities were purchased, and are paid upon receipt of the securities from other brokers or dealers. In the case of aged securities fails to receive, the Company may purchase the underlying security in the market and seek reimbursement for any losses from the counterparty. For cash management purposes, the Company enters into short - term securities purchased under agreements to resell and securities sold under agreements to repurchase transactions (“repos”) in addition to securities borrowing and lending arrangements, all of which may result in credit exposure in the event the counterparty to a transaction is unable to fulfill its contractual obligations. Repos are collateralized by securities with a market value in excess of the obligation under the contract. Similarly, securities lending agreements are collateralized by deposits of cash or securities. The Company attempts to minimize credit risk associated with these activities by monitoring collateral values on a daily basis and requiring additional collateral to be deposited with or returned to the Company as permitted under contractual provisions. Concentrations of Credit Risk The Company’s exposure to credit risk associated with its trading and other activities is measured on an individual counterparty basis, as well as by groups of counterparties that share similar attributes. Concentrations of credit risk can be affected by changes in political, industry, or economic factors. To reduce the potential for risk concentration, credit limits are established and exposure is monitored in light of changing counterparty and market conditions. As of September 30, 2020, the Company did not have any material concentrations of credit risk outside the ordinary course of business. Off - Balance Sheet Risks The Company may be exposed to a risk of loss not reflected in the condensed consolidated financial statements to settle futures and certain over - the - counter contracts at contracted prices, which may require repurchase or sale of the underlying products in the market at prevailing prices. Accordingly, these transactions result in off - balance sheet risk as the Company’s cost to liquidate such contracts may exceed the amounts reported in the Company’s condensed consolidated statements of financial condition. |
Equity And Earnings Per Share
Equity And Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Equity And Earnings Per Share [Abstract] | |
Equity And Earnings Per Share | 4. Equity and Earnings per Share In connection with IBG, Inc.’s initial public offering of Class A common stock (“IPO”) in May 2007, it purchased 10.0 % of the membership interests in IBG LLC from IBG Holdings LLC (“Holdings”), became the sole managing member of IBG LLC and began to consolidate IBG LLC’s financial results into its financial statements. Holdings owns all of IBG, Inc.’s Class B common stock, which has voting rights in proportion to its ownership interests in IBG LLC . The table below presents the amount of IBG LLC membership interests held by IBG, Inc. and Holdings as of September 30 , 2020. IBG, Inc. Holdings Total Ownership % 19.0 % 81.0 % 100.0 % Membership interests 79,057,622 337,670,642 416,728,264 These condensed consolidated financial statements reflect the results of operations and financial position of IBG, Inc., including consolidation of its investment in IBG LLC and its subsidiaries. The noncontrolling interests in IBG LLC attributable to Holdings are reported as a component of total equity in the condensed consolidated statements of financial condition. Recapitalization and Post - IPO Capital Structure Immediately prior to and immediately following the consummation of the IPO, IBG, Inc., Holdings, IBG LLC and the members of IBG LLC consummated a series of transactions collectively referred to herein as the “Recapitalization.” In connection with the Recapitalization, IBG, Inc., Holdings and the historical members of IBG LLC entered into an exchange agreement, dated as of May 3, 2007 (the “Exchange Agreement”), pursuant to which the historical members of IBG LLC received membership interests in Holdings in exchange for their membership interests in IBG LLC. Additionally, IBG, Inc. became the sole managing member of IBG LLC. In connection with the consummation of the IPO, Holdings used the net proceeds to redeem 10.0 % of members’ interests in Holdings in proportion to their interests. Immediately following the Recapitalization and IPO, Holdings owned approximately 90 % of IBG LLC and 100 % of IBG, Inc.’s Class B common stock. Since consummation of the IPO and Recapitalization, IBG, Inc.’s equity capital structure has been comprised of Class A and Class B common stock. All shares of common stock have a par value of $ 0.01 per share and have identical rights to earnings and dividends and in liquidation. As of September 30 , 2020 and December 31, 2019, 1,000,000,000 shares of Class A common stock were authorized, of which 79,187,067 and 76,889,040 shares have been issued; and 79,054,435 and 76,750,110 shares were outstanding, respectively. Class B common stock is comprised of 100 authorized shares, of which 100 shares were issued and outstanding as of September 30 , 2020 and December 31, 2019, respectively. In addition, 10,000 shares of preferred stock have been authorized, of which no shares are issued or outstanding as of September 30 , 2020 and December 31, 2019, respectively. As a result of a federal income tax election made by IBG LLC applicable to the acquisition of IBG LLC member interests by IBG, Inc., the income tax basis of the assets of IBG LLC acquired by IBG, Inc. have been adjusted based on the amount paid for such interests. Deferred tax assets were recorded as of the IPO date and in connection with subsequent redemptions of Holdings member interests in exchange for common stock. These deferred tax assets are included in other assets in the Company’s condensed consolidated statements of financial condition and are being amortized as additional deferred income tax expense over 15 years from the IPO date and from the additional redemption dates, respectively, as allowable under current tax law. As of September 30 , 2020 and December 31, 2019, the unamortized balance of these deferred tax assets was $ 107 million and $ 116 million, respectively. IBG, Inc. also entered into an agreement (the “Tax Receivable Agreement”) with Holdings to pay Holdings (for the benefit of the former members of IBG LLC) 85 % of the tax savings that IBG, Inc. actually realizes as the result of tax basis increases. These payables to Holdings are reported as payable to affiliate in the Company’s condensed consolidated statements of financial condition. The remaining 15 % is accounted for as a permanent increase to additional paid - in capital in the Company’s condensed consolidated statements of financial condition. The cumulative amounts of deferred tax assets, payables to Holdings and additional paid - in capital arising from stock offerings from the date of the IPO through September 30 , 2020 were $ 506 million, $ 430 million, and $ 76 million, respectively. Amounts payable under the Tax Receivable Agreement are payable to Holdings annually following the filing of IBG, Inc.’s federal income tax return. The Company has paid Holdings a cumulative total of $ 205 million through September 30 , 2020 pursuant to the terms of the Tax Receivable Agreement. The Exchange Agreement, as amended, provides for future redemptions of member interests and for the purchase of member interests in IBG LLC by IBG, Inc. from Holdings, which could result in IBG, Inc. acquiring the remaining member interests in IBG LLC that it does not own. On an annual basis, members of Holdings are able to request redemption of their interests. At the time of IBG, Inc.’s IPO in 2007, three hundred sixty ( 360 ) million shares of authorized common stock were reserved for future sales and redemptions. From 2008 through 2010, Holdings redeemed 5,013,259 IBG LLC interests with a total value of $ 114 million, which redemptions were funded using cash on hand at IBG LLC. Upon cash redemption these IBG LLC interests were retired. From 2011 through 2019, IBG, Inc. issued 15,417,157 shares of common stock (with a fair value of $ 506 million) directly to Holdings in exchange for an equivalent number of member interests in IBG LLC. On July 27, 2020, the Company filed a Prospectus Supplement on Form 424B (File Number 333-240121) with the SEC to register up to 990,000 shares of common stock, offering the opportunity for eligible persons to receive awards in the form of an offer to receive such shares by participating in one or more promotions that are designed to attract new customers to the Company ’ s brokerage platform, increase assets held with the Company ’ s brokerage business and enhance customer loyalty. On August 20, 2020, the Company filed a Prospectus Supplement on Form 424B5 with the SEC to issue 1,000,000 shares of common stock (with a fair value of $ 52 million) in exchange for an equivalent number of shares of member interests in IBG LLC. As a consequence of these redemption transactions, and distribution of shares to employees (see Note 10), IBG, Inc.’s interest in IBG LLC has increased to approximately 19.0 %, with Holdings owning the remaining 81.0 % as of September 30 , 2020. The redemptions also resulted in an increase in the Holdings interest held by Mr. Thomas Peterffy and his affiliates from approximately 84.6 % at the IPO to approximately 89.6 % as of September 30 , 2020. On October 30, 2020, the Company filed a Prospectus Supplement on Form 424B5 with the SEC to issue 11,710,608 shares of common stock (with a fair value of $ 557 million) in exchange for an equivalent number of shares of member interests in IBG LLC. This issuance of shares increased the Company’s ownership in IBG LLC from 19.0 % to 21.8 %. This redemption also resulted in an increase in the Holdings interest held by Mr. Thomas Peterffy and his affiliates to approximately 89.8 % as of October 31 , 2020. Earnings per Share Basic earnings per share is calculated utilizing net income available for common stockholders divided by the weighted average number of shares of Class A and Class B common stock outstanding for that period. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions, except share or per share amounts) Basic earnings per share Net income available for common stockholders $ 46 $ 36 $ 124 $ 117 Weighted average shares of common stock outstanding Class A 78,509,525 76,742,689 77,542,908 75,909,980 Class B 100 100 100 100 78,509,625 76,742,789 77,543,008 75,910,080 Basic earnings per share $ 0.59 $ 0.46 $ 1.60 $ 1.54 Diluted earnings per share are calculated utilizing the Company’s basic net income available for common stockholders divided by diluted weighted average shares outstanding with no adjustments to net income available to common stockholders for potentially dilutive common shares. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions, except share or per share amounts) Diluted earnings per share Net income available for common stockholders $ 46 $ 36 $ 124 $ 117 Weighted average shares of common stock outstanding Class A Issued and outstanding 78,509,525 76,742,689 77,542,908 75,909,980 Potentially dilutive common shares Issuable pursuant to employee stock incentive plans 610,923 606,187 700,691 736,407 Class B 100 100 100 100 79,120,548 77,348,976 78,243,699 76,646,487 Diluted earnings per share $ 0.58 $ 0.45 $ 1.58 $ 1.52 Member Distributions and Stockholder Dividends During the nine months ended September 30 , 2020, IBG LLC made distributions totaling $ 304 million, to its members, of which IBG, Inc.’s proportionate share was $ 57 million. In March, June , and September 2020, the Company paid quarterly cash dividends of $ 0.10 per share of common stock, totaling $ 8 million, $ 7 million, and $ 8 million, respectively. On October 20, 2020, the Company declared a cash dividend of $ 0.10 per common share, payable on December 14, 2020 to stockholders of record as of December 1, 2020 . |
Comprehensive Income
Comprehensive Income | 9 Months Ended |
Sep. 30, 2020 | |
Comprehensive Income Detail [Abstract] | |
Comprehensive Income | 5. Comprehensive Income The table below presents comprehensive income and earnings per share on comprehensive income for the periods indicated. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions, except share or per share amounts) Comprehensive income available for common stockholders $ 54 $ 30 $ 129 $ 114 Earnings per share on comprehensive income Basic $ 0.69 $ 0.39 $ 1.67 $ 1.50 Diluted $ 0.69 $ 0.39 $ 1.65 $ 1.49 Weighted average common shares outstanding Basic 78,509,625 76,742,789 77,543,008 75,910,080 Diluted 79,120,548 77,348,976 78,243,699 76,646,487 |
Financial Assets And Financial
Financial Assets And Financial Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Financial Assets And Financial Liabilities [Abstract] | |
Financial Assets And Financial Liabilities | 6. Financial Assets and Financial Liabilities Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The tables below present, by level within the fair value hierarchy (see Note 2), financial assets and liabilities, measured at fair value on a recurring basis for the periods indicated. As required by ASC Topic 820, financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the respective fair value measurement. Financial Assets at Fair Value as of September 30, 2020 Level 1 Level 2 Level 3 Total (in millions) Securities segregated for regulatory purposes $ 4,974 $ — $ — $ 4,974 Financial instruments owned, at fair value Stocks 375 — 1 376 Options 29 — — 29 Warrants — — — — U.S. and foreign government securities 28 — — 28 Corporate bonds — — 3 3 Currency forward contracts — 16 — 16 Total financial instruments owned, at fair value 432 16 4 452 Other assets - other investments at fair value 48 — — 48 Total financial assets at fair value $ 5,454 $ 16 $ 4 $ 5,474 Financial Liabilities at Fair Value as of September 30, 2020 Level 1 Level 2 Level 3 Total (in millions) Financial instruments sold, but not yet purchased, at fair value Stocks $ 158 $ — $ — $ 158 Options 27 — — 27 Currency forward contracts — 2 — 2 Total financial instruments sold, but not yet purchased, at fair value 185 2 — 187 Total financial liabilities at fair value $ 185 $ 2 $ — $ 187 Financial Assets at Fair Value as of December 31, 2019 Level 1 Level 2 Level 3 Total (in millions) Securities segregated for regulatory purposes $ 3,797 $ — $ — $ 3,797 Financial instruments owned, at fair value Stocks 540 — — 540 Options 1,333 — — 1,333 Warrants — — — — U.S. and foreign government securities 34 — — 34 Corporate bonds — — 3 3 Currency forward contracts — 6 — 6 Total financial instruments owned, at fair value 1,907 6 3 1,916 Other assets - other investments at fair value 36 — — 36 Total financial assets at fair value $ 5,740 $ 6 $ 3 $ 5,749 Financial Liabilities at Fair Value as of December 31, 2019 Level 1 Level 2 Level 3 Total (in millions) Financial instruments sold, but not yet purchased, at fair value Stocks $ 183 $ — $ — $ 183 Options 273 — — 273 Currency forward contracts — 1 — 1 Total financial instruments sold, but not yet purchased, at fair value 456 1 — 457 Total financial liabilities at fair value $ 456 $ 1 $ — $ 457 Level 3 Financial Assets and Financial Liabilities The Company’s Level 3 financial assets are comprised of delisted and illiquid securities reported within financial instruments owned, at fair value in the condensed consolidated statements of financial condition. As of September 30, 2020, Level 3 financial assets included $ 3 million in corporate bonds and $ 1 million in stocks which were not traded in active markets and were valued by the Company based on internal estimates . Financial Assets and Liabilities Not Measured at Fair Value The tables below represent the carrying value, fair value, and fair value hierarchy category of certain financial assets and liabilities that are not recorded at fair value in the Company's condensed consolidated statements of financial condition for the periods indicated. The tables below exclude certain financial instruments such as equity investments and all non-financial assets and liabilities. September 30, 2020 Carrying Value Fair Value Level 1 Level 2 Level 3 (in millions) Financial assets, not measured at fair value Cash and cash equivalents $ 3,292 $ 3,292 $ 3,292 $ — $ — Cash - segregated for regulatory purposes 12,789 12,789 12,789 — — Securities - segregated for regulatory purposes 24,342 24,342 — 24,342 — Securities borrowed 3,995 3,995 — 3,995 — Securities purchased under agreements to resell 1,401 1,401 — 1,401 — Receivables from customer 30,343 30,343 — 30,343 — Receivables from broker, dealers, and clearing organizations 2,575 2,575 — 2,575 — Interest receivable 69 69 — 69 — Other assets 11 11 — 2 9 Total financial assets, not measured at fair value $ 78,817 $ 78,817 $ 16,081 $ 62,727 $ 9 Financial liabilities, not measured at fair value Short-term borrowings $ 628 $ 628 $ — $ 628 $ — Securities loaned 5,738 5,738 — 5,738 — Payables to customer 68,830 68,830 — 68,830 — Payables to brokers, dealers and clearing organizations 313 313 — 313 — Interest payable 3 3 — 3 — Total financial liabilities, not measured at fair value $ 75,512 $ 75,512 $ — $ 75,512 $ — December 31, 2019 Carrying Value Fair Value Level 1 Level 2 Level 3 (in millions) Financial assets, not measured at fair value Cash and cash equivalents $ 2,882 $ 2,882 $ 2,882 $ — $ — Cash - segregated for regulatory purposes 9,400 9,400 9,400 — — Securities - segregated for regulatory purposes 14,027 14,027 — 14,027 — Securities borrowed 3,916 3,916 — 3,916 — Securities purchased under agreements to resell 3,111 3,111 — 3,111 — Receivables from customer 31,304 31,304 — 31,304 — Receivables from broker, dealers, and clearing organizations 685 685 — 685 — Interest receivable 158 158 — 158 — Other assets 9 9 — 3 6 Total financial assets, not measured at fair value $ 65,492 $ 65,492 $ 12,282 $ 53,204 $ 6 Financial liabilities, not measured at fair value Short-term borrowings $ 16 $ 16 $ — $ 16 $ — Securities loaned 4,410 4,410 — 4,410 — Securities sold under agreements to repurchase 1,909 1,909 — 1,909 — Payables to customer 56,248 56,248 — 56,248 — Payables to brokers, dealers and clearing organizations 220 220 — 220 — Interest payable 29 29 — 29 — Total financial liabilities, not measured at fair value $ 62,832 $ 62,832 $ — $ 62,832 $ — Netting of Financial Assets and Financial Liabilities The Company’s policy is to net securities borrowed and securities loaned, and securities purchased under agreements to resell and securities sold under agreements to repurchase that meet the offsetting requirements prescribed in ASC Topic 210-20. In the tables below, the amounts of financial instruments that are not offset in the condensed consolidated statements of financial condition, but could be netted against cash or financial instruments with specific counterparties under master netting agreements, according to the terms of the agreements, including clearing houses (exchange traded options, warrants and discount certificates) or over the counter currency forward contract counterparties, are presented to provide financial statement readers with the Company’s net payable or receivable with counterparties for these financial instruments. The tables below present the netting of financial assets and of financial liabilities for the periods indicated. September 30, 2020 Gross Amounts Net Amounts Amounts Not Offset Amounts Offset in the Presented in in the Condensed of Financial Condensed the Condensed Consolidated Statement Assets and Consolidated Consolidated of Financial Condition Liabilities Statement of Statement of Cash or Financial Recognized Financial Condition 2 Financial Condition Instruments Net Amount (in millions) Offsetting of financial assets Securities segregated for regulatory purposes - purchased under agreements to resell $ 24,342 1 $ — $ 24,342 $ ( 24,342 ) $ — Securities borrowed 3,995 — 3,995 ( 3,822 ) 173 Securities purchased under agreements to resell 1,401 — 1,401 ( 1,401 ) — Financial instruments owned, at fair value Options 29 — 29 ( 26 ) 3 Currency forward contracts 16 — 16 — 16 Total $ 29,783 $ — $ 29,783 $ ( 29,591 ) $ 192 (in millions) Offsetting of financial liabilities Securities loaned $ 5,738 $ — $ 5,738 $ ( 5,404 ) $ 334 Financial instruments sold, but not yet purchased, at fair value Options 27 — 27 ( 26 ) 1 Currency forward contracts 2 — 2 — 2 Total $ 5,767 $ — $ 5,767 $ ( 5,430 ) $ 337 December 31, 2019 Gross Amounts Net Amounts Amounts Not Offset Amounts Offset in the Presented in in the Condensed of Financial Condensed the Condensed Consolidated Statement Assets and Consolidated Consolidated of Financial Condition Liabilities Statement of Statement of Cash or Financial Recognized Financial Condition 2 Financial Condition Instruments Net Amount (in millions) Offsetting of financial assets Securities segregated for regulatory purposes - purchased under agreements to resell $ 14,027 1 $ — $ 14,027 $ ( 14,027 ) $ — Securities borrowed 3,916 — 3,916 ( 3,765 ) 151 Securities purchased under agreements to resell 3,111 — 3,111 ( 3,111 ) — Financial instruments owned, at fair value Options 1,333 — 1,333 ( 267 ) 1,066 Currency forward contracts 6 — 6 — 6 Total $ 22,393 $ — $ 22,393 $ ( 21,170 ) $ 1,223 (in millions) Offsetting of financial liabilities Securities loaned $ 4,410 $ — $ 4,410 $ ( 4,186 ) $ 224 Securities sold under agreements to repurchase 1,909 — 1,909 ( 1,909 ) — Financial instruments sold, but not yet purchased, at fair value Options 273 — 273 ( 267 ) 6 Currency forward contracts 1 — 1 — 1 Total $ 6,593 $ — $ 6,593 $ ( 6,362 ) $ 231 ________________________ (1) As of September 30 , 2020 and December 31, 2019, the Company had $ 24.3 billion and $ 14.0 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in “Securities - segregated for regulatory purposes” in the condensed consolidated statements of financial condition. (2) The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at September 30, 2020 and December 31, 2019. Secured Financing Transactions – Maturities and Collateral Pledged The tables below present gross obligations for securities loaned transactions by remaining contractual maturity and class of collateral pledged for the periods indicated. September 30, 2020 Remaining Contractual Maturity Overnight Less than 30 – 90 Over 90 and Open 30 days days days Total (in millions) Securities loaned Stocks $ 5,696 $ — $ — $ — $ 5,696 Corporate bonds 41 — — — 41 Foreign government securities 1 — — — 1 Total $ 5,738 $ — $ — $ — $ 5,738 December 31, 2019 Remaining Contractual Maturity Overnight Less than 30 – 90 Over 90 and Open 30 days days days Total (in millions) Securities loaned Stocks $ 4,356 $ — $ — $ — $ 4,356 Corporate bonds 54 — — — 54 Total securities loaned 4,410 — — — 4,410 Securities sold under agreements to repurchase U.S. government securities 1,909 — — — 1,909 Total $ 6,319 $ — $ — $ — $ 6,319 |
Collateralized Transactions
Collateralized Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Collateralized Transactions [Abstract] | |
Collateralized Transactions | 7. Collateralized Transactions The Company enters into securities borrowing and lending transactions and agreements to repurchase and resell securities to finance trading inventory, to obtain securities for settlement and to earn residual interest rate spreads. In addition, the Company’s customers pledge their securities owned to collateralize margin loans. Under these transactions, the Company either receives or provides collateral, including equity, corporate debt and U.S. government securities. Under typical agreements, the Company is permitted to sell or repledge securities received as collateral and use these securities to secure securities purchased under agreements to resell, enter into securities lending transactions or deliver these securities to counterparties to cover short positions. The Company also engages in securities financing transactions with and for customers through margin lending. Customer receivables generated from margin lending activity are collateralized by customer - owned securities held by the Company. Customers’ required margin levels and established credit limits are monitored continuously by risk management staff using automated systems. Pursuant to the Company’s policy and as enforced by such systems, customers are required to deposit additional collateral or reduce positions, when necessary, to avoid automatic liquidation of their positions. Margin loans are extended to customers on a demand basis and are not committed facilities. Factors considered in the acceptance or rejection of margin loans are the amount of the loan, the degree of leverage being employed in the customer account and an overall evaluation of the customer’s portfolio to ensure proper diversification or, in the case of concentrated positions, appropriate liquidity of the underlying collateral. Additionally, transactions relating to concentrated or restricted positions are limited or prohibited by raising the level of required margin collateral (to 100% in the extreme case). Underlying collateral for margin loans is evaluated with respect to the liquidity of the collateral positions, valuation of securities, volatility analysis and an evaluation of industry concentrations. Adherence to the Company’s collateral policies significantly limits the Company’s credit exposure to margin loans in the event of a customer’s default. Under margin lending agreements, the Company may request additional margin collateral from customers and may sell securities that have not been paid for or purchase securities sold but not delivered from customers, if necessary. As of September 30 , 2020 and December 31, 2019, approximately $ 30.3 billion and $ 31.3 billion, respectively, of customer margin loans were outstanding. The table below presents a summary of the amounts related to collateralized transactions for the periods indicated. September 30, 2020 December 31, 2019 Permitted Sold or Permitted Sold or to Repledge Repledged to Repledge Repledged (in millions) Securities lending transactions $ 44,808 $ 3,955 $ 31,994 $ 3,944 Securities purchased under agreements to resell transactions 1 25,740 25,375 17,185 16,627 Customer margin assets 35,353 10,554 34,156 11,189 $ 105,901 $ 39,884 $ 83,335 $ 31,760 ________________________ (1) As of September 30 , 2020, $ 24.3 billion or 96 % (as of December 31, 2019, $ 14.0 billion or 84 %) of securities acquired through agreements to resell that are shown as repledged have been deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3. In the normal course of business, the Company pledges qualified securities with clearing organizations to satisfy daily margin and clearing fund requirements. As of September 30, 2020 and December 31, 2019, the majority of the Company’s U.S. and foreign government securities owned were pledged to clearing organizations. The table below presents financial instruments owned and pledged as collateral, including amounts pledged to affiliates, where the counterparty has the right to repledge, for the periods indicated. September 30, December 31, 2020 2019 (in millions) Stocks $ 19 $ 128 U.S. and foreign government securities 28 33 $ 47 $ 161 |
Revenue From Contracts With Cus
Revenue From Contracts With Customers | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues From Contracts With Customers | 8. Revenues from Contracts with Customers Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring the promised services to the customers. A service is transferred to a customer when, or as, the customer obtains control of that service. A performance obligation may be satisfied at a point in time or over time. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised service. Revenue from a performance obligation satisfied over time is recognized by measuring the Company’s progress in satisfying the performance obligation in a manner that depicts the transfer of the services to the customer. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for those promised services ( i.e. , the “transaction price”). In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration, if any. The Company’s revenues from contracts with customers are recognized when the performance obligations are satisfied at an amount that reflects the consideration expected to be received in exchange for such services. The majority of the Company’s performance obligations are satisfied at a point in time and are typically collected from customers by debiting their brokerage account with the Company. Nature of Services The Company’s main sources of revenues from contracts with customers are as follows: - Commissions are charged to customers for order execution services and trade clearing and settlement services. These services represent a single performance obligation as the services are not separately identifiable in the context of the contract. The Company recognizes revenue at a point in time at the execution of the order (i.e., trade date). Commissions are generally collected from cleared customers on trade date and from non-cleared customers monthly. Commissions also include payments for order flow received from IBKR Lite SM liquidity providers. - Market data fees are charged to customers for market data services to which they subscribe that the Company delivers. The Company recognizes revenue monthly as the performance obligation is satisfied over time by continually providing market data for the period. Market data fees are collected monthly, generally in advance. - Risk exposure fees are charged to customers who carry positions with market risk that exceeds defined thresholds. The Company recognizes revenue daily as the performance obligation is satisfied at a point in time by the Company taking on additional risk of account liquidation and potential losses due to insufficient margin. Risk exposure fees are collected daily. - Payments for order flow are earned from various options exchanges based upon options trading volume originated by the Company that meets certain criteria. The Company recognizes revenue daily as the performance obligation is satisfied at a point in time on customer orders that qualify for payments subject to exchange-mandated programs. Payments for order flow are collected monthly, in arrears. - Minimum activity fees are charged to customers that do not generate the required minimum monthly commission. The Company recognizes revenue monthly as the performance obligation is satisfied at a point in time by servicing customer accounts that do not generate the required minimum monthly commissions. Minimum activity fees are collected monthly, in arrears. The Company also earns revenues from other services, including order cancelation or modification fees, position transfer fees, telecommunications fees, withdrawal fees, and bank sweep program fees, among others. Disaggregation of Revenue The tables below present revenue from contracts with customers by geographic location, and major types of services for the periods indicated. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions) Geographic location 1 United States $ 202 $ 158 $ 599 $ 460 International 122 64 348 183 $ 324 $ 222 $ 947 $ 643 Major types of services Commissions $ 279 $ 187 $ 824 $ 538 Market data fees 2 16 11 44 34 Risk exposure fees 2 3 4 8 13 Payments for order flow 2 6 5 20 16 Minimum activity fees 2 7 7 20 20 Other 2 13 8 31 22 $ 324 $ 222 $ 947 $ 643 _____________________________ (1) Based on the location of the subsidiaries in which the revenues are recorded. (2) Included in other fees and services in the condensed consolidated statements of comprehensive income. Receivables and Contract Balances Receivables arise when the Company has an unconditional right to receive payment under a contract with a customer and are derecognized when the cash is received. Receivables of $ 11 million and $ 10 million, as of September 30 , 2020 and December 31, 2019, respectively, are reported in other assets in the condensed consolidated statements of financial condition. Contract assets arise when the revenue associated with the contract is recognized prior to the Company’s unconditional right to receive payment under a contract with a customer (i.e., unbilled receivable) and are derecognized when either it becomes a receivable or the cash is received. Contract assets are reported in other assets in the condensed consolidated statements of financial condition. As of September 30 , 2020 and December 31, 2019, contract asset balances were not material. Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized either when a milestone is met triggering the contractual right to bill the customer or when the performance obligation is satisfied. Contract liabilities are reported in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition. As of September 30 , 2020 and December 31, 2019, contract liability balances were not material. |
Other Income
Other Income | 9 Months Ended |
Sep. 30, 2020 | |
Other Income [Abstract] | |
Other Income | 9. Other Income The table below presents the components of other income for the periods indicated. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions) Principal transactions $ 14 $ — $ 36 $ 69 Gains (losses) from currency diversification strategy, net 27 ( 47 ) ( 6 ) ( 72 ) Other, net ( 12 ) — ( 5 ) 1 $ 29 $ ( 47 ) $ 25 $ ( 2 ) Principal transactions include (1) trading gains and losses from the Company’s remaining market making activities; (2) realized and unrealized gains and losses on financial instruments that (a) are held for purposes other than the Company’s market making activities, (b) are subject to restrictions, or (c) are accounted for under the equity method; and (3) dividends on investments accounted at cost less impairment. |
Employee Incentive Plans
Employee Incentive Plans | 9 Months Ended |
Sep. 30, 2020 | |
Employee Incentive Plans [Abstract] | |
Employee Incentive Plans | 10. Employee Incentive Plans Defined Contribution Plan The Company offers substantially all employees of U.S.-based operating subsidiaries who have met minimum service requirements the opportunity to participate in defined contribution retirement plans qualifying under the provisions of Section 401(k) of the Internal Revenue Code. The general purpose of this plan is to provide employees with an incentive to make regular savings in order to provide additional financial security during retirement. This plan provides for the Company to match 50 % of the employees’ pre-tax contribution, up to a maximum of 10 % of eligible earnings. The employee is vested in the matching contribution incrementally over six years of service. Included in employee compensation and benefits expenses in the condensed consolidated statements of comprehensive income was $ 3 million of plan contributions for each of the nine months ended September 30 , 2020 and 2019. 2007 Stock Incentive Plan Under the Company’s Stock Incentive Plan, up to 30 million shares of the Company’s Class A common stock may be issued to satisfy vested restricted stock units granted to directors, officers, employees, contractors and consultants of the Company. The purpose of the Stock Incentive Plan is to promote the Company’s long - term financial success by attracting, retaining and rewarding eligible participants. As a result of the Company’s organizational structure, a description of which can be found in “Business – Our Organizational Structure” in Part I, Item 1 of the Company’s Annual Report on Form 10-K, there is no material dilutive effect upon ownership of common stockholders of issuing shares under the Stock Incentive Plan. The issuances do not dilute the book value of the ownership of common stockholders since the restricted stock units are granted at market value, and upon their vesting and the related issuance of shares of common stock, the ownership of IBG, Inc. in IBG LLC, increases proportionately to the shares issued. As a result of such proportionate increase in share ownership, the dilution upon issuance of common stock is borne by IBG LLC’s majority member (i.e., noncontrolling interest), Holdings, and not by IBG, Inc. or its common stockholders. Additionally, dilution of earnings that may take place after issuance of common stock is reflected in EPS reported in the Company’s financial statements. The EPS dilution can be neither estimated nor projected, but historically it has not been material. The Stock Incentive Plan is administered by the Compensation Committee of the Company’s Board of Directors. The Compensation Committee has discretionary authority to determine the eligibility to participate in the Stock Incentive Plan and establishes the terms and conditions of the awards, including the number of awards granted to each participant and all other terms and conditions applicable to such awards in individual grant agreements. Awards are expected to be made primarily through grants of restricted stock units. Stock Incentive Plan awards are subject to issuance over time. All previously granted but not yet earned awards may be cancelled by the Company upon the participant’s termination of employment or violation of certain applicable covenants prior to issuance, unless determined otherwise by the Compensation Committee. The Stock Incentive Plan provides that, upon a change in control, the Compensation Committee may, at its discretion, fully vest any granted but not yet earned awards under the Stock Incentive Plan, or provide that any such granted but not yet earned awards will be honored or assumed, or new rights substituted by the new employer on a substantially similar basis and on terms and conditions substantially comparable to those of the Stock Incentive Plan. The Company expects to continue to grant awards on or about December 31 of each year to eligible participants as part of an overall plan of equity compensation. Restricted stock units vest and become distributable to participants in accordance with the following schedule: • 10% on the first vesting date, which is on or about May 9 of each year; and • an additional 15% on each of the following six anniversaries of the first vesting, assuming continued employment with the Company and compliance with non-competition and other applicable covenants. Awards granted to external directors vest, and are distributed, over a five - year period ( 20 % per year) commencing one year after the date of grant. A total of 27,245 restricted stock units have been granted to the external directors cumulatively since the plan’s inception. The table below presents Stock Incentive Plan awards granted and the related fair values since the plan’s inception. Fair Value at Date of Grant Units ($ millions) Prior periods (since inception) 23,551,137 $ 504 December 31, 2017 946,489 57 December 31, 2018 1,146,267 62 December 31, 2019 1,374,217 1 65 27,018,110 $ 688 ______________________________ (1) Stock Incentive Plan number of granted restricted stock units related to 2019 was adjusted by 343 additional restricted stock units during the nine months ended September 30, 2020. Estimated future grants under the Stock Incentive Plan are accrued for ratably during each year (see Note 2). In accordance with the vesting schedule, outstanding awards vest and are distributed to participants yearly on or about May 9 of each year. At the end of each year, no vested awards remain undistributed. Compensation expense related to the Stock Incentive Plan recognized in the condensed consolidated statements of comprehensive income was $ 46 million and $ 43 million for the nine months ended September 30, 2020 and 2019, respectively. Estimated future compensation costs for unvested awards, net of credits for cancelled awards, as of September 30, 2020 are $ 27 million. The table below summarizes the Stock Incentive Plan activity for the periods indicated. Stock Incentive Plan Units Balance, December 31, 2019 1 5,127,915 Granted — Cancelled ( 72,439 ) Distributed ( 1,298,027 ) Balance, September 30, 2020 3,757,449 _____________________________ (1) Stock Incentive Plan number of granted restricted stock units related to 2019 was adjusted by 343 additional restricted stock units during the nine months ended September 30, 2020. Awards previously granted but not yet earned under the stock plans are subject to the plans’ post-employment provisions in the event a participant ceases employment with the Company. Through September 30, 2020 , a total of 1,066,736 restricted stock units have been distributed under these post - employment provisions. These distributions are included in the table above. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Taxes [Abstract] | |
Income Taxes | 11. Income Taxes Income tax expense for the nine months ended September 30, 2020 and 2019 differs from the U.S. federal statutory rate primarily due to the taxation treatment of income attributable to noncontrolling interests in IBG LLC. These noncontrolling interests are held directly through a U.S. partnership. Accordingly, the income attributable to these noncontrolling interests is reported in the condensed consolidated statements of comprehensive income, but the related U.S. income tax expense attributable to these noncontrolling interests is not reported by the Company as it is generally the obligation of the noncontrolling interests. Income tax expense is also affected by the differing effective tax rates in foreign, state and local jurisdictions where certain of the Company’s subsidiaries are subject to corporate taxation. Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with the common stock offerings (see Note 4), differences in the valuation of financial assets and liabilities, and for other temporary differences arising from the deductibility of compensation and depreciation expenses in different time periods for accounting and income tax return purposes. As of and for the nine months ended September 30, 2020 and 2019, the Company had no valuation allowances on deferred tax assets. The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. As of September 30, 2020, the Company is no longer subject to U.S. Federal and State income tax examinations for tax years prior to 2015, and to non-U.S. income tax examinations for tax years prior to 2009. As of September 30, 2020, accumulated earnings held by non - U.S. subsidiaries totaled $ 1.4 billion (as of December 31, 2019 $ 1.3 billion). Of this amount, approximately $ 0.1 billion (as of December 31, 2019 $ 0.2 billion) is attributable to earnings of the Company’s foreign subsidiaries that are considered “pass - through” entities for U.S. income tax purposes. Since the Company accounts for U.S. income taxes on these earnings on a current basis, no additional U.S. tax consequences would result from the repatriation of these earnings other than that which would be due arising from currency fluctuations between the time the earnings are reported for U.S. tax purposes and when they are remitted. With respect to certain of these subsidiaries’ accumulated earnings, approximately $ 0.1 billion and $ 0.2 billion as of September 30, 2020 and December 31, 2019, respectively, would result in additional foreign taxes in the form of dividend withholding tax imposed on the recipient of the distribution or dividend distribution tax imposed on the payor of the distribution upon repatriation. The Company has not provided for its proportionate share of additional foreign taxes or deferred U.S. tax on cumulative translation adjustments associated with certain foreign pass - through entities as it does not intend to repatriate these earnings in the foreseeable future. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | 12. Leases All of the Company’s leases are classified as operating leases and primarily consist of real estate leases for corporate offices, data centers, and other facilities. As of September 30, 2020, the weighted-average remaining lease term on these leases is approximately 8 years and the weighted-average discount rate used to measure the lease liabilities is approximately 4.17 %. For the nine months ended September 30, 2020, right- of-use assets obtained under new operating leases were $ 3 million. The Company’s lease agreements do not contain any residual value guarantees, restrictions or covenants. The table below presents balances reported in the unaudited condensed consolidated statements of financial condition related to the Company’s leases for the period indicated. September 30, 2020 December 31, 2019 (in millions) Right-of-use assets 1 $ 107 $ 118 Lease liabilities 1 $ 116 $ 124 __________________________ (1) Right-of-use assets are included in other assets and lease liabilities are included in accounts payable, accrued expenses and other liabilities in the Company’s unaudited condensed consolidated statements of financial condition. The table below presents balances reported in the unaudited condensed consolidated statements of comprehensive income related to the Company’s leases for the period indicated. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions) Operating lease cost $ 7 $ 7 $ 19 $ 19 Variable lease cost 1 1 3 3 Total lease cost $ 8 $ 8 $ 22 $ 22 The tables below reconcile the undiscounted cash flows of the Company’s leases to the present value of its operating lease payments for the periods indicated. September 30, 2020 (in millions) 2020 (remaining) $ 5 2021 18 2022 17 2023 15 2024 14 2025 14 Thereafter 56 Total undiscounted operating lease payments 139 Less: imputed interest ( 23 ) Present value of operating lease liabilities $ 116 |
Commitments, Contingencies And
Commitments, Contingencies And Guarantees | 9 Months Ended |
Sep. 30, 2020 | |
Commitments, Contingencies And Guarantees [Abstract] | |
Commitments, Contingencies And Guarantees | 13. Commitments, Contingencies and Guarantees Claims Against Customers Over an extended period in 2018, a small number of the Company’s customers had taken relatively large positions in a security listed on a major U.S. exchange. The Company extended margin loans against the security at a conservatively high collateral requirement. In December 2018, within a very short timeframe, this security lost a substantial amount of its value. During the quarter ended March 31, 2019, subsequent price declines in the stock have caused these accounts to fall into deficits, despite the Company’s efforts to liquidate the customers’ positions. As of September 30, 2020, the Company has recognized an aggregate loss of approximately $ 42 million. The maximum aggregate loss, which would occur if the security’s price fell to zero and none of the debts were collected, would be approximately $ 50 million. The Company continues to evaluate pursuing the collection of the debts, although debt collection efforts are inherently difficult and uncertain. The ultimate effect of this incident on the Company’s results will depend upon market conditions and the outcome of the Company’s debt collection efforts. Legal, Regulatory and Governmental Matters The Company is subject to certain pending and threatened legal, regulatory and governmental actions and proceedings that arise out of the normal course of business. Given the inherent difficulty of predicting the outcome of such matters, particularly in proceedings where claimants seek substantial or indeterminate damages, or which are in their early stages, the Company is generally not able to quantify the actual loss or range of loss related to such legal proceedings, the manner in which they will be resolved, the timing of their final resolution or the ultimate settlement. Management believes that the resolution of these matters will not have a material effect, if any, on the Company’s business or financial condition, but may have a material impact on the results of operations for a given period. The Company accounts for potential losses related to litigation in accordance with FASB ASC Topic 450, “Contingencies.” As of September 30 , 2020 and 2019, accruals for potential losses related to legal, regulatory and governmental actions, and proceedings matters were not material. Trading Technologies Matter On February 3, 2010, Trading Technologies International, Inc. (“Trading Technologies”) filed a complaint in the U.S. District Court for the Northern District of Illinois, Eastern Division, against IBG LLC and IB LLC (“Defendants”). The complaint, as amended, alleges that the Defendants have infringed and continue to infringe twelve U.S. patents held by Trading Technologies. Trading Technologies is seeking, among other things, unspecified damages and injunctive relief. The Defendants filed an answer to Trading Technologies’ amended complaint, as well as related counterclaims. The Defendants deny Trading Technologies’ claims, assert that the asserted patents are not infringed and are invalid, and assert several other defenses as well. The asserted patents were the subject of petitions before the United States Patent and Trademark Office (“USPTO”) seeking Covered Business Method Review (“CBM Review”). The USPTO Patent Trial Appeal Board (“PTAB”) found all claims of ten of the twelve asserted patents to be invalid. Of the remaining two patents, 53 of the 56 claims of one patent were held invalid and the other patent survived CBM Review proceedings. Appeals were filed by either Defendants or Trading Technologies on all PTAB determinations. The United States Court of Appeals for the Federal Circuit vacated the CBM Review determinations of invalidity for four patents, concluding that these patents were not eligible for CBM Review. The District Court trial with respect to these four patents is scheduled for April 2021. While it is difficult to predict the outcome of the matter, the Company believes it has meritorious defenses to the allegations made in the complaint and intends to defend itself vigorously against them. However, litigation is inherently uncertain and there can be no guarantee that the Company will prevail or that the litigation can be settled on favorable terms. Class Action Matter On December 18, 2015, a former individual customer filed a purported class action complaint against IB LLC, IBG, Inc., and Thomas Frank, PhD, the Company’s Executive Vice President and Chief Information Officer, in the U.S. District Court for the District of Connecticut. The complaint alleges that the purported class of IB LLC’s customers were harmed by alleged “flaws” in the computerized system used to close out (i.e., liquidate) positions in customer brokerage accounts that have margin deficiencies. The complaint seeks, among other things, undefined compensatory damages and declaratory and injunctive relief. On September 28, 2016, the District Court issued an order granting the Company’s motion to dismiss the complaint in its entirety, and without providing plaintiff leave to amend. On September 28, 2017, plaintiff appealed to the United States Court of Appeals for the Second Circuit. On September 26, 2018, the Court of Appeals affirmed the dismissal of plaintiff’s claims of breach of contract and commercially unreasonable liquidation but vacated and remanded back to the District Court plaintiff’s claims for negligence. On November 30, 2018, the plaintiff filed a second amended complaint. The Company filed a motion to dismiss the new complaint on January 15, 2019, which was denied on September 30, 2019. On December 9, 2019, the Company filed a motion requesting that the District Court certify to the Connecticut Supreme Court two questions of Connecticut law directly relevant to the motion to dismiss. The Court denied the Company’s motion to certify on May 15, 2020. Currently, Plaintiff’s motion for class certification is due on February 17, 2021. Regardless of the outcome of this motion, the Company does not believe that a purported class action is appropriate given the great differences in portfolios, markets and many other circumstances surrounding the liquidation of any particular customer’s margin-deficient account. IB LLC and the related defendants intend to continue to defend themselves vigorously against the case and, consistent with past practice in connection with this type of unwarranted action, any potential claims for counsel fees and expenses incurred in defending the case may be fully pursued against the plaintiff. Regulatory Matters The Company is subject to regulatory oversight and examination by numerous governmental and self-regulatory authorities . As announced on August 10, 2020, we agreed to settle certain matters related to our historical anti-money laundering and Bank Secrecy Act practices and procedures with FINRA, the SEC and the CFTC. As part of the settlements, we agreed to pay penalties of $ 15 million to FINRA, $ 11.5 million to the SEC and $ 11.5 million to the CFTC, plus approximately $ 700,000 in disgorgement. In addition, we agreed to continue the retention of an independent consultant to review the implementation of our enhanced compliance practices and procedures. We are also cooperating with a United States Department of Justice inquiry concerning these matters, and while its outcome cannot be predicted, we do not believe that the resolution of this inquiry is likely to have a materially adverse effect on our financial results. West Texas Intermediate Crude Oil Event On April 20, 2020 the energy markets exhibited extraordinary price activity in the New York Mercantile Exchange (“NYMEX”) West Texas Intermediate Crude Oil contract. The price of the May 2020 physically-settled futures contract dropped to an unprecedented negative price of $ 37.63 . This price was the basis for determining the settlement price for cash-settled futures contracts traded on the CME Globex and also for a separate, expiring cash-settled futures contract listed on the Intercontinental Exchange Europe (“ICE Europe”). Several of the Company’s customers held long positions in these CME and ICE Europe futures contracts, and as a result they incurred losses, including losses in excess of the equity in their accounts. The Company fulfilled the required variation margin settlements with the respective clearinghouses on behalf of its customers. While the Company originally recognized an aggregate provisionary loss of approximately $ 88 million, the Company has since determined to compensate certain affected customers in connection with their losses resulting from the futures contracts settling at a price below zero. As a result, the Company recognized an aggregate loss of approximately $ 104 million. Guarantees Certain of the operating subsidiaries provide guarantees to securities and commodities clearing houses and exchanges which meet the accounting definition of a guarantee under FASB ASC Topic 460, “Guarantees.” Under standard membership agreements, clearing house and exchange members are required to guarantee collectively the performance of other members. Under the agreements, if a member becomes unable to satisfy its obligations, other members would be required to meet shortfalls. In the opinion of management, the operating subsidiaries ’ liability under these arrangements is not quantifiable and could exceed the cash and securities they have posted as collateral. However, the potential for these operating subsidiaries to be required to make payments under these arrangements is remote. Accordingly, no contingent liability is carried in the condensed consolidated statements of financial condition for these arrangements. In connection with its retail brokerage business, IB LLC or other electronic brokerage operating subsidiaries perform securities and commodities execution, clearance and settlement on behalf of their customers for whom they commit to settle trades submitted by such customers with the respective clearing houses. If a customer fails to fulfill its settlement obligations, the respective operating subsidiary must fulfill those settlement obligations. No contingent liability is carried on the condensed consolidated statements of financial condition for such customer obligations. Other Commitments Certain clearing houses, clearing banks and firms used by certain operating subsidiaries are given a security interest in certain assets of those operating subsidiaries held by those clearing organizations. These assets may be applied to satisfy the obligations of those operating subsidiaries to the respective clearing organizations. |
Geographic Information
Geographic Information | 9 Months Ended |
Sep. 30, 2020 | |
Geographic Information [Abstract] | |
Geographic Information | 14. Geographic Information The Company operates its automated global business in the U.S. and international markets on more than 135 electronic exchanges and market centers. A significant portion of the Company’s net revenues is generated by subsidiaries operating outside the U.S. International operations are conducted in 32 countries in Europe, Asia/Pacific and the Americas (outside the U.S.). The following table presents total net revenues and income before income taxes by geographic area for the periods indicated . Significant transactions and balances between the operating subsidiaries occur, primarily as a result of certain operating subsidiaries holding exchange or clearing organization memberships, which are utilized to provide execution and clearing services to subsidiaries. Intra - region income and expenses and related balances have been eliminated in this geographic information to reflect the external business conducted in each geographic region. The geographic analysis presented below is based on the location of the subsidiaries in which the transactions are recorded. This geographic information does not reflect the way the Company’s business is managed. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions) Net revenues United States $ 390 $ 346 $ 1,153 $ 1,117 International 158 120 466 320 Total net revenues $ 548 $ 466 $ 1,619 $ 1,437 Income before income taxes United States $ 278 $ 222 $ 696 $ 717 International 56 59 168 128 Total income before income taxes $ 334 $ 281 $ 864 $ 845 |
Regulatory Requirements
Regulatory Requirements | 9 Months Ended |
Sep. 30, 2020 | |
Regulatory Requirements [Abstract] | |
Regulatory Requirements | 15. Regulatory Requirements As of September 30 , 2020, aggregate excess regulatory capital for all of the operating subsidiaries was $ 5.9 billion. IB LLC, TH LLC and IB Corp are subject to the Uniform Net Capital Rule (Rule 15c3 - 1) under the Exchange Act, IB LLC is also subject to the CFTC’s minimum financial requirements (Regulation 1.17), and IBKRFS is subject to the Swiss Financial Market Supervisory Authority eligible equity requirement. IBC is subject to the Investment Industry Regulatory Organization of Canada risk adjusted capital requirement, IBUK is subject to the United Kingdom Financial Conduct Authority Capital Requirements Directive, IBLUX is subject to the Luxembourg Commission de Surveillance du Secteur Financier financial resources requirement , IBHK is subject to the Hong Kong Securities Futures Commission liquid capital requirement, IBI is subject to the National Stock Exchange of India net capital requirements, IBSJ is subject to the Japanese Financial Supervisory Agency capital requirements, IBSG is subject to the Monetary Authority of Singapore capital requirements, and IBA is subject to the Australian Securities Exchange liquid capital requirement. The table below summarizes capital, capital requirements and excess regulatory capital as of September 30, 2020. Net Capital/ Eligible Equity Requirement Excess (in millions) IB LLC $ 4,621 $ 520 $ 4,101 IBKRFS 593 21 572 IBHK 632 225 407 Other regulated operating subsidiaries 896 56 840 $ 6,742 $ 822 $ 5,920 Regulatory capital requirements could restrict the operating subsidiaries from expanding their business and declaring dividends if their net capital does not meet regulatory requirements. Also, certain operating subsidiaries are subject to other regulatory restrictions and requirements. As of September 30 , 2020, all of the regulated operating subsidiaries were in compliance with their respective regulatory capital requirements. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 16. Related Party Transactions Receivable from affiliate, reported in other assets in the condensed consolidated statement of financial condition, represents amounts advanced to Holdings and payable to affiliate represents amounts payable to Holdings under the Tax Receivable Agreement (see Note 4). Included in receivables from and payables to customers in the condensed consolidated statements of financial condition as of September 30 , 2020 and December 31, 2019 were accounts receivable from directors, officers and their affiliates of $ 231 million and $ 23 million, respectively, and payables of $ 1,002 million and $ 939 million, respectively. The Company may extend credit to these related parties in connection with margin and securities loans. Such loans are (i) made in the ordinary course of business, (ii) are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the company, and (iii) do not involve more than the normal risk of collectability or present other unfavorable features. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events The Company has evaluated subsequent events for adjustment to or disclosure in its condensed consolidated financial statements through the date the condensed consolidated financial statements were issued. Except as disclosed above and in Note 4 and Note 13, no other recordable or disclosable events occurred. ***** |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These condensed consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10 - Q. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2019 Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 28, 2020. The condensed consolidated financial information as of December 31, 2019 has been derived from the audited financial statements not included herein. These condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the periods presented. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. In March 2020, the World Health Organization recognized the outbreak of the Coronavirus Disease 2019 (“COVID-19”) caused by a novel strain of the coronavirus as a pandemic. The pandemic affects all countries in which we operate. The response of governments and societies to the COVID-19 pandemic, which includes temporary closures of businesses; social distancing; travel restrictions, “shelter in place” and other governmental regulations; and reduced consumer spending due to job losses, has significantly impacted market volatility and general economic conditions. The impact of the COVID-19 pandemic on the Company could be significant but currently cannot be quantified, as it will depend on numerous evolving factors that currently cannot be accurately predicted, including, but not limited to the duration and spread of the pandemic; its impact on our customers, employees and vendors; governmental regulations in response to the pandemic; and the overall impact of the pandemic on the economy and society; among other factors. Any of these events could have significant accounting and financial reporting implications (i.e., reassessing accounting estimates related to credit losses, valuation of certain investments, deferred tax assets and contingency reserves). We have reviewed our assumptions related to the above estimates and have not made any adjustments. |
Principles Of Consolidation, Including Noncontrolling Interests | Principles of Consolidation, including Noncontrolling Interests These condensed consolidated financial statements include the accounts of IBG, Inc. and its majority and wholly owned subsidiaries. As sole managing member of IBG LLC, IBG, Inc. exerts control over IBG LLC’s operations. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “ Consolidation, ” the Company consolidates IBG LLC’s financial statements and records the interests in IBG LLC that it does not own as noncontrolling interests. The Company’s policy is to consolidate all other entities in which it owns more than 50% unless it does not have control. All inter - company balances and transactions have been eliminated. |
Condensed Consolidated Statements of Comprehensive Income and Operating Business Segment Presentation Changes | Condensed Consolidated Statements of Comprehensive Income and Operating Business Segment Presentation Changes As previously disclosed in the Company’s 10-Q for the quarter ended March 31, 2017 and in subsequent filings, the Company intended to eliminate the reporting of separate operating business segments upon its determination that the continued wind-down of the Company’s market making activity rendered it no longer reportable as a business segment. Pursuant to the requirements of FASB ASC Topic 280, “ Segment Reporting, ” the Company performed a quantitative and a qualitative assessment of its business and determined that its remaining market making activity no longer supports the Company’s reporting of separate business segments. Accordingly, effective the first quarter of 2020 the Company discontinued the reporting of separate business segments. Since the Company’s decision to wind down its market making activities, management has continued to shift its focus to growing and strengthening the Company’s electronic brokerage business. The Company believes the elimination of segment reporting aligns its financial reporting with its business strategy and management’s focus on the electronic brokerage business. For each of the eight quarters during 2018 and 2019, the market making segment’s contribution to the Company’s consolidated net revenues, income before income taxes, and total assets did not exceed 7 %, 4 %, and 6 %, respectively. As a result, effective the first quarter of 2020, the Company modified the presentation of its segment financial information with retrospective application to all prior periods presented. In addition, effective the first quarter of 2020, the Company changed the presentation of its condensed consolidated statements of comprehensive income to better align with its business strategy. As a result, the Company made the following reclassifications to amounts reported in its condensed consolidated statement of comprehensive income for the three and nine months ended September 30, 2019: Other fees and services – reclassified $ 35 million and $ 105 million for the three and nine months ended September 30, 2019 previously reported as other income to other fees and services, which includes market data fees, account activity fees, risk exposure fees, order flow income from options exchange-mandated programs, and revenues from other fees and services. These items have been historically reported as a component of other income. Other income – reclassified $ 7 million and $ 20 million for the three and nine months ended September 30, 2019 previously reported as trading gains to other income as a component of “principal transactions.” Other income includes gains (losses) from principal transactions; the impact of the currency diversification strategy; gains (losses) from equity method investments; and other revenues not directly attributable to the Company’s core business offerings. Previously reported amounts in the condensed consolidated statements of comprehensive income and notes to the condensed consolidated financial statements have been adjusted to conform to the current presentation. |
Use Of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these condensed consolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Therefore, actual results could differ materially from those estimates. Such estimates include the allowance for credit losses, valuation of certain investments, compensation accruals, current and deferred income taxes, and contingency reserves. |
Fair Value | Fair Value Substantially all of the Company’s assets and liabilities, including financial instruments, are carried at fair value based on published market prices and are marked to market, or are assets and liabilities which are short - term in nature and are carried at amounts that approximate fair value. The Company applies the fair value hierarchy in accordance with FASB ASC Topic 820, “ Fair Value Measurement” (“ASC Topic 820”) , to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Quoted prices for similar assets in an active market, quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly. Level 3 Prices or valuations that require inputs that are both significant to fair value measurement and unobservable. Financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are generally classified as Level 1 of the fair value hierarchy. The Company’s Level 1 financial instruments, which are valued using quoted market prices as published by exchanges and clearing houses or otherwise broadly distributed in active markets, include active listed stocks, options, warrants, and U.S. and foreign government securities. The Company does not adjust quoted prices for financial instruments classified as Level 1 of the fair value hierarchy, even in the event that the Company may hold a large position whereby a purchase or sale could reasonably impact quoted prices. Currency forward contracts are valued using broadly distributed bank and broker prices, and are classified as Level 2 of the fair value hierarchy since inputs to their valuation can be generally corroborated by market data. Other securities that are not traded in active markets are also classified as Level 2 of the fair value hierarchy. Level 3 financial instruments are comprised of securities that have been delisted or otherwise are no longer tradable in active markets and have been valued by the Company based on internal estimates. |
Earnings Per Share | Earnings per Share Earnings per share (“EPS”) is computed in accordance with FASB ASC Topic 260, “ Earnings per Share .” Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s stock-based compensation plans, with no adjustments to net income available for common stockholders for potentially dilutive common shares. |
Current Expected Credit Losses | Current Expected Credit Losses On January 1, 2020, the Company adopted FASB ASC Topic 326 – “Financial Instruments – Credit Losses” (“ASC Topic 326”) which replaces the incurred loss methodology with the current expected credit loss (“CECL”) methodology. The new guidance applies to financial assets measured at amortized cost, held-to-maturity debt securities and off-balance sheet credit exposures. For on-balance sheet assets, an allowance must be recognized at the origination or purchase of in-scope assets and represents the expected credit losses over the contractual life of those assets. Expected credit losses on off-balance sheet credit exposures must be estimated over the contractual period the Company is exposed to credit risk as a result of a present obligation to extend credit. The Company adopted ASC Topic 326 using the modified retrospective approach for all in-scope assets, which did not result in an adjustment to the opening balance in retained earnings. Results for reporting periods beginning after January 1, 2020 are presented under ASC Topic 326 while prior periods continue to be reported in accordance with previously applicable U.S. GAAP. The impact to the current period is not material since the Company’s in-scope assets are primarily subject to collateral maintenance provisions for which the Company elected to apply the practical expedient of reporting the difference between the fair value of collateral and the amortized cost for the in-scope assets as the allowance for current expected credit losses. |
Cash And Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of deposits with banks and all highly liquid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes or to meet margin requirements at clearing houses and clearing banks. |
Cash And Securities - Segregated For Regulatory Purposes | Cash and Securities - Segregated for Regulatory Purposes As a result of customer activities, certain operating subsidiaries are obligated by rules mandated by their primary regulators to segregate or set aside cash or qualified securities to satisfy such regulations, which have been promulgated to protect customer assets. Restricted cash represents cash and cash equivalents that are subject to withdrawal or usage restrictions. Cash segregated for regulatory purposes meets the definition of restricted cash and is included in “cash, cash equivalents, and restricted cash” in the condensed consolidated statements of cash flows. The table below presents the composition of the Company’s securities segregated for regulatory purposes for the periods indicated. September 30, December 31, 2020 2019 (in billions) U.S. government securities $ 5.0 $ 3.8 Securities purchased under agreements to resell 1 24.3 14.0 $ 29.3 $ 17.8 ___________________________ (1) These balances are collateralized by U.S. government securities. |
Securities Borrowed And Securities Loaned | Securities Borrowed and Securities Loaned Securities borrowed and securities loaned are recorded at the amount of the cash collateral advanced or received. Securities borrowed transactions require the Company to provide counterparties with collateral, which may be in the form of cash, letters of credit or other securities. With respect to securities loaned, the Company receives collateral, which may be in the form of cash or other securities in an amount generally in excess of the fair value of the securities loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as permitted contractually. The Company’s policy is to net, in the condensed consolidated statements of financial condition, securities borrowed and securities loaned entered into with the same counterparty that meet the offsetting requirements prescribed in FASB ASC Topic 210-20, “Balance Sheet – Offsetting” (“ASC Topic 210-20”). Securities lending fees received and paid by the Company are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income. |
Securities Purchased Under Agreements To Resell and Secruities Sold Under Agreements to Repurchase | Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase Securities purchased under agreements to resell and securities sold under agreements to repurchase, which are reported as collateralized financing transactions, are recorded at contract value, which approximates fair value. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. The Company’s policy is to net, in the condensed consolidated statements of financial condition, securities purchased under agreements to resell transactions and securities sold under agreements to repurchase transactions entered into with the same counterparty that meet the offsetting requirements prescribed in ASC Topic 210-20. |
Financial Instruments Owned And Sold But Not Yet Purchased, at Fair Value | Financial Instruments Owned and Financial Instruments Sold, But Not Yet Purchased, at Fair Value Financial instrument transactions are accounted for on a trade date basis. Financial instruments owned and financial instruments sold, but not yet purchased are stated at fair value based upon quoted market prices, or if not available, are valued by the Company based on internal estimates (see Fair Value above). The Company’s financial instruments pledged to counterparties where the counterparty has the right, by contract or custom, to sell or repledge the financial instruments are reported as financial instruments owned and pledged as collateral in the condensed consolidated statements of financial condition. |
Customer Receivables And Payables | Customer Receivables and Payables Customer securities transactions are recorded on a settlement date basis and customer commodities transactions are recorded on a trade date basis. Receivables from and payables to customers include amounts due on cash and margin transactions, including futures contracts transacted on behalf of customers. Securities owned by customers, including those that collateralize margin loans or other similar transactions, are not reported in the condensed consolidated statements of financial condition. Amounts receivable from customers that are determined by management to be uncollectible are recorded as customer bad debt expense in the condensed consolidated statements of comprehensive income. |
Receivables From And Payables To Brokers, Dealers And Clearing Organizations | Receivables from and Payables to Brokers, Dealers and Clearing Organizations Receivables from and payables to brokers, dealers and clearing organizations include net receivables and payables from unsettled trades, including amounts related to futures and options on futures contracts executed on behalf of customers, amounts receivable for securities not delivered by the Company to the purchaser by the settlement date (“fails to deliver”) and cash deposits. Payables to brokers, dealers and clearing organizations also include amounts payable for securities not received by the Company from a seller by the settlement date (“fails to receive”). |
Investments | Investments The Company makes certain strategic investments related to its business which are included in other assets in the consolidated statements of financial condition. The Company accounts for these investments as follows: Under the equity method of accounting as required under FASB ASC Topic 323, “ Investments - Equity Method and Joint Ventures. ” These investments, including where the investee is a limited partnership or limited liability company, are recorded at the fair value amount of the Company’s initial investment and are adjusted each period for the Company’s share of the investee’s income or loss. Contributions paid to and distributions received from equity method investees are recorded as additions or reductions, respectively, to the respective investment balance. At fair value if the investment in equity securities has a readily determinable fair value. At adjusted cost if the investment does not have a readily determinable fair value. Adjusted cost represents the historical cost, less impairment, if any. If the Company identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer, the Company measures the equity security at fair value as of the date that the observable transaction occurred in accordance with FASB ASC Topic 321, “Investments in Equity Securities.” A judgmental aspect of accounting for investments is evaluating whether a decline in the value of an investment has occurred. The evaluation of an impairment is dependent on specific quantitative and qualitative factors and circumstances surrounding an investment, including recurring operating losses, credit defaults and subsequent rounds of financing. Most of the Company’s equity investments do not have readily determinable market values. All investments are reviewed for changes in circumstances or occurrence of events that suggest the Company’s investment may not be recoverable. An impairment loss, if any, is recognized in the period the determination is made . The table below presents the composition of the Company’s investments for the periods indicated. September 30, December 31, 2020 2019 (in millions) Equity method investments 1 $ 9 $ 22 Investments in equity securities at adjusted cost 2 7 5 Investments in equity securities at fair value 2 48 36 Investments in exchange memberships and equity securities of certain exchanges 2 3 3 $ 67 $ 66 ___________________________ (1) The Company’s share of income or losses is included in other income in the condensed consolidated statements of comprehensive income. (2) These investments do not qualify for equity method of accounting and the dividends received are included in other income in the condensed consolidated statements of comprehensive income. |
Property, Equipment, and Intangible Assets | Property, Equipment, and Intangible Assets Property, equipment, and intangible assets, which are included in other assets in the condensed consolidated statements of financial condition, consist of leasehold improvements, computer equipment, software developed for the Company’s internal use, office furniture and equipment . Property and equipment are recorded at historical cost, less accumulated depreciation and amortization. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation and amortization are computed using the straight - line method. Equipment is depreciated over the estimated useful lives of the assets, while leasehold improvements are amortized over the lesser of the estimated economic useful life of the asset or the term of the lease. Computer equipment is depreciated over three to five years and office furniture and equipment are depreciated over five to seven years . Intangible assets with a finite life are amortized on a straight-line basis over their estimated useful lives of three years , and tested for recoverability whenever events indicate that the carrying amounts may not be recoverable. Qualifying costs for internally developed software are capitalized and amortized over the expected useful life of the developed software, not to exceed three years . Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the condensed consolidated statements of financial condition and any resulting gain or loss is recorded in other income in the condensed consolidated statements of comprehensive income. Fully depreciated (or amortized) assets are retired periodically throughout the year. |
Leases | Leases The Company reviews all relevant contracts to determine if the contract contains a lease at its inception date. A contract contains a lease if the contract conveys to the company the right to control the use of an underlying asset for a period of time in exchange for consideration. If the Company determines that a contract contains a lease, it recognizes, in the condensed consolidated statements of financial condition, a lease liability and a corresponding right-of-use asset on the commencement date of the lease. The lease liability is initially measured at the present value of the future lease payments over the lease term using the rate implicit in the lease or, if not readily determinable, the Company’s secured incremental borrowing rate. An operating lease right-of-use asset is initially measured at the value of the lease liability minus any lease incentives and initial direct costs incurred plus any prepaid rent. The Company’s leases are classified as operating leases and consist of real estate leases for office space, data centers and other facilities. Each lease liability is measured using the Company’s secured incremental borrowing rate, which is based on an internally developed yield curve using interest rates of third parties’ corporate debt issued with a similar risk profile as the Company and a duration similar to the lease term. The Company’s leases have remaining terms of one to twelve years, some of which include options to extend the lease term, and some of which include options to terminate the lease upon notice. The Company considers these options when determining the lease term used to calculate the right-of-use asset and the lease liability when the Company is reasonably certain it will exercise such option. The Company’s operating leases contain both lease components and non-lease components . Non-lease components are distinct elements of a contract that are not related to securing the use of the underlying assets, such as common area maintenance and other management costs. The Company elected to measure the lease liability by combining the lease and non-lease components as a single lease component. As such, the Company includes the fixed payments and any payments that depend on a rate or index that relate to the lease and non-lease components in the measurement of the lease liability. Some of the non-lease components are variable in nature and not based on an index or rate, and as a result, are not included in the measurement of the right-of-use asset or lease liability. Operating lease expense is recognized on a straight-line basis over the lease term and is included in occupancy, depreciation and amortization, expense in the Company’s condensed consolidated statements of comprehensive income. |
Comprehensive Income And Foreign Currency Translation | Comprehensive Income and Foreign Currency Translation The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to FASB ASC Topic 220, “ Comprehensive Income. ” Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The Company’s OCI is comprised of gains and losses resulting from translating foreign currency financial statements of non-U.S. subsidiaries , net of related income taxes, where applicable. In general, the practice and intention of the Company is to reinvest the earnings of its non - U.S. subsidiaries in those operations, therefore tax is usually not accrued on OCI. The Company’s non - U.S. domiciled subsidiaries have a functional currency that is other than the U.S. dollar. Such subsidiaries’ assets and liabilities are translated into U.S. dollars at period - end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary’s functional currency to the U.S. dollar (as described above) are reported net of tax, where applicable, in accumulated OCI in the condensed consolidated statements of financial condition. |
Revenue Recognition | Revenue Recognition Commissions Commissions earned for executing and/or clearing transactions are accrued on a trade date basis and are reported as commissions in the condensed consolidated statements of comprehensive income. Commissions also include payments for order flow income related to IBKR Lite SM customers. See Note 8 for further information on revenue from contracts with customers. Other fees and services The Company earns fee income on services provided to customers, which includes market data fees, risk exposure fees, payments for order flow from exchange-mandated programs, minimum activity fees, and other fees and services charged to customers. Fee income is recognized either daily or monthly. See Note 8 for further information on revenue from contracts with customers. Interest Income and Expense The Company earns interest income and incurs interest expense primarily in connection with its electronic brokerage customer business and its securities lending activities, which are recorded on an accrual basis and are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income. Principal Transactions Principal transactions include gains and losses as a result of changes in the fair value of financial instruments owned, at fair value, financial instruments sold, but not yet purchased, at fair value, and other investments measured at fair value (i.e., unrealized gains and losses) and realized gains and losses related to the Company’s principal transactions. Included are net gains and losses on stocks, options, U.S. and foreign government securities, futures, foreign exchange and other derivative instruments. Dividends are integral to the valuation of stocks. Accordingly, dividends income and expense attributable to financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value, are reported on a net basis in other income in the condensed consolidated statements of comprehensive income. Foreign Currency Gains and Losses Foreign currency balances are assets and liabilities in currencies other than the Company’s functional currency. At every reporting date, the Company revalues its foreign currency balances to its functional currency at the spot exchange rate and records the associated foreign currency gains and losses. These foreign currency gains and losses are reported in the condensed consolidated statements of comprehensive income, as follows: (a) foreign currency gains and losses related to the Company’s currency diversification strategy are reported in other income; (b) foreign currency gains and losses arising from currency swap transactions are reported in interest income or interest expense; and (c) all other foreign currency gains and losses are reported in other income . |
Rebates | Rebates Rebates consist of volume discounts, credits or payments received from exchanges or other market centers related to the placement and/or removal of liquidity from the marketplace and are recorded on an accrual basis. Rebates are recorded net within execution, clearing and distribution fees in the condensed consolidated statements of comprehensive income. Rebates received for trades executed on behalf of customers that elect tiered pricing are passed, in whole or part, to these customers; and such pass-through amounts are recorded net within commissions in the condensed consolidated statements of comprehensive income. |
Stock-Based Compensation | Stock - Based Compensation The Company follows FASB ASC Topic 718, “ Compensation - Stock Compensation” (“ASC Topic 718”) , to account for its stock - based compensation plans. ASC Topic 718 requires all share - based payments to employees to be recognized in the consolidated financial statements using a fair value - based method. Grants, which are denominated in U.S. dollars, are communicated to employees in the year of grant, thereby establishing the fair value of each grant. The fair value of awards granted to employees are generally expensed as follows: 50 % in the year of grant in recognition of the plans’ post-employment provisions (as described below) and the remaining 50 % over the related vesting period utilizing the “graded vesting” method permitted under ASC Topic 718. In the case of “retirement eligible” employees (those employees older than 59), 100 % of awards are expensed when granted. Awards granted under stock - based compensation plans are subject to the plans’ post-employment provisions in the event an employee ceases employment with the Company. The plans provide that employees who discontinue employment with the Company without cause and continue to meet the terms of the plans’ post - employment provisions will be eligible to earn 50 % of previously granted but not yet earned awards, unless the employee is over the age of 59, in which case the employee would be eligible to receive 100 % of previously granted but not yet earned awards. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with FASB ASC Topic 740, “ Income Taxes” (“ASC Topic 740”) . The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits are based on enacted tax laws (see Note 11) and reflect management’s best assessment of estimated future taxes to be paid. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Determining income tax expense requires significant judgment and estimates. Deferred income tax assets and liabilities arise from temporary differences between the tax and financial statement recognition of underlying assets and liabilities. In evaluating the ability to recover deferred tax assets within the jurisdictions from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax - planning strategies, and results of recent operations. In projecting future taxable income, historical results are adjusted for changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax - planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, three years of cumulative operating income (loss) are considered. Deferred income taxes have not been provided for U.S. tax liabilities or for additional foreign taxes on the unremitted earnings of foreign subsidiaries that have been indefinitely reinvested. The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company’s global operations. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. The Company records tax liabilities in accordance with ASC Topic 740 and adjusts these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in payments that are different from the current estimates of these tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information becomes available. The Company recognizes a tax benefit from an uncertain tax position only when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. A tax position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. The Company recognizes interest related to income tax matters as interest income or interest expense and penalties related to income tax matters as income tax expense in the condensed consolidated statements of comprehensive income. |
Recently Issued Accounting Pronouncements | FASB Standards Adopted During 2020 Standard Summary of guidance Effect on financial statements Financial instruments – credit losses (Topic 326) Issued June 2016 Replaces the current incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost. The allowance shall reflect managements’ estimate of credit losses over the life of the asset taking future economic changes into consideration. As of the beginning of the reporting period of adoption, a cumulative-effect adjustment to retained earnings shall be recognized. Adopted January 1, 2020. The changes did not have a material impact on the Company’s condensed consolidated financial statements. The Company elected the practical expedient relating to financial assets subject to collateral maintenance provisions. Fair Value Measurement (Topic 820) Issued August 2018 Eliminates the requirement to disclose: (a) the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (b) an entity’s policy for timing of transfers between levels; (c) and an entity’s valuation processes for Level 3 fair value measurements. Adopted January 1, 2020. Changes relating to Level 3 fair value measurements were applied prospectively. All other changes were applied retrospectively. The adoption of the guidance did not have a material impact on the Company’s condensed consolidated financial statements. Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606) Issued August 2019 Requires that share-based payments granted to customers as part of a revenue arrangement and are not in exchange for a distinct good or service, be recorded as a reduction in transaction price using the grant date fair value. Share-based payments shall be measured and classified under ASC 718 unless they are subsequently modified and the grantee is no longer a customer, in which case they shall be classified under other U.S. GAAP. Adopted January 1, 2020. The guidance was applied using a modified retrospective approach. The changes did not have a material impact on the Company’s condensed consolidated financial statements. FASB Standards issued but not adopted as of September 30, 2020 Standard Summary of guidance Effect on financial statements Income Taxes (Topic 740) Issued December 2019 Simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. Effective date: January 1, 2021. Early adoption is permitted. The guidance is being evaluated for impact. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Significant Accounting Policies [Abstract] | |
Schedule Of Securities Segregated For Regulatory Purposes | September 30, December 31, 2020 2019 (in billions) U.S. government securities $ 5.0 $ 3.8 Securities purchased under agreements to resell 1 24.3 14.0 $ 29.3 $ 17.8 ___________________________ (1) These balances are collateralized by U.S. government securities. |
Composition Of Investment | September 30, December 31, 2020 2019 (in millions) Equity method investments 1 $ 9 $ 22 Investments in equity securities at adjusted cost 2 7 5 Investments in equity securities at fair value 2 48 36 Investments in exchange memberships and equity securities of certain exchanges 2 3 3 $ 67 $ 66 ___________________________ (1) The Company’s share of income or losses is included in other income in the condensed consolidated statements of comprehensive income. (2) These investments do not qualify for equity method of accounting and the dividends received are included in other income in the condensed consolidated statements of comprehensive income. |
Equity And Earnings Per Share (
Equity And Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity And Earnings Per Share [Abstract] | |
IBG LLC Ownership of Member Interests | IBG, Inc. Holdings Total Ownership % 19.0 % 81.0 % 100.0 % Membership interests 79,057,622 337,670,642 416,728,264 |
Earnings Per Share Basic And Diluted | Basic earnings per share is calculated utilizing net income available for common stockholders divided by the weighted average number of shares of Class A and Class B common stock outstanding for that period. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions, except share or per share amounts) Basic earnings per share Net income available for common stockholders $ 46 $ 36 $ 124 $ 117 Weighted average shares of common stock outstanding Class A 78,509,525 76,742,689 77,542,908 75,909,980 Class B 100 100 100 100 78,509,625 76,742,789 77,543,008 75,910,080 Basic earnings per share $ 0.59 $ 0.46 $ 1.60 $ 1.54 Diluted earnings per share are calculated utilizing the Company’s basic net income available for common stockholders divided by diluted weighted average shares outstanding with no adjustments to net income available to common stockholders for potentially dilutive common shares. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions, except share or per share amounts) Diluted earnings per share Net income available for common stockholders $ 46 $ 36 $ 124 $ 117 Weighted average shares of common stock outstanding Class A Issued and outstanding 78,509,525 76,742,689 77,542,908 75,909,980 Potentially dilutive common shares Issuable pursuant to employee stock incentive plans 610,923 606,187 700,691 736,407 Class B 100 100 100 100 79,120,548 77,348,976 78,243,699 76,646,487 Diluted earnings per share $ 0.58 $ 0.45 $ 1.58 $ 1.52 |
Comprehensive Income (Tables)
Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Comprehensive Income Detail [Abstract] | |
Comprehensive Income Table | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions, except share or per share amounts) Comprehensive income available for common stockholders $ 54 $ 30 $ 129 $ 114 Earnings per share on comprehensive income Basic $ 0.69 $ 0.39 $ 1.67 $ 1.50 Diluted $ 0.69 $ 0.39 $ 1.65 $ 1.49 Weighted average common shares outstanding Basic 78,509,625 76,742,789 77,543,008 75,910,080 Diluted 79,120,548 77,348,976 78,243,699 76,646,487 |
Financial Assets And Financia_2
Financial Assets And Financial Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Financial Assets And Financial Liabilities [Abstract] | |
Fair Value Table | Financial Assets at Fair Value as of September 30, 2020 Level 1 Level 2 Level 3 Total (in millions) Securities segregated for regulatory purposes $ 4,974 $ — $ — $ 4,974 Financial instruments owned, at fair value Stocks 375 — 1 376 Options 29 — — 29 Warrants — — — — U.S. and foreign government securities 28 — — 28 Corporate bonds — — 3 3 Currency forward contracts — 16 — 16 Total financial instruments owned, at fair value 432 16 4 452 Other assets - other investments at fair value 48 — — 48 Total financial assets at fair value $ 5,454 $ 16 $ 4 $ 5,474 Financial Liabilities at Fair Value as of September 30, 2020 Level 1 Level 2 Level 3 Total (in millions) Financial instruments sold, but not yet purchased, at fair value Stocks $ 158 $ — $ — $ 158 Options 27 — — 27 Currency forward contracts — 2 — 2 Total financial instruments sold, but not yet purchased, at fair value 185 2 — 187 Total financial liabilities at fair value $ 185 $ 2 $ — $ 187 Financial Assets at Fair Value as of December 31, 2019 Level 1 Level 2 Level 3 Total (in millions) Securities segregated for regulatory purposes $ 3,797 $ — $ — $ 3,797 Financial instruments owned, at fair value Stocks 540 — — 540 Options 1,333 — — 1,333 Warrants — — — — U.S. and foreign government securities 34 — — 34 Corporate bonds — — 3 3 Currency forward contracts — 6 — 6 Total financial instruments owned, at fair value 1,907 6 3 1,916 Other assets - other investments at fair value 36 — — 36 Total financial assets at fair value $ 5,740 $ 6 $ 3 $ 5,749 Financial Liabilities at Fair Value as of December 31, 2019 Level 1 Level 2 Level 3 Total (in millions) Financial instruments sold, but not yet purchased, at fair value Stocks $ 183 $ — $ — $ 183 Options 273 — — 273 Currency forward contracts — 1 — 1 Total financial instruments sold, but not yet purchased, at fair value 456 1 — 457 Total financial liabilities at fair value $ 456 $ 1 $ — $ 457 |
Financial Assets and Liabilities Not Measured at Fair Value | September 30, 2020 Carrying Value Fair Value Level 1 Level 2 Level 3 (in millions) Financial assets, not measured at fair value Cash and cash equivalents $ 3,292 $ 3,292 $ 3,292 $ — $ — Cash - segregated for regulatory purposes 12,789 12,789 12,789 — — Securities - segregated for regulatory purposes 24,342 24,342 — 24,342 — Securities borrowed 3,995 3,995 — 3,995 — Securities purchased under agreements to resell 1,401 1,401 — 1,401 — Receivables from customer 30,343 30,343 — 30,343 — Receivables from broker, dealers, and clearing organizations 2,575 2,575 — 2,575 — Interest receivable 69 69 — 69 — Other assets 11 11 — 2 9 Total financial assets, not measured at fair value $ 78,817 $ 78,817 $ 16,081 $ 62,727 $ 9 Financial liabilities, not measured at fair value Short-term borrowings $ 628 $ 628 $ — $ 628 $ — Securities loaned 5,738 5,738 — 5,738 — Payables to customer 68,830 68,830 — 68,830 — Payables to brokers, dealers and clearing organizations 313 313 — 313 — Interest payable 3 3 — 3 — Total financial liabilities, not measured at fair value $ 75,512 $ 75,512 $ — $ 75,512 $ — December 31, 2019 Carrying Value Fair Value Level 1 Level 2 Level 3 (in millions) Financial assets, not measured at fair value Cash and cash equivalents $ 2,882 $ 2,882 $ 2,882 $ — $ — Cash - segregated for regulatory purposes 9,400 9,400 9,400 — — Securities - segregated for regulatory purposes 14,027 14,027 — 14,027 — Securities borrowed 3,916 3,916 — 3,916 — Securities purchased under agreements to resell 3,111 3,111 — 3,111 — Receivables from customer 31,304 31,304 — 31,304 — Receivables from broker, dealers, and clearing organizations 685 685 — 685 — Interest receivable 158 158 — 158 — Other assets 9 9 — 3 6 Total financial assets, not measured at fair value $ 65,492 $ 65,492 $ 12,282 $ 53,204 $ 6 Financial liabilities, not measured at fair value Short-term borrowings $ 16 $ 16 $ — $ 16 $ — Securities loaned 4,410 4,410 — 4,410 — Securities sold under agreements to repurchase 1,909 1,909 — 1,909 — Payables to customer 56,248 56,248 — 56,248 — Payables to brokers, dealers and clearing organizations 220 220 — 220 — Interest payable 29 29 — 29 — Total financial liabilities, not measured at fair value $ 62,832 $ 62,832 $ — $ 62,832 $ — |
Offsetting Assets And Liabilities | September 30, 2020 Gross Amounts Net Amounts Amounts Not Offset Amounts Offset in the Presented in in the Condensed of Financial Condensed the Condensed Consolidated Statement Assets and Consolidated Consolidated of Financial Condition Liabilities Statement of Statement of Cash or Financial Recognized Financial Condition 2 Financial Condition Instruments Net Amount (in millions) Offsetting of financial assets Securities segregated for regulatory purposes - purchased under agreements to resell $ 24,342 1 $ — $ 24,342 $ ( 24,342 ) $ — Securities borrowed 3,995 — 3,995 ( 3,822 ) 173 Securities purchased under agreements to resell 1,401 — 1,401 ( 1,401 ) — Financial instruments owned, at fair value Options 29 — 29 ( 26 ) 3 Currency forward contracts 16 — 16 — 16 Total $ 29,783 $ — $ 29,783 $ ( 29,591 ) $ 192 (in millions) Offsetting of financial liabilities Securities loaned $ 5,738 $ — $ 5,738 $ ( 5,404 ) $ 334 Financial instruments sold, but not yet purchased, at fair value Options 27 — 27 ( 26 ) 1 Currency forward contracts 2 — 2 — 2 Total $ 5,767 $ — $ 5,767 $ ( 5,430 ) $ 337 December 31, 2019 Gross Amounts Net Amounts Amounts Not Offset Amounts Offset in the Presented in in the Condensed of Financial Condensed the Condensed Consolidated Statement Assets and Consolidated Consolidated of Financial Condition Liabilities Statement of Statement of Cash or Financial Recognized Financial Condition 2 Financial Condition Instruments Net Amount (in millions) Offsetting of financial assets Securities segregated for regulatory purposes - purchased under agreements to resell $ 14,027 1 $ — $ 14,027 $ ( 14,027 ) $ — Securities borrowed 3,916 — 3,916 ( 3,765 ) 151 Securities purchased under agreements to resell 3,111 — 3,111 ( 3,111 ) — Financial instruments owned, at fair value Options 1,333 — 1,333 ( 267 ) 1,066 Currency forward contracts 6 — 6 — 6 Total $ 22,393 $ — $ 22,393 $ ( 21,170 ) $ 1,223 (in millions) Offsetting of financial liabilities Securities loaned $ 4,410 $ — $ 4,410 $ ( 4,186 ) $ 224 Securities sold under agreements to repurchase 1,909 — 1,909 ( 1,909 ) — Financial instruments sold, but not yet purchased, at fair value Options 273 — 273 ( 267 ) 6 Currency forward contracts 1 — 1 — 1 Total $ 6,593 $ — $ 6,593 $ ( 6,362 ) $ 231 ________________________ (1) As of September 30 , 2020 and December 31, 2019, the Company had $ 24.3 billion and $ 14.0 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in “Securities - segregated for regulatory purposes” in the condensed consolidated statements of financial condition. (2) The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at September 30, 2020 and December 31, 2019. |
Schedule of Securities Financing Transactions | September 30, 2020 Remaining Contractual Maturity Overnight Less than 30 – 90 Over 90 and Open 30 days days days Total (in millions) Securities loaned Stocks $ 5,696 $ — $ — $ — $ 5,696 Corporate bonds 41 — — — 41 Foreign government securities 1 — — — 1 Total $ 5,738 $ — $ — $ — $ 5,738 December 31, 2019 Remaining Contractual Maturity Overnight Less than 30 – 90 Over 90 and Open 30 days days days Total (in millions) Securities loaned Stocks $ 4,356 $ — $ — $ — $ 4,356 Corporate bonds 54 — — — 54 Total securities loaned 4,410 — — — 4,410 Securities sold under agreements to repurchase U.S. government securities 1,909 — — — 1,909 Total $ 6,319 $ — $ — $ — $ 6,319 |
Collateralized Transactions (Ta
Collateralized Transactions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Collateralized Transactions [Abstract] | |
Amounts Related To Collateralized Transactions | September 30, 2020 December 31, 2019 Permitted Sold or Permitted Sold or to Repledge Repledged to Repledge Repledged (in millions) Securities lending transactions $ 44,808 $ 3,955 $ 31,994 $ 3,944 Securities purchased under agreements to resell transactions 1 25,740 25,375 17,185 16,627 Customer margin assets 35,353 10,554 34,156 11,189 $ 105,901 $ 39,884 $ 83,335 $ 31,760 ________________________ (1) As of September 30 , 2020, $ 24.3 billion or 96 % (as of December 31, 2019, $ 14.0 billion or 84 %) of securities acquired through agreements to resell that are shown as repledged have been deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3. |
Financial Instruments Owned and Pledged as Collateral (table) | September 30, December 31, 2020 2019 (in millions) Stocks $ 19 $ 128 U.S. and foreign government securities 28 33 $ 47 $ 161 |
Revenue From Contracts With C_2
Revenue From Contracts With Customers (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions) Geographic location 1 United States $ 202 $ 158 $ 599 $ 460 International 122 64 348 183 $ 324 $ 222 $ 947 $ 643 Major types of services Commissions $ 279 $ 187 $ 824 $ 538 Market data fees 2 16 11 44 34 Risk exposure fees 2 3 4 8 13 Payments for order flow 2 6 5 20 16 Minimum activity fees 2 7 7 20 20 Other 2 13 8 31 22 $ 324 $ 222 $ 947 $ 643 _____________________________ (1) Based on the location of the subsidiaries in which the revenues are recorded. (2) Included in other fees and services in the condensed consolidated statements of comprehensive income. |
Other Income (Tables)
Other Income (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Income [Abstract] | |
Schedule Of Components Of Other Income | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions) Principal transactions $ 14 $ — $ 36 $ 69 Gains (losses) from currency diversification strategy, net 27 ( 47 ) ( 6 ) ( 72 ) Other, net ( 12 ) — ( 5 ) 1 $ 29 $ ( 47 ) $ 25 $ ( 2 ) |
Employee Incentive Plans (Table
Employee Incentive Plans (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Employee Incentive Plans [Abstract] | |
Share Grants And Fair Value | Fair Value at Date of Grant Units ($ millions) Prior periods (since inception) 23,551,137 $ 504 December 31, 2017 946,489 57 December 31, 2018 1,146,267 62 December 31, 2019 1,374,217 1 65 27,018,110 $ 688 ______________________________ (1) Stock Incentive Plan number of granted restricted stock units related to 2019 was adjusted by 343 additional restricted stock units during the nine months ended September 30, 2020. |
2007 Stock Incentive Plan, ROI Summary | Stock Incentive Plan Units Balance, December 31, 2019 1 5,127,915 Granted — Cancelled ( 72,439 ) Distributed ( 1,298,027 ) Balance, September 30, 2020 3,757,449 _____________________________ (1) Stock Incentive Plan number of granted restricted stock units related to 2019 was adjusted by 343 additional restricted stock units during the nine months ended September 30, 2020. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Supplemental Balance Sheet Information Related To Operating Leases | September 30, 2020 December 31, 2019 (in millions) Right-of-use assets 1 $ 107 $ 118 Lease liabilities 1 $ 116 $ 124 __________________________ (1) Right-of-use assets are included in other assets and lease liabilities are included in accounts payable, accrued expenses and other liabilities in the Company’s unaudited condensed consolidated statements of financial condition. |
Lease Cost | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions) Operating lease cost $ 7 $ 7 $ 19 $ 19 Variable lease cost 1 1 3 3 Total lease cost $ 8 $ 8 $ 22 $ 22 |
Undiscounted Cash Flows of Operating Lease | September 30, 2020 (in millions) 2020 (remaining) $ 5 2021 18 2022 17 2023 15 2024 14 2025 14 Thereafter 56 Total undiscounted operating lease payments 139 Less: imputed interest ( 23 ) Present value of operating lease liabilities $ 116 |
Geographic Information (Tables)
Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Geographic Information [Abstract] | |
Schedule Of Total Net Revenues And Income Before Income Taxes By Geographic Area | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in millions) Net revenues United States $ 390 $ 346 $ 1,153 $ 1,117 International 158 120 466 320 Total net revenues $ 548 $ 466 $ 1,619 $ 1,437 Income before income taxes United States $ 278 $ 222 $ 696 $ 717 International 56 59 168 128 Total income before income taxes $ 334 $ 281 $ 864 $ 845 |
Regulatory Requirements (Tables
Regulatory Requirements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Regulatory Requirements [Abstract] | |
Summary Of Capital, Capital Requirements And Excess Capital | Net Capital/ Eligible Equity Requirement Excess (in millions) IB LLC $ 4,621 $ 520 $ 4,101 IBKRFS 593 21 572 IBHK 632 225 407 Other regulated operating subsidiaries 896 56 840 $ 6,742 $ 822 $ 5,920 |
Organization Of Business (Detai
Organization Of Business (Details) - employee | Sep. 30, 2020 | May 03, 2007 |
Number of employees | 1,923 | |
IBG LLC [Member] | ||
IBG Inc. ownership % of IBG LLC | 19.00% | 10.00% |
Significant Accounting Polici_4
Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 24 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | May 03, 2007 | |
Significant Accounting Policies [Line Items] | ||||||
SIP expense - Year of grant | 50.00% | |||||
SIP expense - Remaining vesting period | 50.00% | |||||
SIP expense - Employees over 59 in year of grant | 100.00% | |||||
Percent of shares cancelled post employment | 50.00% | |||||
Over 59 percent of shares eligible | 100.00% | |||||
Other Income Loss | $ 29 | $ (47) | $ 25 | $ (2) | ||
Property and equipment useful lives, description | Computer equipment is depreciated over three to five years and office furniture and equipment are depreciated over five to seven years. Intangible assets with a finite life are amortized on a straight-line basis over their estimated useful lives of three years, and tested for recoverability whenever events indicate that the carrying amounts may not be recoverable. Qualifying costs for internally developed software are capitalized and amortized over the expected useful life of the developed software, not to exceed three years. | |||||
Restatement Adjustment [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Other fees and services | 35 | 105 | ||||
Other Income Loss | $ 7 | $ 20 | ||||
Maximum [Member] | Market Making [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Percent of segment's net revenue | 7.00% | |||||
Percent of segment's income before income taxes | 4.00% | |||||
Percent of segment's total assets | 6.00% | |||||
Maximum [Member] | Computer Equipment [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Property and equipment useful lives | 5 years | |||||
Maximum [Member] | Office Furniture And Equipment [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Property and equipment useful lives | 7 years | |||||
Maximum [Member] | Internally Developed Software [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Intangible assets useful lives | 3 years | |||||
Maximum [Member] | Finite-Lived Intangible Assets [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Intangible assets useful lives | 3 years | |||||
Minimum [Member] | Computer Equipment [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Property and equipment useful lives | 3 years | |||||
Minimum [Member] | Office Furniture And Equipment [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Property and equipment useful lives | 5 years |
Significant Accounting Polici_5
Significant Accounting Policies (Schedule Of Securities Segregated For Regulatory Purposes) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 | |
Marketable Securities [Line Items] | |||
Securities - segregated for regulatory purposes | $ 29,316 | $ 17,824 | |
US Government Securities [Member] | |||
Marketable Securities [Line Items] | |||
Securities - segregated for regulatory purposes | 5,000 | 3,800 | |
Securities Purchased Under Agreement To Resell [Member] | |||
Marketable Securities [Line Items] | |||
Securities - segregated for regulatory purposes | [1] | $ 24,300 | $ 14,000 |
[1] | These balances are collateralized by U.S. government securities. |
Significant Accounting Polici_6
Significant Accounting Policies (Components Of Investments) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 | |
Significant Accounting Policies [Abstract] | |||
Equity method investments | [1] | $ 9 | $ 22 |
Investment in equity securities at adjusted cost | [2] | 7 | 5 |
Investments in equity securities at fair value | [2] | 48 | 36 |
Investments in exchange memberships and equity securities of certain exchanges | [2] | 3 | 3 |
Total investments | $ 67 | $ 66 | |
[1] | The Company’s share of income or losses is included in other income in the condensed consolidated statements of comprehensive income. | ||
[2] | These investments do not qualify for equity method of accounting and the dividends received are included in other income in the condensed consolidated statements of comprehensive income. |
Equity And Earnings Per Share_2
Equity And Earnings Per Share (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | Oct. 30, 2020 | Aug. 20, 2020 | Jul. 27, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2010 | Dec. 31, 2019 | Sep. 30, 2020 | Oct. 31, 2020 | Oct. 29, 2020 | May 03, 2007 |
Equity And Earnings Per Share [Line Items] | ||||||||||||||
IBG Holdings Redemption of IBG LLC | 10.00% | |||||||||||||
IBG Holdings LLC Ownership Percentage of Class B Common Stock | 100.00% | |||||||||||||
Preferred stock shares authorized | 10,000 | 10,000 | 10,000 | 10,000 | ||||||||||
Preferred stock shares issued | 0 | 0 | 0 | 0 | ||||||||||
Preferred stock shares outstanding | 0 | 0 | 0 | 0 | ||||||||||
Amortization period DTA (years) | 15 years | |||||||||||||
Unamortized deferred tax asset arising from equity offerings | $ 107 | $ 107 | $ 116 | $ 107 | ||||||||||
Percent of tax savings owed to IBG Holdings LLC | 85.00% | |||||||||||||
Percentage of tax savings retained by IBG Inc. | 15.00% | |||||||||||||
Deferred tax asset from common stock offerings | $ 506 | $ 506 | 506 | |||||||||||
Tax savings owed to IBG Holdings LLC | 430 | |||||||||||||
Tax savings retained by IBG Inc. | 76 | |||||||||||||
Tax savings paid to IBG Holdings LLC | $ 205 | |||||||||||||
Shares reserved for future issuance | 360,000,000 | |||||||||||||
Shares redeemed by IBG Holdings from IBG LLC | 5,013,259 | |||||||||||||
Cash Redemptions IBG Holdings | $ 114 | |||||||||||||
Fair Value of Issued Shares in Exchange for Membership Interests | $ 506 | |||||||||||||
Stock registered, number of common stock | 990,000 | |||||||||||||
Shares Issued | 1,000,000 | 15,417,157 | ||||||||||||
Shares issued, value | $ 52 | |||||||||||||
Thomas Peterffy and Affiliates Ownership | 89.60% | 89.60% | 89.60% | 84.60% | ||||||||||
Distribution from IBG LLC | $ 304 | |||||||||||||
Cash distribution to IBG, Inc. | $ 57 | |||||||||||||
Dividend per share | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | ||||||||||
Dividends paid to common shareholders | $ 8 | $ 7 | $ 8 | $ 23 | $ 23 | |||||||||
Payment Date | Dec. 14, 2020 | |||||||||||||
Record Date | Dec. 1, 2020 | |||||||||||||
Subsequent Event [Member] | ||||||||||||||
Equity And Earnings Per Share [Line Items] | ||||||||||||||
Shares Issued | 11,710,608 | |||||||||||||
Shares issued, value | $ 557 | |||||||||||||
Thomas Peterffy and Affiliates Ownership | 89.80% | |||||||||||||
IBG LLC [Member] | ||||||||||||||
Equity And Earnings Per Share [Line Items] | ||||||||||||||
IBG Inc. ownership % of IBG LLC | 19.00% | 19.00% | 19.00% | 10.00% | ||||||||||
IBG LLC [Member] | Holdings [Member] | ||||||||||||||
Equity And Earnings Per Share [Line Items] | ||||||||||||||
IBG Holdings ownership % of IBG LLC | 81.00% | 81.00% | 81.00% | 90.00% | ||||||||||
IBG LLC [Member] | Subsequent Event [Member] | ||||||||||||||
Equity And Earnings Per Share [Line Items] | ||||||||||||||
IBG Inc. ownership % of IBG LLC | 21.80% | 19.00% | ||||||||||||
Common Class A [Member] | ||||||||||||||
Equity And Earnings Per Share [Line Items] | ||||||||||||||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||||||||||
Shares authorized | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | ||||||||||
Common stock, shares issued | 79,187,067 | 79,187,067 | 76,889,040 | 79,187,067 | ||||||||||
Common stock, shares outstanding | 79,054,435 | 79,054,435 | 76,750,110 | 79,054,435 | ||||||||||
Common Class B [Member] | ||||||||||||||
Equity And Earnings Per Share [Line Items] | ||||||||||||||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||||||||||
Shares authorized | 100 | 100 | 100 | 100 | ||||||||||
Common stock, shares issued | 100 | 100 | 100 | 100 | ||||||||||
Common stock, shares outstanding | 100 | 100 | 100 | 100 |
Equity And Earnings Per Share_3
Equity And Earnings Per Share (IBG LLC Ownership of Member Interests) (Details) | Sep. 30, 2020shares |
Ownership Percentage | 100.00% |
Membership Interests | 416,728,264 |
IBG Inc [Member] | |
Ownership Percentage | 19.00% |
Membership Interests | 79,057,622 |
Holdings [Member] | |
Ownership Percentage | 81.00% |
Membership Interests | 337,670,642 |
Equity And Earnings Per Share_4
Equity And Earnings Per Share (Basic Table) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Basic earnings per share: | ||||
Net income available for common stockholders | $ 46 | $ 36 | $ 124 | $ 117 |
Weighted average shares of common stock outstanding: | ||||
Weighted Average Number of Shares Outstanding, Basic | 78,509,625 | 76,742,789 | 77,543,008 | 75,910,080 |
Basic earnings per share | $ 0.59 | $ 0.46 | $ 1.60 | $ 1.54 |
Common Class A [Member] | ||||
Weighted average shares of common stock outstanding: | ||||
Weighted Average Number of Shares Outstanding, Basic | 78,509,525 | 76,742,689 | 77,542,908 | 75,909,980 |
Common Class B [Member] | ||||
Weighted average shares of common stock outstanding: | ||||
Weighted Average Number of Shares Outstanding, Basic | 100 | 100 | 100 | 100 |
Equity And Earnings Per Share_5
Equity And Earnings Per Share (Diluted Table) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Diluted earnings per share: | ||||
Net income available for common stockholders | $ 46 | $ 36 | $ 124 | $ 117 |
Weighted Average Shares Outstanding [Abstract] | ||||
Weighted Average Number of Shares Outstanding, Basic | 78,509,625 | 76,742,789 | 77,543,008 | 75,910,080 |
Potentially dilutive common shares: | ||||
Issuable pursuant to employee incentive plans | 610,923 | 606,187 | 700,691 | 736,407 |
Weighted Average Number of Shares Outstanding, Diluted | 79,120,548 | 77,348,976 | 78,243,699 | 76,646,487 |
Earnings Per Share, Diluted | $ 0.58 | $ 0.45 | $ 1.58 | $ 1.52 |
Common Class A [Member] | ||||
Weighted Average Shares Outstanding [Abstract] | ||||
Weighted Average Number of Shares Outstanding, Basic | 78,509,525 | 76,742,689 | 77,542,908 | 75,909,980 |
Common Class B [Member] | ||||
Weighted Average Shares Outstanding [Abstract] | ||||
Weighted Average Number of Shares Outstanding, Basic | 100 | 100 | 100 | 100 |
Comprehensive Income (Details)
Comprehensive Income (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Comprehensive Income Detail [Abstract] | ||||
Comprehensive income available for common stockholders | $ 54 | $ 30 | $ 129 | $ 114 |
Earnings per share on comprehensive income: | ||||
Basic | $ 0.69 | $ 0.39 | $ 1.67 | $ 1.50 |
Diluted | $ 0.69 | $ 0.39 | $ 1.65 | $ 1.49 |
Weighted average common shares outstanding: | ||||
Weighted Average Number of Shares Outstanding, Basic | 78,509,625 | 76,742,789 | 77,543,008 | 75,910,080 |
Weighted Average Number of Shares Outstanding, Diluted | 79,120,548 | 77,348,976 | 78,243,699 | 76,646,487 |
Financial Assets And Financia_3
Financial Assets And Financial Liabilities (Narrative) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities purchased under agreement to resell segregated for regulatory purposes | $ 24,300 | $ 14,000 |
Total financial instruments owned, at fair value | 452 | 1,916 |
Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 4 | $ 3 |
Level 3 [Member] | Corporate And Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 3 | |
Level 3 [Member] | Common Stock [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | $ 1 |
Financial Assets And Financia_4
Financial Assets And Financial Liabilities (Fair Value Table) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities segregated for regulatory purposes | $ 4,974 | $ 3,797 |
Total financial instruments owned, at fair value | 452 | 1,916 |
Other assets - other investments at fair value | 48 | 36 |
Total financial assets at fair value | 5,474 | 5,749 |
Financial instruments sold, not yet purchased, at fair value | 187 | 457 |
Total Financial Liabilities at Fair Value | 187 | 457 |
Common Stock [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 376 | 540 |
Financial instruments sold, not yet purchased, at fair value | 158 | 183 |
Options owned [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 29 | 1,333 |
Financial instruments sold, not yet purchased, at fair value | 27 | 273 |
U.S. And Foreign Government Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 28 | 34 |
Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 3 | 3 |
Currency Forward Contracts [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 16 | 6 |
Financial instruments sold, not yet purchased, at fair value | 2 | 1 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities segregated for regulatory purposes | 4,974 | 3,797 |
Total financial instruments owned, at fair value | 432 | 1,907 |
Other assets - other investments at fair value | 48 | 36 |
Total financial assets at fair value | 5,454 | 5,740 |
Financial instruments sold, not yet purchased, at fair value | 185 | 456 |
Total Financial Liabilities at Fair Value | 185 | 456 |
Level 1 | Common Stock [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 375 | 540 |
Financial instruments sold, not yet purchased, at fair value | 158 | 183 |
Level 1 | Options owned [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 29 | 1,333 |
Financial instruments sold, not yet purchased, at fair value | 27 | 273 |
Level 1 | U.S. And Foreign Government Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 28 | 34 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 16 | 6 |
Total financial assets at fair value | 16 | 6 |
Financial instruments sold, not yet purchased, at fair value | 2 | 1 |
Total Financial Liabilities at Fair Value | 2 | 1 |
Level 2 | Currency Forward Contracts [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 16 | 6 |
Financial instruments sold, not yet purchased, at fair value | 2 | 1 |
Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 4 | 3 |
Total financial assets at fair value | 4 | 3 |
Level 3 [Member] | Common Stock [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | 1 | |
Level 3 [Member] | Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial instruments owned, at fair value | $ 3 | $ 3 |
Financial Assets And Financia_5
Financial Assets And Financial Liabilities (Financial Assets and Liabilities Not Measured at Fair Value) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 |
Cash and cash equivalents | $ 3,292 | $ 2,882 | $ 3,035 |
Cash segregated for regulatory purposes | 12,789 | 9,400 | $ 8,794 |
Securities - segregated for regulatory purposes | 29,316 | 17,824 | |
Securities borrowed | 3,995 | 3,916 | |
Securities purchased under agreements to resell | 1,401 | 3,111 | |
Receivables from customer | 30,343 | 31,304 | |
Receivables from brokers, dealers and clearing organizations | 2,575 | 685 | |
Interest Receivable | 69 | 158 | |
Other assets | 466 | 480 | |
Short-term borrowings | 628 | 16 | |
Securities loaned | 5,738 | 4,410 | |
Securities sold under agreements to repurchase | 1,909 | ||
Customers | 68,830 | 56,248 | |
Brokers, dealers and clearing organizations | 313 | 220 | |
Interest Payable | 3 | 29 | |
at Fair Value | |||
Cash and cash equivalents | 3,292 | 2,882 | |
Cash segregated for regulatory purposes | 12,789 | 9,400 | |
Securities - segregated for regulatory purposes | 24,342 | 14,027 | |
Securities borrowed | 3,995 | 3,916 | |
Securities purchased under agreements to resell | 1,401 | 3,111 | |
Receivables from customer | 30,343 | 31,304 | |
Receivables from brokers, dealers and clearing organizations | 2,575 | 685 | |
Interest Receivable | 69 | 158 | |
Other assets | 11 | 9 | |
Total financial assets, not measured at fair value | 78,817 | 65,492 | |
Short-term borrowings | 628 | 16 | |
Securities loaned | 5,738 | 4,410 | |
Securities sold under agreements to repurchase | 1,909 | ||
Customers | 68,830 | 56,248 | |
Brokers, dealers and clearing organizations | 313 | 220 | |
Interest Payable | 3 | 29 | |
Total financial liabilities, not measured at fair value | 75,512 | 62,832 | |
Carrying Value | |||
Cash and cash equivalents | 3,292 | 2,882 | |
Cash segregated for regulatory purposes | 12,789 | 9,400 | |
Securities - segregated for regulatory purposes | 24,342 | 14,027 | |
Securities borrowed | 3,995 | 3,916 | |
Securities purchased under agreements to resell | 1,401 | 3,111 | |
Receivables from customer | 30,343 | 31,304 | |
Receivables from brokers, dealers and clearing organizations | 2,575 | 685 | |
Interest Receivable | 69 | 158 | |
Other assets | 11 | 9 | |
Total financial assets, not measured at fair value | 78,817 | 65,492 | |
Short-term borrowings | 628 | 16 | |
Securities loaned | 5,738 | 4,410 | |
Securities sold under agreements to repurchase | 1,909 | ||
Customers | 68,830 | 56,248 | |
Brokers, dealers and clearing organizations | 313 | 220 | |
Interest Payable | 3 | 29 | |
Total financial liabilities, not measured at fair value | 75,512 | 62,832 | |
Level 1 | |||
Cash and cash equivalents | 3,292 | 2,882 | |
Cash segregated for regulatory purposes | 12,789 | 9,400 | |
Total financial assets, not measured at fair value | 16,081 | 12,282 | |
Short-term borrowings | |||
Securities loaned | |||
Securities sold under agreements to repurchase | |||
Customers | |||
Brokers, dealers and clearing organizations | |||
Interest Payable | |||
Total financial liabilities, not measured at fair value | |||
Level 2 | |||
Securities - segregated for regulatory purposes | 24,342 | 14,027 | |
Securities borrowed | 3,995 | 3,916 | |
Securities purchased under agreements to resell | 1,401 | 3,111 | |
Receivables from customer | 30,343 | 31,304 | |
Receivables from brokers, dealers and clearing organizations | 2,575 | 685 | |
Interest Receivable | 69 | 158 | |
Other assets | 2 | 3 | |
Total financial assets, not measured at fair value | 62,727 | 53,204 | |
Short-term borrowings | 628 | 16 | |
Securities loaned | 5,738 | 4,410 | |
Securities sold under agreements to repurchase | 1,909 | ||
Customers | 68,830 | 56,248 | |
Brokers, dealers and clearing organizations | 313 | 220 | |
Interest Payable | 3 | 29 | |
Total financial liabilities, not measured at fair value | 75,512 | 62,832 | |
Level 3 [Member] | |||
Cash and cash equivalents | |||
Cash segregated for regulatory purposes | |||
Securities - segregated for regulatory purposes | |||
Securities borrowed | |||
Securities purchased under agreements to resell | |||
Receivables from customer | |||
Receivables from brokers, dealers and clearing organizations | |||
Interest Receivable | |||
Other assets | 9 | 6 | |
Total financial assets, not measured at fair value | 9 | 6 | |
Short-term borrowings | |||
Securities loaned | |||
Securities sold under agreements to repurchase | |||
Customers | |||
Brokers, dealers and clearing organizations | |||
Interest Payable | |||
Total financial liabilities, not measured at fair value |
Financial Assets And Financia_6
Financial Assets And Financial Liabilities (Netting of Financial Assets) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 | |
Securities, Segregated For Regulatory Purposes, Purchased Under Agreements To Resell [Abstract] | |||
Gross Amounts of Financial Assets Recognized | [1] | $ 24,342 | $ 14,027 |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 24,342 | 14,027 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | (24,342) | (14,027) | |
Net Amount | |||
Offsetting Securities Borrowed [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 3,995 | 3,916 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 3,995 | 3,916 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | (3,822) | (3,765) | |
Net Amount | 173 | 151 | |
Offsetting Securities Purchased under Agreements to Resell [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 1,401 | 3,111 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 1,401 | 3,111 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | (1,401) | (3,111) | |
Net Amount | |||
Total [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 29,783 | 22,393 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 29,783 | 22,393 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | (29,591) | (21,170) | |
Net Amount | 192 | 1,223 | |
Options [Member] | |||
Offsetting Financial Instruments Owned, At Fair Value [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 29 | 1,333 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 29 | 1,333 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | (26) | (267) | |
Net Amount | 3 | 1,066 | |
Currency Forward Contracts [Member] | |||
Offsetting Financial Instruments Owned, At Fair Value [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 16 | 6 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [2] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 16 | 6 | |
Amounts Not Offset in the Condensed Consolidated Statement of Financial Condition: Cash or Financial Instruments | |||
Net Amount | $ 16 | $ 6 | |
[1] | As of September 30 , 2020 and December 31, 2019, the Company had $ 24.3 billion and $ 14.0 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in “Securities - segregated for regulatory purposes” in the condensed consolidated statements of financial condition. | ||
[2] | The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at September 30, 2020 and December 31, 2019. |
Financial Assets And Financia_7
Financial Assets And Financial Liabilities (Netting of Financial Liabilities) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 | |
Offsetting Securities Loaned [Abstract] | |||
Gross Amounts of Financial Assets Recognized | $ 5,738 | $ 4,410 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [1] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 5,738 | 4,410 | |
Amounts of Liabilities Not Offset in the Condensed Consolidated Statement of Financial Condition (Cash or Financial Instruments) | (5,404) | (4,186) | |
Net Amount | 334 | 224 | |
Securities Sold under Agreements to Repurchase [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 1,909 | ||
Amounts Offset in the Consolidated Statement of Financial Condition | [1] | ||
Net Amounts Presented in the Consolidated Statement of Financial Condition | 1,909 | ||
Amounts of Liabilities Not Offset in the Consolidated Statement of Financial Condition (Cash or Financial Instruments) | (1,909) | ||
Net Amount | |||
Total [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 5,767 | 6,593 | |
Amounts Offset in the Consolidated Statement of Financial Condition | [1] | ||
Net Amounts Presented in the Consolidated Statement of Financial Condition | 5,767 | 6,593 | |
Amounts of Liabilities Not Offset in the Consolidated Statement of Financial Condition (Cash or Financial Instruments) | (5,430) | (6,362) | |
Net Amount | 337 | 231 | |
Options [Member] | |||
Offsetting Financial Instruments Sold, But Not Yet Purchased, At Fair Value [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 27 | 273 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [1] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 27 | 273 | |
Amounts of Liabilities Not Offset in the Condensed Consolidated Statement of Financial Condition (Cash or Financial Instruments) | (26) | (267) | |
Net Amount | 1 | 6 | |
Currency Forward Contracts [Member] | |||
Offsetting Financial Instruments Sold, But Not Yet Purchased, At Fair Value [Abstract] | |||
Gross Amounts of Financial Assets Recognized | 2 | 1 | |
Amounts Offset in the Condensed Consolidated Statement of Financial Condition | [1] | ||
Net Amounts Presented in the Condensed Consolidated Statement of Financial Condition | 2 | 1 | |
Amounts of Liabilities Not Offset in the Condensed Consolidated Statement of Financial Condition (Cash or Financial Instruments) | |||
Net Amount | $ 2 | $ 1 | |
[1] | The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at September 30, 2020 and December 31, 2019. |
Financial Assets And Financia_8
Financial Assets And Financial Liabilities (Secured Financing Transactions) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | $ 5,738 | $ 4,410 |
Securities sold under agreements to repurchase | 1,909 | |
Total | 6,319 | |
Foreign Government Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | 1 | |
US Government Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities sold under agreements to repurchase | 1,909 | |
Overnight and Open [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | 5,738 | 4,410 |
Total | 6,319 | |
Overnight and Open [Member] | Foreign Government Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | 1 | |
Overnight and Open [Member] | US Government Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities sold under agreements to repurchase | 1,909 | |
Common Stock [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | 5,696 | 4,356 |
Common Stock [Member] | Overnight and Open [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | 5,696 | 4,356 |
Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | 41 | 54 |
Corporate Bonds [Member] | Overnight and Open [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities loaned | $ 41 | $ 54 |
Collateralized Transactions (Na
Collateralized Transactions (Narrative) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Disclosure Collateralized Transactions [Abstract] | ||
Customers receivables | $ 30,343 | $ 31,304 |
Securities purchased under agreement to resell segregated for regulatory purposes | $ 24,300 | $ 14,000 |
Percentage of securities repledged and deposited for customers | 96.00% | 84.00% |
Collateralized Transactions (Am
Collateralized Transactions (Amounts Related to Collateralized Transactions) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 | |
Permitted To Repledge [Member] | |||
Collateralized Transactions [Line Items] | |||
Securities lending transactions | $ 44,808 | $ 31,994 | |
Agreements to resell | [1] | 25,740 | 17,185 |
Customer margin assets | 35,353 | 34,156 | |
Total collateralized transactions | 105,901 | 83,335 | |
Sold Or Repledged [Member] | |||
Collateralized Transactions [Line Items] | |||
Securities lending transactions | 3,955 | 3,944 | |
Agreements to resell | [1] | 25,375 | 16,627 |
Customer margin assets | 10,554 | 11,189 | |
Total collateralized transactions | $ 39,884 | $ 31,760 | |
[1] | As of September 30 , 2020, $ 24.3 billion or 96 % (as of December 31, 2019, $ 14.0 billion or 84 %) of securities acquired through agreements to resell that are shown as repledged have been deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3. |
Collateralized Transactions (Fi
Collateralized Transactions (Financial instruments owned and pledged where the counterparty has the right to repledge) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Disclosure Collateralized Transactions [Abstract] | ||
Stocks | $ 19 | $ 128 |
U.S. and foreign government securities | 28 | 33 |
Financial Instruments Owned and Pledged as Collateral - Eligible to be Repledged by Counterparty | $ 47 | $ 161 |
Revenue From Contracts With C_3
Revenue From Contracts With Customers (Narrative) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Revenue from Contract with Customer [Abstract] | ||
Receivables | $ 11 | $ 10 |
Revenue From Contracts With C_4
Revenue From Contracts With Customers (Disaggregation of Revenue ) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | $ 324 | $ 222 | $ 947 | $ 643 |
United States [Member] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | 202 | 158 | 599 | 460 |
International [Member] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | 122 | 64 | 348 | 183 |
Commissions [Member] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 279 | 187 | 824 | 538 | |
Market Data Fees [Member] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 16 | 11 | 44 | 34 |
Risk Exposure Fees [Member] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 3 | 4 | 8 | 13 |
Payments For Order Flow [Member] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 6 | 5 | 20 | 16 |
Minimum Activity Fees [Member] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 7 | 7 | 20 | 20 |
Others [Member] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | $ 13 | $ 8 | $ 31 | $ 22 |
[1] | Based on the location of the subsidiaries in which the revenues are recorded. | ||||
[2] | Included in other fees and services in the condensed consolidated statements of comprehensive income. |
Other Income (Schedule Of Compo
Other Income (Schedule Of Components Of Other Income) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other Income [Abstract] | ||||
Principal transactions | $ 14 | $ 36 | $ 69 | |
Gains (losses) from currency diversification strategy, net | 27 | $ (47) | (6) | (72) |
Other, net | (12) | (5) | 1 | |
Other income | $ 29 | $ (47) | $ 25 | $ (2) |
Employee Incentive Plans (Narra
Employee Incentive Plans (Narrative) (Details) - USD ($) $ in Millions | 9 Months Ended | 161 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay | 10.00% | ||
Defined Contribution Plan, Employer Matching Contribution, Percent of Match | 50.00% | ||
Defined Contribution Plan Vesting Period | 6 years | ||
401(k) plan contribution expense | $ 3 | $ 3 | |
Maximum shares of stock distributable under 2007 Stock Incentive Plan | 30,000,000 | 30,000,000 | |
Shares granted to external directors | 27,245 | ||
2007 Stock Incentive Plan Compensation Expense | $ 46 | $ 43 | |
Estimated Future 2007 Stock Incentive Plan Compensation Expense | $ 27 | $ 27 | |
Post employment shares distribution | 1,066,736 | ||
2007 Stock Incentive Plan (Shares) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting Percentage, description | •10% on the first vesting date, which is on or about May 9 of each year; and•an additional 15% on each of the following six anniversaries of the first vesting, assuming continued employment with the Company and compliance with non-competition and other applicable covenants. | ||
2007 Stock Incentive Plan (Shares) | External Director [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 5 years | ||
2007 Stock Incentive Plan (Shares) | External Director [Member] | Commencing One Year After Grant Date [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage per year | 20.00% |
Employee Incentive Plans (Share
Employee Incentive Plans (Share Grants And Fair Value) (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | 116 Months Ended | 152 Months Ended | |||
Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2019 | ||
Employee Incentive Plans [Abstract] | |||||||
Shares granted | 1,374,217 | [1] | 1,146,267 | 946,489 | 23,551,137 | ||
Fair Value - Date of Grant | $ 65 | $ 62 | $ 57 | $ 504 | $ 65 | ||
Shares Granted IPO to Date | 27,018,110 | ||||||
Fair Value - Date of Grant IPO to Date | $ 688 | ||||||
Stock Incentive Plan Granted Shares Adjustment | 343 | ||||||
[1] | Stock Incentive Plan number of granted restricted stock units related to 2019 was adjusted by 343 additional restricted stock units during the nine months ended September 30, 2020. |
Employee Incentive Plans (2007
Employee Incentive Plans (2007 Stock Incentive Plan, ROI Summary) (Details) | 9 Months Ended | |
Sep. 30, 2020shares | ||
Stock Incentive Plan Granted Shares Adjustment | 343 | |
2007 Stock Incentive Plan (Shares) | ||
Beginning Balance | 5,127,915 | [1] |
Shares Cancelled | (72,439) | |
Shares Distributed | (1,298,027) | |
Ending Balance | 3,757,449 | |
[1] | Stock Incentive Plan number of granted restricted stock units related to 2019 was adjusted by 343 additional restricted stock units during the nine months ended September 30, 2020. |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Billions | Sep. 30, 2020 | Dec. 31, 2019 |
Income Taxes [Abstract] | ||
Undistributed accumulated earnings of foreign subsidiaries | $ 1.4 | $ 1.3 |
Accumulated earnings of foreign pass through subsidiaries | 0.1 | 0.2 |
Accumulated earnings subject to additional foreign tax | $ 0.1 | $ 0.2 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Leases [Abstract] | |
Operating lease, weighted-average remaining lease term | 8 years |
Operating lease, weighted-average discount rate | 4.17% |
Right-of-use assets obtained in exchange for operating lease liabilities | $ 3 |
Leases (Supplemental Balance Sh
Leases (Supplemental Balance Sheet Information Related To Operating Leases) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | |||
Right-of-use assets | [1] | $ 107 | $ 118 |
Lease liabilites | [1] | $ 116 | $ 124 |
[1] | Right-of-use assets are included in other assets and lease liabilities are included in accounts payable, accrued expenses and other liabilities in the Company’s unaudited condensed consolidated statements of financial condition. |
Leases (Lease Cost) (Details)
Leases (Lease Cost) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating lease cost | $ 7 | $ 7 | $ 19 | $ 19 |
Variable lease cost | 1 | 1 | 3 | 3 |
Total lease cost | $ 8 | $ 8 | $ 22 | $ 22 |
Leases (Undiscounted Cash Flows
Leases (Undiscounted Cash Flows of Operating Lease) (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | |||
2020 (remaining) | $ 5 | ||
Year One | 18 | ||
Year Two | 17 | ||
Year Three | 15 | ||
Year Four | 14 | ||
Year Five | 14 | ||
Thereafter | 56 | ||
Total undiscounted operating lease payments | 139 | ||
Less: imputed interest | (23) | ||
Present value of operating lease liabilities | [1] | $ 116 | $ 124 |
[1] | Right-of-use assets are included in other assets and lease liabilities are included in accounts payable, accrued expenses and other liabilities in the Company’s unaudited condensed consolidated statements of financial condition. |
Commitments, Contingencies an_2
Commitments, Contingencies and Guarantees (Narrative) (Details) | Aug. 10, 2020USD ($) | Apr. 20, 2020USD ($)$ / bbl | Sep. 30, 2020USD ($) |
Commitment And Contingencies [Line Items] | |||
Aggregate loss on securities | $ 42,000,000 | ||
Maximum aggregate loss, if securities' price falls to zero and no debts collected | 50,000,000 | ||
Guarantees, Fair Value Disclosure | $ 0 | ||
Oil and Gas, Average Sale Price | $ / bbl | (37.63) | ||
Aggregate provisionary loss | $ 88,000,000 | ||
Recognized loss | $ 104,000,000 | ||
FINRA [Member] | |||
Commitment And Contingencies [Line Items] | |||
Settlement, penalties agreed to paid | $ 15,000,000 | ||
SEC [Member] | |||
Commitment And Contingencies [Line Items] | |||
Settlement, penalties agreed to paid | 11,500,000 | ||
CFTC [Member] | |||
Commitment And Contingencies [Line Items] | |||
Settlement, penalties agreed to paid | 11,500,000 | ||
Disgorgement [Member] | |||
Commitment And Contingencies [Line Items] | |||
Settlement, penalties agreed to paid | $ 700,000 |
Geographic Information (Geograp
Geographic Information (Geographic Table) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Total net revenues | $ 548 | $ 466 | $ 1,619 | $ 1,437 |
Income before income taxes | 334 | 281 | 864 | 845 |
United States [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 390 | 346 | 1,153 | 1,117 |
Income before income taxes | 278 | 222 | 696 | 717 |
International [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 158 | 120 | 466 | 320 |
Income before income taxes | $ 56 | $ 59 | $ 168 | $ 128 |
Regulatory Requirements (Narrat
Regulatory Requirements (Narrative) (Details) $ in Millions | Sep. 30, 2020USD ($) |
Regulatory Requirements [Abstract] | |
Excess | $ 5,920 |
Regulatory Requirements (Summar
Regulatory Requirements (Summary Of Capital, Capital Requirements And Excess Capital) (Details) $ in Millions | Sep. 30, 2020USD ($) |
Net Capital / Eligible Equity | $ 6,742 |
Requirement | 822 |
Excess | 5,920 |
IB LLC [Member] | |
Net Capital / Eligible Equity | 4,621 |
Requirement | 520 |
Excess | 4,101 |
IBKRFS [Member] | |
Net Capital / Eligible Equity | 593 |
Requirement | 21 |
Excess | 572 |
IBHK [Member] | |
Net Capital / Eligible Equity | 632 |
Requirement | 225 |
Excess | 407 |
Other Regulated Operating Companies [Member] | |
Net Capital / Eligible Equity | 896 |
Requirement | 56 |
Excess | $ 840 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Related Party Transactions [Abstract] | ||
Due from Related Parties - Customers | $ 231 | $ 23 |
Due to Related Parties - Customers | $ 1,002 | $ 939 |