Market participants tend to prefer digital tools to execute trades because of lower costs and faster execution. However, the associated lower commissions for the trades can impact brokerages’ revenue. Therefore, brokerages must ensure they do not reduce commissions to the point of impacting their financial position.
When choosing a broker, market participants often consider how easily they can access markets and financial instruments via mobile phone. Interactive Brokers’ (IBKR) universal account, which gives clients this access, could attract market participants. Competitor TD Ameritrade (AMTD) has indicated that clients are adopting its digital initiatives.
Interactive Brokers’ clients can easily access markets with their accounts through voice command technology. To retain clients, the company has maintained a clear focus on improving its trading platform to cater to clients’ diverse needs, and offering a systematic view of its services.
Over the past several years, Interactive Brokers’ share of industry margin loans has grown. At the end of March, overall industry margin loans amounted to $82 billion, of which Interactive Brokers held a 36% share. Brokerages (VFH) Charles Schwab (SCHW), TD Ameritrade, and E*TRADE Financial (ETFC) had a 26%, 25%, and 13% share, respectively.