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What Interactive Brokers Group’s Commissions Might Be in Q2 2018

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IBKR’s fees and commissions income in Q2 2018

In the second quarter, Interactive Brokers Group (IBKR) is expected to generate fees and commissions income of $195 million. That quarter, equities were lesser volatile sequentially, which could impact the company’s commissions. However, brokerages are expected to see higher engagement in the second half of 2018 primarily due to the expected reshuffling of portfolios toward alternatives, including real estate and debt.

Trade tensions are expected to accelerate, which might make the markets volatile. That could help Interactive Brokers. However, as trade tensions grow, investors might opt out of putting money into equities due to higher risk. That could lead to withdrawals from equities.

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Recent performance

Interactive Brokers Group (IBKR) had commissions of $220 million in the first quarter, which reflects a substantial increase of 42.8% on a YoY (year-over-year) basis. In order to attract investor interest, the company needs to move toward technology. In June 2018, Interactive Brokers had an average commission rate of $3.84, implying a decline from the June 2017 average commission rate of $4.03.

The major factors that make the markets volatile are interest rate expectations, unemployment levels, and other macro variables.

In the first quarter, Interactive Brokers Group’s commissions accounted for 35.4% of its total revenues. That means that any fluctuation or a fall in its commissions could harm its total revenues. Let’s look at other brokerage companies (VFH). E*TRADE Financial (ETFC) generated commissions of $137 million, Charles Schwab (SCHW) had trading revenue of $201 million, and TD Ameritrade Holding (AMTD) had commissions and transaction fees of $556 million in the first quarter.

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