Increase in interest rates
Interactive Brokers Group (IBKR) is expected to benefit from the Federal Reserve’s rate hikes. In the March 2018 meeting, the Federal Reserve indicated that we could see two more rate hikes in 2018, thus benefiting brokerage giants (XLF). Increased interest rates would likely have a positive impact on the interest income of Interactive Brokers, which could further improve its total net revenues.
Another metric that could prove beneficial for Interactive Brokers Group is commissions. The volatility in 1Q18 could increase trading among the company’s clients, which would likely increase the company’s commission revenues. Other players in the brokerage industry like E*TRADE Financial (ETFC), Charles Schwab (SCHW), and TD Ameritrade Holding (AMTD) could also benefit from market volatility.
Increase in client accounts
In March 2018, Interactive Brokers reported a rise in client accounts on a YoY basis, which could be another factor that positively impacts the company’s revenues, as it could result in more trading volumes. The company’s daily average revenue trades (or DARTs) also rose in March 2018 on a YoY basis, which could also fuel its commission revenues in 1Q18.
Interactive Brokers could also benefit from the new US corporate tax law moving forward. With a reduction in the taxes, the company might witness positive momentum in its earnings. The increased earnings could open up various investment avenues, which could help the company achieve long-term growth.