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Why Interactive Brokers Group’s Commissions Fell

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Second-quarter DARTs

In the second quarter, Interactive Brokers Group (IBKR) saw daily average revenue trades (or DARTs) of 797,000 compared to 939,000 in the first quarter. The sequential fall of 15% was primarily due to lower movements in the broader markets mainly due to a settlement between the US and North Korean and the May 2018 jobs report, which reported an unemployment rate of only 3.8%. The company’s DARTs fell despite a rise of 5% in total accounts to 542,000 on a sequential basis.

In the March quarter, competitors (VFH) E*TRADE Financial (ETFC) and TD Ameritrade Holding (AMTD) recorded DARTs of 309,469 and 943,058, respectively. Sequentially, Charles Schwab’s (SCHW) trading revenues fell 10% in the second quarter.

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Commissions

In the second quarter, Interactive Brokers Group collected a commission of $3.86 per cleared DART, a decline of 4% YoY. Overall, brokerage companies are reducing commission rates. Fintech companies are offering lower rates to gain market share. On a sequential basis, IBKR’s commission per cleared DART also fell 4% in the second quarter.

Moving forward, Interactive Brokers Group might consider cutting its commission rate per cleared DART, which could help the company to boost total accounts. E*TRADE Financial had an average commission per trade of $7.27 in the first quarter, which implies a fall of 26% on a YoY basis.

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