3355 | 10/31/2023

INTERACTIVE BROKERS LLCDISCLOSURE DOCUMENT
PURSUANT TO CFTC RULE §1.55(k) & NFA Rule 2-36(n)Date of First Use:
Last Updated:

July 11, 2014
October 31, 2023

TABLE OF CONTENTSI.

IB HEADQUARTERS ........................................................................................................................ 5

II. INFORMATION REGARDING NFA PRINCIPALS ..................................................................... 5III.
SIGNIFICANT BUSINESS ACTIVITIES AND PRODUCT LINES FOR INTERACTIVE
BROKERS LLC ........................................................................................................................................ 10
ASSET AND CAPITAL ALLOCATION ............................................................................................................................... 10IV.
V.

DESCRIPTION OF INTERACTIVE BROKERS’ CUSTOMER BUSINESS ....................... 11

PERMITTED DEPOSITORIES & COUNTERPARTIES ........................................................... 12
EXECUTION AND CLEARING RELATIONSHIPS ............................................................................................................ 13
FOREX LIQUIDITY PROVIDERS........................................................................................................................................ 14
CREDIT REVIEWS OF COUNTERPARTIES ...................................................................................................................... 15

VI.
DESCRIPTION OF HOW CUSTOMER FUNDS ARE TREATED AT INTERACTIVE
BROKERS ................................................................................................................................................. 16
LIQUIDITY MANAGEMENT ............................................................................................................................................... 16
Strength and Security of the Group ..................................................................................................... 16
Summary of Financing and Capital Adequacy ................................................................................... 16
Daily Liquidity Management............................................................................................................... 17
Liquidity Management during a Credit/Liquidity Event ..................................................................... 17
Internal Evaluation of Liquidity Management .................................................................................... 18
Risks Posed to IB Through Affiliates................................................................................................... 18
INVESTMENTS OF HOUSE AND CUSTOMER FUNDS ................................................................................................... 19
General ............................................................................................................................................... 19
Commodities Accounts ........................................................................................................................ 20
Securities Accounts ............................................................................................................................. 20
Leverage.............................................................................................................................................. 20
VII. INFORMATION REGARDING INTERACTIVE BROKERS’ DESIGNATED SELFREGULATORY ORGANIZATION ....................................................................................................... 20
VIII. DISCLOSURE OF LEGAL & REGULATORY MATTERS ................................................... 21
IX.
OVERVIEW OF CUSTOMER FUND SEGREGATION AND COLLATERALMANAGEMENT ...................................................................................................................................... 27
COMMODITIES ACCOUNTS ............................................................................................................................................... 27
Basics of Segregation .......................................................................................................................... 27
Customer Segregated Account ............................................................................................................ 28
30.7 Accounts and Special Risks of Engaging in Trading on Foreign Markets.................................. 28
Excess Funds Maintained in Customer Segregated Account(s) and 30.7 Account(s) to Provide Extra
Customer Protection ........................................................................................................................... 29
SECURITIES ACCOUNTS .................................................................................................................................................... 29
X.

INFORMATION ON FILING COMPLAINTS ............................................................................. 30

XI.

FINANCIAL DATA ...................................................................................................................... 31

XII.

SUMMARY OF RISK PRACTICES, CONTROLS AND PROCEDURES ............................ 32
Risks in Connection with IB’s Activities as a FDM ............................................................................ 34

This document is intended to provide material information about Interactive Brokers LLC (“Interactive” or“IB”), its business lines and risk management practices to existing and prospective customers. Muchof the information included in this document can be found on the IB website atwww.interactivebrokers.com. A paper copy is available upon request.
Interactive is an agency-only, direct market access broker-dealer and Futures Commission
Merchant (“FCM”) that provides execution, clearing and settlement services for customertransactions. Our business primarily encompasses securities and commodities brokerage forcustomers. IB is also registered as a Forex Dealer Member (“FDM”) and provides customers withthe ability to trade over the counter spot forex. Interactive differs from a traditional brokerage firm
because it does not employ any human “brokers” or “advisors” that manage customer accounts.
All trading in an IB customer account is self-directed by the customer or by an advisor chosen by
the customer. Interactive customer service personnel are specifically prohibited from providing
advice, including but not limited to investment, trading or tax advice to customers. Trades are
generally entered by the customer on a personal computer or portable electronic device andtransmitted over the Internet to Interactive for execution on various exchanges and market centers.
IB is extensively regulated by U.S. federal and state regulators, foreign regulatory agencies andmultiple exchanges and self-regulatory organizations (“SROs”) of which IB is a member. As aregistered FCM, IB is subject to the Commodity Exchange Act and rules promulgated by the
Commodity Futures Trading Commission (“CFTC”), the National Futures Association (“NFA”)
and the commodities exchanges of which the firm is a member. As a U.S. broker-dealer, IB is also
subject to the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules promulgatedthereunder and is regulated by the Securities and Exchange Commission (“SEC”), the Financial
Industry Regulatory Authority (“FINRA”) and other SROs and exchanges of which the firm is amember.
Interactive is a subsidiary of IBG LLC (the “Group”), which is the holding company for IB and its
proprietary trading and brokerage affiliates. This document focuses on the activities of Interactive,
but we encourage you to review the Interactive Brokers Group, Inc. (“IBG, Inc.”) Annual Reportavailable at https://investors.interactivebrokers.com/ir/main.php. IBG, Inc. is the publicly tradedholding company of the Group. The IBG, Inc. Annual Report provides information on IBG, Inc.
and other Group companies.
Except as otherwise noted below, the information set out is as of September 29, 2023. Interactive
will update this information annually and as necessary to take into account any material change toits business operations, financial condition or other factors that may be material to a customer’s
decision to do business with IB. Please note that IB’s business activities and financial data are notstatic and may change throughout any 12-month period.

4

I. IB Headquarters
Interactive’s headquarters is located at:
One Pickwick Plaza
Greenwich, CT 06830
203-618-5700 (phone)203-618-7731(fax)
www.interactivebrokers.com
email: help@interactivebrokers.com
The firm also maintains an office in Chicago, Illinois and in various locations overseas.
Additional contact information is available on the Help & Contacts section of the IB website.
General inquiries may be submitted to IB via the link on the IB website athttps://www.interactivebrokers.com/help.
II. Information Regarding NFA Principals
The following is a list of IB principals registered with the NFA. For each, we have included asummary of his or her background and details concerning his or her responsibilities at IB.1
Thomas Peterffy
Chairman
777 S. Flagler Drive, Suite 802
West Palm Beach, FL 33401
Mr. Peterffy has been at the forefront of applying computer technology to automate trading
and brokerage functions since 1977 when he purchased a seat on the American Stock
Exchange, trading as an individual marker maker in equity options. Mr. Peterffy was among
the first to apply a computerized mathematical model to continuously value equity option
prices. By 1986, Mr. Peterffy had developed and employed a fully integrated, automatedmarket making system for stocks, options and futures. As this pioneering system extended
around the globe, online brokerage functions were added and, in 1993, Interactive was formed.
Mr. Peterffy was also extremely influential in the formation and structuring of the Boston
Options Exchange and the International Securities Exchange.

1Please note that these principals may hold other titles for various Group companies. Unless otherwise noted, thetitles listed are those each principal holds at IB.

5

Milan Galik
Chief Executive Officer
One Pickwick Plaza
Greenwich, CT 06830
Mr. Galik is responsible for overseeing all corporate functions at Interactive. Mr. Galik joinedInteractive in 1990. Mr. Galik has been a member of the Interactive Brokers Group Board of
Directors since its initial public offering in 2007.
Jeffrey A. Bauch
Director, Internal Compliance
209 South LaSalle Street
11th Floor
Chicago, IL 60604
Mr. Bauch is responsible for overseeing IB’s Internal Compliance group, including theregistration and licensing of the IB companies and employees. Mr. Bauch has been with IB
and its affiliated companies since 1999.
Paul J. Brody
Secretary
One Pickwick Plaza
Greenwich, CT 06830
Mr. Brody is responsible for several areas of IB as well as other Group companies, includinginternal administration, finance, accounting, clearing and banking relationships. Mr. Brody,
who joined the Group in 1987, also serves as a director and/or officer for various Groupsubsidiaries. From 2005 to 2012 Mr. Brody served as a director of The Options Clearing
Corporation (“OCC”) (and for a portion of that time as member Vice Chairman), of which
Interactive Brokers Securities Services LLC (IB’s affiliate) and Interactive are members. He
also served as a director of Quadriserv Inc., an electronic securities lending platform provider,from 2009 to 2014. Mr. Brody worked in the commodities business prior to joining the Group.
Jonathan Chait
Exec. Vice President and Chief Operating Officer
Gotthardstrasse 36301 Zug
Switzerland
Mr. Chait began working for the Group in 1984, and worked in the securities industry prior tothat time. He is responsible for and oversees IB’s customer-facing operations worldwide andis the chief person responsible for managing IB’s global risk exposure.

6

Jonathan M. Gelman
Chief Compliance Officer
Two Pickwick Plaza
Greenwich, CT 06830
Mr. Gelman is IB’s Chief Compliance Officer. He is responsible for overseeing the firm’s
compliance with applicable regulations, providing advice on business and policy issues, andacting as liaison between the firm and its regulators. Prior to joining Interactive, Mr. Gelman
served as Compliance Officer with Brown Brothers Harriman & Co and JP Morgan Securities,
as well as working in FINRA Market Regulation.
Jeffrey D. Fox
Chief Regulatory Officer
Two Pickwick Plaza Greenwich
CT 06830
Mr. Fox is IB’s Global Chief Regulatory Officer. He is responsible for the coordination of theGroup’s global compliance operations and provides legal advice to Interactive. Prior to joining
IB in 2010, Mr. Fox was a litigation partner with Goodwin Procter LLP.
David E. Friedland
Managing Director, Asian Operations
2 Pacific Place, Suite 1512
88 Queensway
Admiralty, Hong Kong
Mr. Friedland has over 25 years’ experience in the securities business and has been with theGroup companies for the majority of that time. He began and manages the Asian operations ofInteractive.
James Menicucci
Principal Financial Officer and Regulatory Reporting Director
Two Pickwick Plaza
Greenwich, CT 06830
Mr. Menicucci is IB’s Principal Financial Officer and the Global Head of Financial andRegulatory Reporting. He is responsible for financial and regulatory functions for IB. Prior tojoining IB in 2015, Mr. Menicucci worked at the Financial Industry Regulatory Authority as a
Principal in Risk Oversight and Operational Risk division and served as a subject matter expert
on numerous topics including Customer Protection, Funding and Liquidity, Credit andOperational Risk.

7

John Courtney Malcarney
Director, Client Services
Gotthardstrasse 36301 Zug
Switzerland
Mr. Malcarney is responsible for IB’s European business development and manages Groupclient services teams in Europe and India. Prior to joining IB in 2015, Mr. Malcarney held
various positions in the financial industry including working on the proprietary trading side of
IBKR Financial Services AG, where he was responsible for Structured Products (including
IBFP Structured Products and ETFs).
Thomas F. Moser
Forex Platform Manager
Gotthardstrasse 36301 Zug
Switzerland
Mr. Moser has been with the Group since 2001 and worked in the financial industry prior tothat time. At IB, Mr. Moser is responsible for building and maintaining relationships with IB’s
forex counterparties and supervising IB’s daily forex business, including, but not limited to,addressing potential trade issues, monitoring risk parameters and reviewing the functionalityof IB’s forex platform. Prior to joining the Group, Mr. Moser held several positions in theindustry, including trading convertible bonds and foreign exchange and managing a hedge
fund.
Chi Ling (Mary) Ng
Senior Manager, Trade and Risk
2 Pacific Place, Suite 1512
88 Queensway
Admiralty, Hong Kong
Ms. Ng supervises the customer service group in Hong Kong. Her responsibilities include
handling customer trade-related issues and monitoring customer accounts for margincompliance. Prior to joining IB in 2005, Ms. Ng worked in the China Tax Department ofPricewaterhouse Coopers Ltd. and was an Assistant Vice President in the China Research andAdvisory Department of Mizuho Corporate Bank Ltd.
Steven J. Sanders
Senior Vice President, Marketing & Product Development
One Pickwick Plaza
Greenwich, CT 06830
Mr. Sanders has been with Interactive since 2001 and worked in the financial services industry
for many years prior to that time. At IB, Mr. Sanders supervises the firm’s marketing programand educational tools for customers. He is also responsible for the operation and supervisionof IB’s front-end account management system as well as display level customer reporting.
8

Prior to joining IB, Mr. Sanders held many positions in the securities industry, including
working as a broker and a capital markets Certified Public Accountant.
Kengning Shao-Chen
Treasurer
One Pickwick Plaza
Greenwich, CT 06830
Ms. Shao-Chen oversees treasury functions for Interactive as well as for its global affiliates.
Her responsibilities focus on supervising the firm’s cash and asset management as well as thefirm’s liquidity. Ms. Shao-Chen joined the Group in 2000 in the Treasury department,
holding various treasury and managerial finance positions within the Group’s Treasury team.
Christopher James Sorcic
Risk Manager
209 South LaSalle Street
10th Floor
Chicago, IL 60604
Mr. Sorcic is a Risk Manager on the IB Trade Desk and holds several series licenses. In
connection with his primary responsibility of managing risk to the firm and its customers, Mr.
Sorcic is involved in risk reporting, reviewing margin scenarios and analyzing customer
accounts for margin and trade-related issues.
Allan Doi Ki Tang
Senior Manager, Trade and Risk
2 Pacific Place, Suite 1512
88 Queensway
Admiralty, Hong Kong
Mr. Tang supervises the Hong Kong Trade and Risk group and is involved in managing thefirm’s risk on a daily basis. His responsibilities include handling customer trade inquiries andacting as a liaison with IB’s other customer service desks around the world, reviewing andadjusting margin requirements based on risk and regulatory requirements and monitoring orderrouting efficiencies. Prior to joining IB in 2008, Mr. Tang spent several years as an Investment
Representative dealing in U.S. and Canadian equities and equity options at TD Waterhouse
Discount Brokerage Canada Inc. in Toronto.
Joseph T. McGovern
Manager, Trade Issues
209 South LaSalle Street, 10th Floor
Chicago, IL 60604
Mr. McGovern holds multiple series licenses and manages a team in the Interactive Trade
Group. His team handles trading and margin issues. Prior to joining IB Mr. McGovern was theManaging Director Principal of Bear Stearns & Co. Inc. Chicago Board of Trade operations.

9Andrea Servalli
Supervisor, Client Services
Gotthardstrasse 36301 Zug
Switzerland
Mr. Servalli is responsible for IB’s European risk team and trade desk, supervising the Zug
and London teams. Prior to joining IB in 2016, Mr. Servalli held various positions at
Honestamp, European Commission, Ferrero and CACEIS.
IBG LLCManaging Member
One Pickwick Plaza
Greenwich, CT 06830
IBG LLC is the holding company for IB’s proprietary trading, market-making and brokerageaffiliates and is the managing member of IB. IBG LLC does not conduct any external business
operations other than holding certain investment positions for the Group.
III. Significant Business Activities and Product Lines for Interactive Brokers LLC
IB is an electronic brokerage firm. With the exception of certain trades to hedge currency
exposure and hedge interest rates, IB does not conduct proprietary trading. Additionally, IBdoes not trade against customer orders.
IB’s primary business lines include online brokerage services for public securities andcommodities customers. We have included the information below to demonstrate the allocationof IB’s capital and assets between these business lines.
Asset and Capital Allocation2
The tables below provide an approximate allocation of IB’s capital and assets between its two
primary business lines: securities brokerage and commodities brokerage. Some amounts are
not specifically allocated to a particular business line and are categorized as firm capital/assets.

2

Capital Allocation
Securities allocation
Commodities allocation
Other cash, cash equivalents and receivables(1)

16%
5%
79%

Total

100%

Asset and Capital Allocation data is current as of September 29, 2023. All numbers are rounded up.

10Asset Allocation
Securities Allocation
Commodities allocation
Other cash, cash equivalents and receivables(2)

82%
6%
13%

Total

100%

Notes:(1) Other cash, cash equivalents and receivables consists of the firm’s cash and equivalents that cannot beallocated to IB’s principal business lines: (i) securities brokerage and (ii) commodities brokerage. The
receivables represent deposits with brokers, dealers and clearing organizations.
(2) Included in this amount are monies included in international customer protection computations, which cannot
be allocated to business segments.

IV. Description of Interactive Brokers’ Customer Business
As an electronic broker, IB executes, clears and settles trades globally for both institutional
and individual customers. Capitalizing on the technology originally developed for the market
making business of its affiliates, IB’s systems provide its customers with the capability tomonitor multiple markets around the world simultaneously and to execute trades electronicallyin these markets at a low cost, in multiple products and currencies from a single universal
trading account.
Since launching the business in 1993, IB and its affiliates have grown to serve more than
2.48 million institutional and individual brokerage customers from more than 200 countries.
IB’s customer base consists primarily of sophisticated investors and institutional traders. IB
customers have access to securities and futures markets around the world, including in the
U.S., Canada, Mexico, Europe, Australia, Hong Kong, India, Japan, Singapore and South
Korea. A full listing of the products offered and the markets available to IB customers can befound at https://www.interactivebrokers.com/exchanges.
IB offers the following account types to its clients:
Trader & Investor Accounts:
•
•
•
•
•

Individual
Joint
Trust
UGMA/UTMA
IRA

Institutional Accounts:••

Organization and Pool
Proprietary Trading Group
11

•
•
•

Hedge/Mutual Fund
AdvisorIntroducing Broker

IB offers execution and clearing services to customers. Some customers may choose an“execution-only” account that allows them to clear their trades at another broker. In addition,some prime brokerage customers may execute trades through another broker and clear throughIB.
IB offers access to more than 150 markets around the world where clients have the ability to
trade various products, including stocks, options, futures, bonds, mutual funds and spot forex
currency pairs in more than 27 currencies.
Customers can hold balances in multiple currencies in their securities accounts with IB, which
may offset long or short securities positions. Customers can use IB’s forex platform to convert
these currencies into the base currency of their account. In addition, IB customers can trade
spot forex, buying one currency in exchange for another.
IB maintains an electronic trading platform that offers its customers the ability to enter orders
for over-the-counter spot forex trading. When a customer enters into a forex transaction with
IB, IB may effect that transaction by entering into a transaction with one of IB’s affiliates or witha third party bank (each, a “Forex Liquidity Provider”).
As part of its forex business, IB offers a roll service to certain clients (U.S. clients must be
qualified Eligible Contract Participants (each, an “ECP”)) that provides the client with
automated forex rolls for two opposing (i.e., long vs. short) forex transactions and positions
are rolled each day to the following day (tom/next). The minimum transaction size isgenerally$10 million U.S. dollars or the equivalent in foreign currency.
V. Permitted Depositories & Counterparties
Interactive is a member of or participant at various registered exchanges, electronic
communication networks (“ECN”), clearinghouses and depositories in several countries. In
many cases, IB is self-clearing, and is a member of the following clearinghouses: CME
Clearing; ICE Clear U.S., Inc.; ICE Clear Europe; Fixed Income Clearing Corp (“FICC”);
National Securities Clearing Corporation (“NSCC”); and the Options Clearing Corporation(“OCC”). In addition, IB maintains membership at the Depository Trust Company (“DTC”)
and at Euroclear UK and Ireland Limited (formerly known as CrestCo Limited).

12

Execution and Clearing Relationships3
Where IB is not self-clearing, it uses a clearing agent to clear its clients’ trades. Similarly,
where IB is not an executing member on an exchange, IB client trades may be executed throughan affiliate that is a member of the exchange. The table below lists the futures exchanges on
which IB clients may trade along with the executing broker, clearinghouse and clearing broker
that clears trades on IB’s behalf on that exchange (for markets where IB is not self-clearing).
Each futures exchange is listed in the applicable region (North America, Europe andAsia/Pacific).
Futures Exchange

Executing Broker

Clearinghouse

Clearing Broker

NORTH AMERICACBOE Futures
Exchange
CME Group(Including CME,
CBOT, NYMEX)ICE Futures U.S.,
Inc.
Small ExchangeMontreal Exchange

Mexican Derivatives
Exchange

Interactive Brokers
LLC
Interactive Brokers
LLC

Options Clearing
Corporation
CME Clearing

Interactive Brokers
LLC
Interactive Brokers
LLC

Interactive Brokers
LLC
Interactive Brokers
LLC
Interactive Brokers
Canada Inc.

ICE Clear U.S., Inc.

Interactive Brokers
LLC
Interactive Brokers
LLC
Interactive Brokers
Canada Inc.

Interactive Brokers(U.K.) Limited

Options Clearing
Corporation
Canadian
Derivatives Clearing
Corporation
AsignaBBVA Bancomer,
S.A.

EUROPE

3

Borsa Italiana

Interactive Brokers(U.K.) Limited

Cassa diCompensazione e
Garanzia (CC&G)

Eurex

IBKR Financial
Services AG

Eurex Clearing AG

ICE Futures Europe(LIFFE business)

Interactive Brokers(U.K.) Limited

ICE Clear Europe

Execution and Clearing Relationships data is current as of September 29, 2023.

13

BNP Paribas
Securities Services,
Milan branch(through Interactive
Brokers (U.K.)
Limited account)
IBKR Financial
Services AG
Interactive Brokers(U.K.) Limited

Futures Exchange
ICE Futures Europe
Nasdaq OMX
NordicNYSE Euronext(Brussels, France,
Amsterdam)
Spanish Futures &Options Exchange

Executing Broker
Interactive Brokers
LLC
IBKR Financial
Services AG

Clearinghouse
ICE Clear Europe

IBKR Financial
Services AG

LCH.Clearnet S.A.

IBKR Financial
Services AG

Interactive Brokers(U.K.) Limited

BME Clearing

Interactive Brokers(U.K.) Limited

Nasdaq OMX

Clearing Broker
Interactive Brokers
LLC
IBKR Financial
Services AG

ASIA/PACIFICASX Trade24

Hong Kong Futures
Exchange
Korea Exchange –Derivatives Market

National Stock
Exchange of India

Osaka Securities
Exchange
Singapore ExchangeInteractive Brokers
Australia Pty
LimitedInteractive Brokers
Hong Kong Limited
Shinhan Securities
Co. Ltd. (throughInteractive Brokers(U.K.) Limited
account)
Interactive Brokers(India) Pvt. Ltd.

Interactive Brokers
Securities Japan,
Inc.
Interactive Brokers(U.K.) Limited

ASX Clear

HKFE Clearing
Corporation Limited
Korea Stock
Exchange

National Securities
Clearing Corp
Ltd./BOISL – Bankof India
Shareholding
Limited
JSCC

Singapore Exchange
Derivatives Clearing

Interactive Brokers
Australia Pty
LimitedInteractive Brokers
Hong Kong Limited
Shinhan Securities
Co. Ltd. (throughInteractive Brokers(U.K.) Limited
account)
Interactive Brokers(India) Pvt. Ltd.

Interactive Brokers
Securities Japan,Inc.
ABN AMRO
Clearing Bank N.V.
Singapore

Forex Liquidity Providers
As described above, IB customers may trade OTC spot currency. Customers may engage insimple currency conversions, which allows them to trade products denominated in foreign
currencies. Customers may also engage in leveraged spot forex trading through IB. Leveraged
forex trading is conducted through IB’s IDEAL FX platform. IB may effect these transactions
by, in turn, entering into a transaction with a Liquidity Provider. As of the date of this14

document, the non-affiliated, non-IB customer Liquidity Providers that may be counterparties
to leveraged forex transactions include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

Australia and New Zealand Banking Group Limited
Barclays Bank plc
Bank of America N.A.
BNP Paribas, N.A.
Citibank, N.A.
Commerzbank AG
Deutsche Bank AG
Goldman Sachs International Limited
HSBC Bank plc
JP Morgan Chase Bank N.A.
Morgan Stanley Inc.
Nomura International plc
Royal Bank of Canada
Royal Bank of Scotland plc
Standard Chartered Bank plc
Toronto Dominion BankUBS AG
Wells Fargo BankXTX Markets

Credit Reviews of Counterparties
IB conducts a credit analysis on all counterparties (including banks through which IB deposits/ invests customer funds, under CFTC and SEC rules) before establishing a counterparty
relationship. As part of this process, the Interactive Brokers Group’s Credit Department
evaluates the risks of each bank’s balance sheet, financial performance over a period of time,
credit ratings and pending litigations / regulatory investigations and limits the aggregate
amount that may be placed with any one institution. The Group’s Credit policy also takes into
account the nature of the counterparty relationship. These reviews are updated at least annually.
All credit reviews are overseen by the Interactive Brokers Group’s Chief Credit Officer, whodetermines the aggregate amount of risk posed by the counterparty, and each counterparty isapproved by the Group Chairman and Group Chief Financial Officer. IB also performs
quarterly reviews to ensure the banks that have been selected remain a good credit risk andestablishes and monitors daily limits to avoid concentration risk.
Prior to joining a new clearinghouse, IB also examines the operational procedures set forth in
the bylaws of the clearinghouse, especially its margin and clearing fund calculations anddefault procedures. The firm conducts annual reviews to monitor for any material changes tothe existing policies and procedures. Since the largest risk with clearinghouses is operationalrisk, IB carefully reviews and verifies that the risk management policies and procedures areadequate to mitigate a default risk that could impact non-defaulting clearing members.

15

This credit review process is also conducted regarding the Forex Liquidity Providers that
submit quotations on IB’s IDEAL FX Platform. After the credit review is performed, each FX
Liquidity Provider venue is assigned a risk limit by the Group’s Credit Department.
VI. Description of How Customer Funds Are Treated at Interactive Brokers
This section describes the risk of depositing funds with IB to trade futures and the steps that
IB takes to reduce that risk and to protect client funds. When customers place funds with afinancial institution such as Interactive, there is an inherent risk of default. Further, funds
deposited to trade futures with IB (or any other futures commission merchant) are not protectedby the Securities Industry Protection Corporation ("SIPC"). While these risks exist, we believethat the risk of a default by IB causing loss of customer funds is very remote.
As of September 29, 2023, IB had excess net capital of $6.2 billion. IB is rated A-+; Outlook
Positive by Standard & Poor's and IB's parent company had $13.3 billion in equity capital. IB
does not trade for its own proprietary account4 and IB's affiliates that conduct proprietary
trading do so in separate companies that are regulated and separately capitalized. IB holds nomaterial positions in over-the-counter securities or derivatives. IB holds no Collateralized Debt
Obligations (“CDOs”), Mortgage-Backed Securities (“MBS”) or Credit Default Swaps(“CDS”). The gross amount of IB’s portfolio of debt securities, with the exception of U.S.
government securities, is less than 10% of IB’s equity capital. IB employs state of the art risk
management systems, including systems that margin customer accounts in real-time (rejecting
under-margined orders and generally liquidating under-margined accounts). We discuss thesematters in greater detail below.
Liquidity Management
Strength and Security of the GroupIB has reported solid, positive earnings for the past 20 consecutive years. Within the Group,
brokerage and market making businesses are managed separately. There is a strict systematicand procedural separation between the two business lines and customer-segregated assets are
not commingled with or utilized for proprietary operations.
Summary of Financing and Capital Adequacy
The Group and its subsidiaries maintain sufficient liquidity for daily operations and forprotection against liquidity stress situations, and project that cash flows from operations andavailable borrowings will be adequate to meet future liquidity needs with a twelve-monthhorizon. The Group actively manages its excess liquidity and maintains significant borrowing
facilities through the securities lending markets and with banks. As a general practice, the4With the exception of certain trades to reduce currency exposure, facilitate fractional trading for clients, andcertain trades to lock in interest rates on investments of house funds, IB does not conduct proprietary
trading. Additionally, IB does not trade against customer orders.

16Group maintains sufficient levels of cash on hand to allow for a buffer should an immediateneed arise for available funds. The Group's liquidity needs are reassessed frequently andrevised as needed.
The Group’s balance sheet structure is relatively simple and highly liquid. The company has
substantial financial resources, which are projected to be sufficient to withstand various
liquidity stress scenarios. As of September 29, 2023, the Group’s global financial resources
included:
•
•
•
•
•

Equity capital of $13.3 billion;
Excess regulatory capital of $11 billion (of which $6.2 billion was held by IB);Bank facilities of $1.147 billion, secured and unsecured;
Liquidity (defined as immediately available cash or borrowing lines) of $6.294 billion; andA daily U.S. target balance of $1,250 million for contingency purposes.

Interactive is the largest operating company within the Group and is rated A-; Outlook Stable
by Standard & Poor's (see https://www.interactivebrokers.com/rating).
As of September 29, 2023, IB holds its liquid assets in the form of bank deposits and maintains
approximately $598million in excess firm balances in customer segregated accounts.
Furthermore, IB holds excess foreign currency at its various global banks, clearinghouses andclearing firms that it can access on a same-day or next-day basis. IB also maintains $250
million in unsecured uncommitted credit facilities from affiliates, $100 million in an unsecuredcommitted credit facility from the Group, secured uncommitted bank credit facilities of $5515
million and unsecured uncommitted bank credit facilities of $632 million.
Daily Liquidity Management
One of the key functions of IB’s Treasury Department involves daily monitoring of liquidity
needs and available collateral to ensure that an appropriate liquidity cushion is maintained at
all times.
Liquidity Management during a Credit/Liquidity Event
The firm’s liquidity management policies are designed to mitigate liquidity shocks from firmspecific and market stress events. Firm-specific stress may result from adverse news about thefirm, perhaps caused by events such as a large loss announcement, fraud, or negative rumors.
Such events may lead to the withdrawal of credit facilities or increased collateral requirements
by external parties reacting to the news. Market stress results from adverse market events, suchas a major bankruptcy or a credit event involving a troubled government. Under these types ofstress scenarios, credit lines are likely to be curtailed, risk margin requirements may suddenly
rise as a result of market volatility, and customers may withdraw funds rapidly and in
unprecedented amounts, transferring to locations deemed to be safe havens (e.g., government
securities or too-big-to-fail banks).

17

While the firm positions itself with a buffer of excess liquidity on a daily basis, liquidity
management during a credit or liquidity event requires close and continuous monitoring byboth the Treasury Department and senior management.
The IB Treasury Department is under a strict mandate to inform senior management ofliquidity or cash issues as soon as they are determined to be critical and as frequently asnecessary. Senior management includes the CEO, the Group CFO and other senior
management.
The firm closely monitors the impact from stress scenarios and applies a stress test to calculate
the firm’s potential loss exposure if customer portfolios were forced into liquidation.
Internal Evaluation of Liquidity Management
As part of its annual risk management review, the Group Internal Audit Department reviews
the firm’s Liquidity Management Plan and reports its findings to senior management and theGroup’s Audit and Compliance Committee.
In addition, in accordance with CFTC and NFA Rules, IB maintains a Risk Management
Program that is designed to identify the daily risks that IB faces and the policies and proceduresthat IB uses to mitigate these risks.
As part of its Risk Management Program, IB has established a Risk Management Unit(“RMU”) comprised of various officers and directors of the Group. The RMU has supervisory
oversight over the Risk Management Program, and, among other things, verifies that the risk
policies and procedures that make up IB’s Risk Management Program are sufficient to identify,
measure, monitor and mitigate the firm’s risk. The RMU reports directly to senior management
and provides at least quarterly reports to senior management and IB’s governing body. (These
reports are also submitted to the CFTC and NFA.) These “Risk Exposure Reports” detail any
applicable risk exposure to the firm, the status of previously recommended changes to the Risk
Management Program and any new recommendations. Members of the Risk Management Unit
meet at least annually to review the Program and update it as necessary. Risk tolerance limits
are also reviewed and approved quarterly by senior management and annually by the firm’s
governing body.
Risks Posed to IB Through Affiliates
Certain IB wholly-owned affiliates hold accounts with IB to trade for their own accounts. IB’s
affiliates are not treated as customers for regulatory purposes. As of September 29, 2023, noncustomer funds held by IB (i.e., affiliate, non-customer and house funds) to satisfy futures
margin requirements totaled approximately $17 million, or 0.67 % of the $2.5 billion in funds
held on behalf of IB customers to satisfy futures margin requirements. IB does not invest funds
in its affiliates, but, as discussed in more detail below, may engage in secured equity financing
with affiliates.

18

Investments of House and Customer Funds
General
IB is conservative when it comes to investing house and customer funds. Outside of deposits
with highly rated regulated banks, IB may invest funds in: (1) certain bank products; (2) U.S.
Treasury securities; (3) secured equity financing with its affiliates; or (4) it may enter into
reverse repurchase agreements in which the FICC5 serves as the central counterparty (“CCP”)
to all transactions matched and cleared through its platform.
With respect to investments in bank products, IB limits its investments to products that can beliquidated6 quickly (i.e., same day) as supported by duly executed legal agreements that havebeen negotiated between IB and its banks. Currently, such investments are limited to cash
deposits. To mitigate the risk of loss, as described above, IB performs a thorough credit review
in the selection of the banks it uses for deposits and investments and limits the aggregate
amount that may be placed with any one institution. IB also performs quarterly reviews toensure the banks that have been selected remain a good credit risk, and establishes and monitors
daily limits to avoid concentration risk.
A portion of segregated futures customer funds is typically invested in U.S. Treasury securities.
IB limits its investments in government securities to debt obligations issued by the UnitedStates government. IB does not invest in agency securities (e.g., securities issued by Freddie
Mac or Fannie Mae) or in debt obligations of foreign governments. IB does not currently invest
any customer money in money market funds. As of September 29, 2023, the average weighted
maturity of IB’s U.S. Treasury security investments was 17.90 days with an average weighted
coupon of 0% per annum. The average weighted maturity of IB’s US Municipal Securities
investment was 199.92 days with an average weighted coupon of 3.2% per annum.
IB may engage in secured equity financing arrangements with affiliates, in which IB lends cash
to an affiliate and the loan is secured by marginable listed stock but as of the date of thisdocument, IB does not have any such loans in place.
IB may engage in unsecured financing arrangements with its parent company, IBG LLC, inwhich IB lends cash to IBG LLC. The average daily loan amount to IBG LLC for the third
quarter 2023 was $131.11 million and the average daily loan rate was 6.02%.

5

FICC is a subsidiary of the Depository Trust & Clearing Corporation that provides real-time trade matching, clearing,netting and risk management for trades in U.S. Government securities, repurchase agreements, government agency
securities, mortgaged-backed securities, and other types of fixed-income securities. In its capacity as a U.S.
clearinghouse of certain fixed-income securities, it serves as the CCP to each party opposite of a trade. If a party to a
trade fails to meet its obligation, the CCP will step in to honor the defaulting party’s obligation.
IB has in the past invested in an overnight commercial paper (“CP”) investment product offered through a sweep
account held at a major U.S. bank. The cash in the account was swept overnight into a CP product to earn interest andwas swept back into the account just before the start of normal business hours. IB presently has no CP investment.
619

IB may enter into reverse repurchase agreements (“reverse repos”), in which it lends funds
against collateral consisting of U.S. Treasury securities. IB settles these transactions on areceive vs. payment basis to mitigate delivery exposure. In addition, IB will only enter into
reverse repos cleared by FICC, which mitigates counterparty exposure. In its capacity as CCP,
FICC will mark-to-market the collateral on a daily basis to ensure that the lender is properlycollateralized. IB engages in reverse repos for purposes of investing securities customer money
only; no reverse repos are transacted with commodities customer funds.
Commodities Accounts
A majority of commodities customer funds are invested in short-term U.S. Treasury securities,
which are held at a custody bank in a safekeeping account segregated for the exclusive benefitof customers. In addition, a portion of these funds are invested in short-term U.S. Treasury
securities and pledged to futures clearing houses to support customer margin requirements on
futures and options on futures positions, and some funds are also held at commodities clearing
banks/brokers in accounts identified as segregated for the benefit of IB's customers to support
customer margin requirements.
Securities Accounts
A majority of securities customer funds is invested in U.S. Treasury securities, including direct
investments in Treasury notes, Treasury bills and reverse repos, where the collateral received
is in the form of U.S. Treasury securities. These transactions are conducted with third parties
and guaranteed by the FICC. The collateral remains in the possession of IB and is held at acustody bank in a segregated Reserve Safekeeping Account for the exclusive benefit ofcustomers. U.S. Treasury securities may also be pledged to a clearinghouse to support customer
margin requirements on securities options positions.
LeverageOn a monthly basis, IB is required to report to the NFA and CFTC a leverage ratio calculation
performed in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).
Section 16(e)(3) of the NFA’s Financial Requirements defines leverage as “total balance sheet
assets, less any instruments guaranteed by the U.S. government and held as an asset or tocollateralize an asset (e.g., a reverse repo) divided by total capital (the sum of stockholder’sequity and subordinated debt).” Leverage ratios can provide important information on a firm’s
financial risk. A high leverage ratio means that the company is using debt and other liabilities
to finance its assets, and, all else being equal, is riskier than a company with lower leverage. As
of September 29, 2023, IB’s reported leverage ratio was 6.35.
VII. Information
Organization

RegardingInteractive

Brokers’

DesignatedSelf-Regulatory

As stated above, Interactive is a member of the NFA, FINRA and is regulated by these entities
as well as by the CFTC and the SEC. IB is also a member of various exchanges and other
SROs.
For its securities activities, IB’s designated examining authority (“DEA”) is FINRA.
20

Information regarding FINRA can be found on the FINRA website at www.finra.org.
For futures activities, IB’s designated self-regulatory organization (“DSRO”) is the CMEGroup. Information regarding the CME Group can be found on the CME Group website at
http://www.cmegroup.com.
Interactive files annual audited financial statements with its regulators. These statements areavailable on the IB website at https://www.interactivebrokers.com/financials.
Hard copies of IB’s audited financial statements may also be obtained from the Boston Officeof the U.S. SEC (www.sec.gov):
33 Arch Street, 24th Floor
Boston, MA 02110-1424(617) 573-8900
e-mail: boston@sec.gov
VIII. Disclosure of Legal & Regulatory Matters
The securities and commodities industries are highly regulated and many aspects of IB’s
business involve substantial risk of liability. In recent years, there has been an increasing
incidence of litigation involving the brokerage industry, including class action suits thatgenerally seek substantial damages, including, in some cases, punitive damages. Complianceand trading problems that are reported to federal, state and provincial regulators, exchanges orother SROs by dissatisfied customers are investigated by such regulatory bodies, and, if
pursued by such regulatory body or such customers, may rise to the level of arbitration or
disciplinary action. IB is also subject to periodic regulatory audits and inspections.
Like other FCMs and brokerage firms, IB has been named as a defendant in lawsuits and fromtime to time has been threatened with, or named as a defendant in, arbitrations andadministrative proceedings. The following contains information regarding potentially material
pending litigation and regulatory proceedings related to IB’s commodities business.
SEC and CFTC Orders Regarding Off-Channel Communications
On September 29, 2023, IB entered into separate settlement agreements with the SEC and
CFTC pursuant to orders by both bodies that from at least January 2019 through September
2023 (“Relevant Period”), IB employees sent and received communications related to thefirm’s business using unapproved methods including personal text and WhatsApp. These
communications were required to be retained pursuant to SEC and CFTC regulations. As aresult, IB violated section 17(a) of the Exchange Act and rule 17a-4(b)(4) thereunder, as well
as section 4g of the Commodity Exchange Act, 7 U.S.C. § 6g, and regulations 1.31 and 1.35,
17 C.F.R. §§ 1.31, 1.35 (2022).
In addition, the use of unauthorized communication methods related to the business of the firm
violated IB’s policies and procedures, and IB did not maintain adequate internal controls withrespect to the use of such unauthorized communications methods. As a result, IB failed todiligently supervise matters related to its business as a CFTC registrant in violation ofregulation 166.3, 17 C.F.R. § 166.3 (2022).
21

Interactive was ordered to pay a civil monetary penalty of $35,000,000 and $20,000,000 to the
SEC and CFTC, respectively. Interactive was also censured by the SEC, and ordered to ceaseand desist from further violating the above-cited regulations by both bodies. In addition,
Interactive was ordered by both bodies to conduct a comprehensive review of (among otherthings) its supervisory, compliance, and other policies and procedures; training programs;
surveillance programs; and technological solutions designed to ensure that IB’s electronic
communications, including those found on personal electronic devices, are preserved inaccordance with the requirements of the federal securities laws. IB will retain an Independent
Compliance Consultant to conduct this review in compliance with the SEC order. Any
recommendations coming from this review must be adopted (subject to certain limitations),
and a final report of the findings of the review must be submitted to the SEC and CFTC.
Interactive will also notify the SEC and CFTC of any discipline it imposes on employees withrespect to violations concerning preservation of electronic communications for a period of two
years, and will have its internal audit function assess its electronic communications
preservation program.
CFTC Settlement Regarding CME Exchange Fees
On June 30, 2022, without admitting or denying any of the findings or conclusions therein,
Interactive entered into a settlement agreement pursuant to a finding by the CFTC that it failed
to adequately supervise its officers, employees, and agents in violation of Regulation 166.3,
17 C.F.R. § 166.3 (2021). This finding stemmed from the CFTC’s allegation that Interactive
inadvertently overcharged customers CME exchange fees for spread trades in certain futures
products traded on CME Globex. Specifically, for spread trades in certain products, Interactive
unintentionally charged customers the higher fee applicable to outright trades while passing onto the exchange the lower amount applicable to spread trades.
Interactive was ordered to pay a civil monetary penalty of $300,000, to disgorge $710,828.14,
and to cease and desist violating Regulation 166.3, 17 C.F.R. § 166.3 (2021). The CFTC
acknowledged that Interactive took prompt corrective and remedial action and cooperated fully
with Staff's investigation.
NFA Settlement Regarding Canceling Retail Forex Orders
On April 14, 2022, IB agreed to pay a penalty of $250,000 to the NFA for activity related to
the firm's interpretation of regulations permitting IB to cancel certain retail customer forex
orders. The NFA alleged that IB canceled retail customer forex orders contrary to the reasonspermitted under NFA compliance rule 2-43(a)(1). The NFA also alleged that IB failed toadequately supervise its employees in the conduct of their forex activities on behalf of the firm
to ensure compliance with the relevant NFA requirements, contrary to NFA compliance rule2-36(e).
IB has updated its processes surrounding the canceling of retail forex client executions tocomply with the cited NFA regulations.

22

CFTC Settlement Regarding Negative Oil Prices
On September 28, 2021, without admitting or denying any of the findings or conclusions
therein, IB entered into a settlement agreement pursuant to a finding by the CFTC that
Interactive failed to adequately supervise its officers, employees, and agents in violation ofRegulation 166.3, 17 C.F.R. § 166.3 (2020). This finding stemmed from electronic trading
systems issues IB experienced on April 20, 2020, when certain crude oil futures products tradedat negative prices for the first time in history. Those systems issues included (1) the inabilityof some customers to enter orders for these products when negative prices occurred and (2)customers opening positions in crude oil futures without sufficient equity in their accounts tomeet applicable margin requirements. Although IB had engaged in extensive systems testingand had begun implementing necessary coding changes in advance of April 20, it was not able
to fully deploy new software before crude oil futures traded in negative territory. After April
20, 2020, IB promptly put in place measures to ensure that our systems are prepared for similar
negative-pricing of futures products going forward. As part of the settlement agreement,Interactive agreed to pay a civil monetary penalty in the amount of $1,750,000. In addition,
Interactive agreed to pay restitution in the amount of $82,570,000. This restitution amount was
fully credited by the CFTC as Interactive had voluntarily made aggregate payment of over
$100,000,000 to potentially affected customers shortly after the April 2020 negative oil pricing
event.
CME Group Actions
On September 25, 2020, CME Group Business Conduct Committee Panels representing the
Chicago Mercantile Exchange (“CME”), Commodity Exchange (“COMEX”), New York
Mercantile Exchange (“NYMEX”) and Chicago Board of Trade (“CBOT”) found that IB LLC(“IB”) implemented customer order routing functionality that bypassed CME group market
integrity controls. Specifically, in several cases, this functionality enabled its customer orders
to avoid protection points applied to all market orders by CME group's Globex platform inreckless disregard for the adverse impact on the market. These protection points are designed
to prevent extreme price movements and other market disruptions. By routing customerinitiated orders in this manner on numerous occasions between August 2015 and January 2016,
IB caused various agricultural, energy and metals markets, including the palladium, platinum,
cocoa, No. 11 sugar, RBOB gasoline and NY Harbor ULSD futures markets, to experience
price, liquidity and trade volume aberrations and velocity logic events.
The panel also found that IB failed to adequately take into consideration market conditions
when it used this order routing functionality to automatically liquidate under-margined
customer accounts which, on multiple occasions between August 2015 and January 2016,
caused those same markets to experience extreme price movements, liquidity and trade volume
aberrations, and velocity logic events.
The activity described above resulted in four companion cases brought by the CME, COMEX,NYMEX and CBOT. In accordance with the settlement of these cases, IB was fined a total of$375,000 with apportionments of $100,000 to CME, $100,000 to COMEX, $100,000 to
NYMEX and $75,000 to CBOT. IB fully cooperated in the investigation and all order routing
logic leading to the activity described above has been remediated.
23

AML Settlements
On August 10, 2020, without admitting or denying any of the findings or conclusions therein,
Interactive consented to the entry of an Order Instituting Proceedings Pursuant to Section 6(c)and (d) of the Commodity Exchange Act, Making Findings, and Imposing Remedial Sanctions(“CFTC Order”) with the CFTC; an Order Instituting Administrative and Cease-and-Desist
Proceedings, Pursuant to Sections 15(b) and 21C of the Exchange Act, Making Findings andImposing Remedial Sanctions and a Cease-and-Desist Order (“SEC Order”) with the SEC; anda Letter of Acceptance, Waiver and Consent (“AWC”) with the FINRA concerning
Interactive’s past anti-money laundering (“AML”) and Bank Secrecy Act (“BSA”) practices
and procedures (collectively, the “Orders”).
In consenting to the entry of the Orders, Interactive 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 and to cease and desist from violating CFTC Regulations 42.2 and 166.3 andSection 17(a) of the Exchange Act and Rules 17a-8 promulgated thereunder. In addition,
Interactive was censured and has agreed to continue the retention of an independent consultant
to review the implementation of its enhanced practices and procedures. Interactive
continuously works to enhance and strengthen its controls and makes significant investments
to improve its AML program to make it more robust and to respond to changing regulatory
standards.
The findings, set forth in the CFTC Order, stated that, from June 2014 through November
2018, Interactive failed to maintain an adequate AML program and to diligently supervise its
employees’ handling of certain commodity trading accounts held at Interactive that were thesubject of recent enforcement actions and nonpublic investigations initiated by the CFTC. The
CFTC’s findings stated that Interactive lacked a reasonably designed process for conducting
investigations of account activity and making Suspicious Activity Reports (“SARs”)
determinations and failed to identify or adequately investigate certain indicia of suspicious
activity in the accounts at issue that should have prompted a filing of with appropriate
authorities. The CFTC’s findings stated that, as a result, Interactive engaged in acts andpractices that violated Regulations 42.2 and 166.3, 17 C.F.R. §§ 42.2, 166.3 (2019).
The findings, set forth in the SEC order, stated that, from at least July 1, 2016, to June 30, 2017,
Interactive failed to file SARs relating to suspicious activity involving certain U.S. microcap
securities transactions it executed on behalf of its customers. The SEC’s findings stated that,during the relevant time period, Interactive ignored or failed to recognize numerous red flags,
failed to properly investigate certain conduct as required by its written supervisory procedures,and ultimately failed to file SARs on suspicious activity. These failures were found to be theresult of Interactive’s failure to implement a reasonable surveillance program. The SEC’s
findings stated that, as a result, Interactive willfully violated Section 17(a) of the Exchange Act
and Rule 17a-8 thereunder.
The findings, set forth in the AWC, stated that, from January 2013 through September 2018,
Interactive failed to develop and implement an AML program reasonably designed to matchits growth, and as a result, was in violation of FINRA Rules 3310(A), (B), (C) and 2010. The
FINRA findings stated that, during the relevant period, Interactive failed to reasonably surveil
certain money movements, develop and implement reasonably designed surveillance tools for24certain money movements and securities transactions, reasonably investigate potentiallysuspicious activity and file SARs after detecting that customers had engaged in suspicious
activity, and conduct reasonable AML testing of its program.
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, Ph.D., 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 a 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 todismiss the complaint in its entirety, and without providing plaintiff leave to amend. On
September 28, 2017, the 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 andremanded 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 11, 2019, which was denied on September 30, 2019. On December
9, 2019, the Company filed a motion requesting that the District Court certify to theConnecticut 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. The plaintiff
served a motion for class certification on March 18, 2022, which the Company opposed. On
March 25, 2022, the plaintiff also filed a motion for leave to amend his complaint, which was
granted on July 5, 2022. The plaintiff filed his third amended complaint on July 14, 2022. The
Company’s answer was filed on July 26, 2022.
On August 25, 2023, the Court granted plaintiff’s motion for class certification, certifying aclass that consists of IB LLC account holders (with some exclusions) who had positions
liquidated from December 18, 2013 to the date of trial at prices outside of a “pricing corridor”
defined in the Court’s decision. On September 8, 2023, the Company filed a petition for
permission to appeal to the United States Court of Appeals for the Second Circuit, seeking aninterlocutory appeal of the District Court’s class certification decision. Plaintiff opposed thepetition, which is now fully-briefed and sub judice. 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 withthis type of unwarranted action, any potential claims for counsel fees and expenses incurred indefending the case may be fully pursued against the plaintiff.
Trading Technologies MatterOn 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 Division25

(the “District Court”), against IBG LLC and IB LLC (the “Defendants”). The complaint, as
amended, alleged that the Defendants infringed twelve U.S. patents held by Trading
Technologies. Trading Technologies sought damages and injunctive relief. The Defendants
asserted numerous defenses to Trading Technologies’ claims.
The asserted patents were the subject of petitions before the United States Patent andTrademark 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
the Defendants or Trading Technologies on all PTAB determinations.
The United States Court of Appeals for the Federal Circuit affirmed the PTAB’s CBM Review
determinations that eight patents were invalid and vacated the CBM Review determinations ofinvalidity for four patents, concluding that these patents were not eligible for CBM Review.
The District Court proceedings on the four patents where the CBM Review determinations had
been vacated thereafter resumed in March 2019. All four patents have since expired.
In June 2021, the District Court granted summary judgment in favor of the Defendants, findingthat two of the remaining four patents were invalid. The District Court trial with respect to thetwo remaining patents began on August 6, 2021. On September 7, 2021, the jury rendered its
verdict finding that the Defendants infringed the two patents, but did not willfully infringe
either patent, finding that the two patents were not invalid and awarding $6.6 million indamages to Trading Technologies.
On October 5, 2021, Trading Technologies filed motions for a new trial on damages andwillfulness, and to amend the judgment to include pre-judgment and post-judgment interest.
The Defendants opposed each of these motions. On December 21, 2021, Trading Technologies
filed a motion seeking to substitute Harris Brumfield (through a trust controlled by Brumfield)
as the plaintiff. The Defendants did not oppose the substitution. On January 11, 2022, theDistrict Court granted in part and denied in part Trading Technologies’ motion seeking prejudgment and post-judgment interest, denying the amount Trading Technologies was seeking,but awarding Trading Technologies pre-judgment interest in the amount of $2.1 million andpost-judgment interest in an amount to be calculated pursuant to the Court’s orders. On
February 22, 2022, the District Court denied in its entirety Trading Technologies’ motion
seeking a new trial on damages and willfulness. On March 24, 2022, Harris Brumfield filed anotice of appeal with the Court of Appeals for the Federal Circuit of the District Court’s
judgment, certain other orders of the Court, and generally any and all other orders, rulings,
findings, and/or conclusions adverse to Trading Technologies. On March 31, 2022, the District
Court granted Trading Technologies’ bill of costs in the amount of $490,232. On April 7, 2022,
the Defendants filed a notice of cross-appeal. Brumfield’s Opening Brief was filed on August
26, 2022, and the Defendants’ filed an Opposition Brief on November 18, 2022. On December
24, 2022, Brumfield filed a Reply Brief. The appeal is still pending. The Defendants continue
to believe in the invalidity of the two patents that were the subject of the jury verdict, andwhich have expired.

26

Further Information
For current information on regulatory and enforcement matters involving Interactive Brokers
LLC’s securities business, please visit http://brokercheck.finra.org and search under “Firm”
Interactive Brokers LLC, click on “Detailed Report” and review the section of the report
entitled “Disclosure Events.”
For current information on regulatory and enforcement matters involving Interactive Brokers
LLC’s futures business, please visit http://www.nfa.futures.org/basicnet/ and search under“Firm name” Interactive Brokers LLC, then click on “Details” under the heading “Regulatory
Actions.”
IX. Overview of Customer Fund Segregation and Collateral Management
As described above, Interactive is registered as an FCM with the U.S. CFTC and as a brokerdealer with the U.S. SEC and is therefore required to abide by the rules of those regulators,
in addition to applicable FINRA and NFA rules.
In general, customer money is segregated in special bank or custody accounts, which aredesignated for the exclusive benefit of customers of IB. This protection is a core principle ofcommodities and securities brokerage. By properly segregating customers’ assets, such assets
should be available to be returned to customers even in the event of a default by or bankruptcyof the broker.
Commodities Accounts
Basics of Segregation
FCMs may maintain up to three different types of accounts for customers, depending on the
products a customer trades:(i)a Customer Segregated Account (required under CFTC Rule 1.20) for customers that
trade futures and options on futures listed on U.S. futures exchanges;(ii)

a 30.7 Account for customers that trade futures and options on futures listed on foreignboards of trade; and(iii)

a Cleared Swaps Customer Account for customers trading swaps that are cleared on a
Derivatives Clearing Organization (“DCO”) registered with the CFTC (Note: IB does
not offer cleared swaps trading).

The requirement to maintain these separate accounts reflects the different risks posed by thedifferent products. Cash, securities and other collateral (collectively, funds) required to be held
in one type of account, e.g., the Customer Segregated Account, may not be commingled withfunds required to be held in another type of account, e.g., the 30.7 Account, except as the CFTC
may permit by order.

27

Customer Segregated AccountFunds that Segregated Customers deposit with an FCM, or that are otherwise required to beheld for the benefit of customers, to margin futures and options on futures contracts traded on
futures exchanges located in the U.S., i.e., designated contract markets, are held in a Customer
Segregated Account in accordance with section 4d(a)(2) of the Act and CFTC Rule 1.20.
Customer Segregated Funds held in the Customer Segregated Account may not be used to meetthe obligations of the FCM or any other person, including another customer.
All Customer Segregated Funds may be commingled in a single account, i.e., an omnibus
Customer Account, and held with: (i) a bank or trust company located in the U.S.; (ii) a bankor trust company located outside of the U.S. that has in excess of $1 billion of regulatory
capital; (iii) an FCM; or (iv) a DCO. Such a commingled account must be properly titled tomake clear that the funds belong to, and are being held for the benefit of, the FCM’s Segregated
Customers. Unless a customer provides instructions to the contrary, an FCM may holdCustomer Segregated Funds only: (i) in the U.S.; (ii) in a money center country (Canada,
France, Italy, Germany, Japan, and the United Kingdom); or (iii) in the country of origin of thecurrency.
An FCM must hold sufficient U.S. dollars in the U.S. to meet all U.S. dollar obligations andsufficient funds in each other currency to meet obligations in such currency. Notwithstanding
the foregoing, assets denominated in a currency may be held to meet obligations denominatedin another currency (other than the U.S. dollar) as follows: (i) U.S. dollars may be held in the
U.S. or in money center countries to meet obligations denominated in any other currency; and(ii) funds in money center currencies may be held in the U.S. or in money center countries tomeet obligations denominated in currencies other than the U.S. dollar.
30.7 Accounts and Special Risks of Engaging in Trading on Foreign Markets
Funds that 30.7 Customers deposit with an FCM, or that are otherwise required to be held forthe benefit of 30.7 Customers, to margin futures and options on futures contracts traded on
foreign boards of trade (i.e., 30.7 Customer Funds, sometimes referred to as the foreign futuresand foreign options secured amount) are held in 30.7 Accounts in accordance with CFTC Rule
30.7.
Funds required to be held in a 30.7 Account for or on behalf of 30.7 Customers may becommingled in an omnibus 30.7 Account and held with: (i) a bank or trust company located in
the U.S.; (ii) a bank or trust company located outside the U.S. that has in excess of $1 billion
in regulatory capital; (iii) an FCM; (iv) a DCO; (v) the clearing organization of any foreignboard of trade; (vi) a foreign broker; or (vii) such clearing organization’s or foreign broker’s
designated depositories. Such a commingled account must be properly titled to make clear thatthe funds belong to, and are being held for the benefit of, the FCM’s 30.7 Customers. As
explained below, CFTC Rule 30.7 restricts the amount of such funds that may be held outsideof the U.S.
Because customers trading on foreign markets assume additional risks, the CFTC generally
does not permit funds held to margin foreign futures and foreign options transactions to be heldin the same account as Customer Segregated Funds or Cleared Swaps Customer Collateral.
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Laws or regulations will vary depending on the foreign jurisdiction in which the transaction
occurs, and funds held in a 30.7 Account outside of the U.S. may not receive the same level ofprotection as Customer Segregated Funds. If the foreign broker carrying 30.7 Customer
positions fails, the broker will be liquidated in accordance with the laws of the jurisdiction inwhich it is organized, which laws may differ significantly from the U.S. Bankruptcy Code.
Return of 30.7 Customer Funds to the U.S. will be delayed and likely will be subject to thecosts of administration of the failed foreign broker in accordance with the law of the applicablejurisdiction, as well as possible other intervening foreign brokers, if multiple foreign brokers
were used to process the U.S. customers’ transactions on foreign markets.
If the foreign broker does not fail but the 30.7 Customers’ U.S. FCM fails, the foreign broker
may want to assure that appropriate authorization has been obtained before returning the 30.7
Customer Funds to the FCM’s trustee, which may delay their return. If both the foreign broker
and the U.S. FCM were to fail, potential differences between the trustee for the U.S. FCM andthe administrator for the foreign broker, each with independent fiduciary obligations underapplicable law, may result in significant delays and additional administrative expenses. Use ofother intervening foreign brokers by the U.S. FCM to process the trades of 30.7 Customers on
foreign markets may cause additional delays and administrative expenses. It is also importantto understand that, in the event of an FCM’s bankruptcy, 30.7 Customers comprise a single
account class under the Bankruptcy Code and the Commission’s Bankruptcy Rules. Therefore,
if a U.S. FCM were to fail and there was a shortfall in 30.7 Customer Funds arising from losses
in one foreign jurisdiction, those losses would be shared pro rata by all 30.7 Customers,
including customers that did not engage in trading in that jurisdiction.
Excess Funds Maintained in Customer Segregated Account(s) and 30.7 Account(s) to Provide
Extra Customer Protection
In order to provide extra protection for customer accounts, Interactive deposits a portion of its
own funds in Customer Segregated Accounts and 30.7 Accounts as a buffer. These excess
funds are held for the exclusive benefit of IB customers while held in Customer SegregatedAccounts and 30.7 Accounts. As of September 29, 2023, IB seeks to maintain an excess of atleast $155 – $245 MM in Customer Segregated Accounts and $80 - $120 MM in 30.7
Accounts.
Securities Accounts
Securities customers’ cash is maintained on a net basis in the customer reserve accounts
maintained by IB in accordance with securities regulations. (Please note that funds held forcustomers that trade forex through IB are included in these securities calculations). To theextent that any one customer maintains a margin loan with IB, that loan will be fully secured
by securities generally valued at up to 200% of the loan, although under Regulation T andapplicable portfolio margin rules, acceptable collateral may be lower in value but is subject toreal-time monitoring.
The security of the loan is enhanced by IB's conservative margin policies, which generally do
not allow the borrower to fulfill a margin requirement within several days, as permitted byregulation. Instead, as discussed below, IB monitors and acts on a real-time basis toautomatically liquidate positions and repay the loan to increase account equity when there is a29

margin deficiency. This brings the borrower back into margin compliance without putting IB
and other customers at risk.
Reserve deposits are distributed across a number of large U.S. banks with investment-grade
ratings so that IB can avoid a concentration risk with any single institution. No single bankholds more than 5% of total customer funds held by IB.
In order to further enhance IB’s protection of its customers’ assets, Interactive sought andreceived approval from FINRA to perform and report the reserve computation on a daily basis,
instead of once per week as otherwise permitted under SEC regulations. IB initiated daily
computations in December 2011, along with daily adjustments of the money set aside inreserve accounts for its customers. Reconciling accounts and customer reserves daily insteadof weekly is just another way that Interactive seeks to provide state-of-the-art protection for its
customers.
Customer-owned, fully-paid securities are protected in accounts at depositories and custodiansthat are specifically identified for the exclusive benefit of customers. IB reconciles positions
in securities owned by customers daily to ensure that these securities have been segregated at
the depositories and custodians.
Customer securities accounts at Interactive are protected by the Securities Investor Protection
Corporation (“SIPC”) for a maximum coverage of $500,000 (with a cash sublimit of $250,000)
and under Interactive’s excess SIPC policy with certain underwriters at Lloyd’s of London for
up to an additional $30 million (with a cash sublimit of $900,000) subject to an aggregate limit
of $150 million. Futures and options on futures are not covered. As with all securities firms,
this coverage provides protection against failure of a broker-dealer, not against loss of market
value of securities.
More information on how IB handles customer funds is available on the IB website atwww.interactivebrokers.com/security.
Notice Regarding Risks of Engaging in Trading in Foreign Markets
As discussed above, IB takes careful measures in choosing counterparties with which to invest
customer funds and performs a daily secured amount computation to segregate customers'
funds in connection with trading on foreign markets. Customer funds are also insured as statedabove. However, it should be noted that in the event of the insolvency of IB, or the insolvencyof a foreign broker or foreign depository that is holding IB’s customer funds, funds held in
foreign jurisdictions may be subject to a different bankruptcy regime and legal system thanfunds held in the U.S. In addition, a customer also is subject to potential fellow customer risk
in foreign jurisdictions; this risk is minimized by the firm’s real-time risk management policies
and procedures. For purposes of bankruptcy protection, a customer that trades only in one
country or in one market is also exposed to fellow customer risk from losses that may be
incurred in other countries and other markets.
X. Information on Filing Complaints
If you wish to file a complaint with Interactive, we encourage you to send your complaint via
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Client Portal for the most expedient and efficient handling. This can be done by clicking on“Message Center.” Under “New Ticket” select the most relevant Category and Sub-Category
relating to the issue. For more information on filing a complaint in this manner, please visit
IB’s website at https://ibkr.info/node/1302.
Alternatively, customers may send their complaints by contacting customer service using theinformation provided on the IB website at www.interactivebrokers.com/help or by hard copy
addressed to:Legal & Compliance Department
Interactive Brokers LLC
One Pickwick Plaza
Greenwich, CT 06830•

A customer that wishes to file a complaint about IB with the CFTC can contact the CFTC
either electronically at
https://forms.cftc.gov/_layouts/PublicForms/TipsAndComplaints.aspx or by calling theDivision of Enforcement toll-free at 866-FON-CFTC (866-366-2382).

•

A customer that wishes to file a complaint about IB with the NFA may do so electronicallyat https://www.nfa.futures.org/ComplaintNet/complaint.aspx or by calling NFA directly at
800-621-3570.

•

A customer that wishes to file a complaint about IB with the CME Group may do soelectronically at https://www.cmegroup.com/market-regulation/file-complaint.html or bycalling CME Group directly at 312-341-7970.

XI. Financial Data
The following financial information is current as of September 29, 2023, for Interactive.
Additional
financialinformationisavailableon
IB’s
websiteathttps://www.interactivebrokers.com/en/index.php?f=7464.

Value as of September 29,
2023 (All $s in millions)$8,270$7,041

Financial Data
Total Equity/Net WorthRegulatory Capital

Dollar value of IB’s margin requirements not related tocustomers (i.e., affiliate, non-customer and house) as a0..67%
percentage of the aggregate margin requirement for futures
customers, Cleared Swaps Customers, and 30.7 customers.7
7

As noted above, IB may make certain trades to reduce currency exposure and may trade certain options box spreads to

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The smallest number of futures customers, Cleared Swaps
282 (futures)
Customers, and 30.7 customers that comprise 50 percent of
0 (cleared swaps customers)
IB’s total funds held for futures customers, Cleared Swaps
43 (30.7 customers)
Customers, and 30.7 customers, respectively
Aggregate notional value, by asset class, of all non-hedged,
principal over-the-counter transactions into which IB has $1
8entered$100
Amount, generic source and purpose of any committed
Committed revolving credit facility from
unsecured lines of credit (or similar short-term funding) IB
parent company.
has obtained but not yet drawn upon$0
IB does not have a dedicated margin financing
Aggregated amount of financing IB provides for customer
facility for its futures, options, or clearedtransactions involving illiquid financial products for whichswaps customers. Financing for securities
it is difficult to obtain timely and accurate prices
customers is provided only on marginablesecurities in accordance with FINRA rules.
Percentage of futures customer, Cleared Swaps Customer,
and 30.7 customer receivable balances that IB had to writeoff as uncollectable during the past 12–month period, as 0%compared to the current balance of funds held for futures
customers, Cleared Swaps Customers, and 30.7 customers

XII.

Summary of Risk Practices, Controls and Procedures

The core of the Group’s risk management philosophy is the utilization of its fully-integrated
computer systems to perform critical, risk-management activities on a real-time or near realtime basis. For IB, integrated risk management seeks to ensure that each customer’s positions
are continuously credit checked and brought into margin compliance if account equity falls
short of margin requirements, in order to resolve margin deficiencies and prevent accountdeficits. IB’s policy is not to provide financing on illiquid financial products for which timely
and accurate prices are difficult to obtain.
Throughout the trading day, IB calculates margin requirements for each of its customers on areal-time or near real-time basis across all product classes (stocks, options, futures, bonds,
lock in an interest rate on the investment of house funds, but in general, IB does not conduct proprietary trading. Additionally,
IB does not trade against customer orders. However, certain IB affiliates (defined as entities under common control andemployees of the firm) hold accounts with IB to trade for their own purposes. For regulatory purposes, IB’s affiliates are nottreated as customers.
8This category reflects accumulated foreign currency balances and not principal over-the-counter transactions with market
counterparties.

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forex, and mutual funds) and across all currencies, and all orders are credit checked prior to
submission. Recognizing that IB’s customers are experienced investors, IB expects its
customers to manage their positions proactively and IB provides tools to facilitate its
customers’ position management. These tools are designed to allow IB’s customers tounderstand and manage their trading risks. IB’s risk management tools and policies help IB
maintain low commissions, by not having to price in the cost of credit losses.
IB’s customers generally are alerted to approaching margin violations, but if a customer’sequity falls below the amount required to support that customer’s margin requirements, IB will
generally automatically liquidate positions on a real-time or near real-time basis to bring thecustomer’s account into margin compliance. This is done to protect IB, as well as the customer,from excessive losses. The credit management process is largely automated and is overseen byexperienced risk management personnel.
As a safeguard, pending liquidation trades generally are displayed on custom-built liquidation
monitoring screens that are part of the toolset IB’s risk management staff uses to monitor
performance of IB’s credit system. In the event IB’s systems absorb anomalous market datafrom exchanges, which prompts liquidation messages, risk management staff have the ability
to halt liquidations that meet specific criteria. The liquidation halt function is highly restricted
and monitored.
IB has automated many other controls surrounding its brokerage business as well as that of its
affiliates. Key automated controls include the following:➢ IB’s technical operations group continuously monitors its network and the proper
functioning of each of its nodes (exchanges, Internet service providers (“ISPs”), leased
customer lines and IB’s own data centers) around the world.
➢ IB’s credit manager software provides pre and post-execution controls by:•testing customer orders to ensure that the customer’s account holds enough equity
to support the execution of the order, rejecting the order if equity is insufficient or
directing the order to an execution destination if equity is sufficient; and➢ continuously updating a customer account’s equity and margin requirements and, if theaccount’s equity falls below its minimum margin requirements, issuing liquidating orders
in a sequence generally intended to minimize the impact on account equity. IB’s clearing
system captures trades in real-time or near real-time and performs automated reconciliationof trades and positions, corporate action processing, customer account transfer, options
exercise, securities lending and inventory management, allowing the firm to effectively
manage operational risk.
➢ The Group’s accounting system operates with automated data feeds from clearinghouses
and banking systems, allowing the firm to produce financial statements for all parts of its
business daily by mid-day of the day following trade date.
As mentioned above, in markets in which IB is not an exchange or clearing member, it may
utilize the services of an affiliated or unaffiliated broker to execute and clear transactions.
These transactions are carried in accounts at the local broker. Similarly, IB may execute andclear transactions for its affiliates. In the ordinary course of business, accounts of affiliates are33

margined in the same way as accounts of other customers.
Pursuant to the firm’s policy, credit analysis is performed on all counterparties (including thosethrough which IB invests customer funds as permitted under CFTC and SEC rules) prior toestablishing a relationship. As described above, risk limits are assigned based on the nature of
the relationship and, as part of the review process, financial performance is examined using
three to five years of audited financial statements, credit ratings and any regulatory reports.
Counterparty credit analyses are renewed at least annually. Daily and, in certain cases, realtime measurement of exposures to credit counterparties is largely automated and is monitoredby the Credit Department.
Prior to joining a new clearinghouse, IB examines the operational procedures delineated in the
bylaws of the clearinghouse, with emphasis on the margin and clearing fund calculations aswell as the clearinghouse’s default procedures. Annual reviews are conducted to monitor forany material changes to the existing policies and procedures. Since the largest risk withclearinghouses is operational risk, IB carefully reviews and verifies that the risk management
policies and procedures are adequate to mitigate a default risk that could impact non-defaulting
clearing members.
Risks in Connection with IB’s Activities as an FDM
The risks associated with IB’s forex activities generally include market risk, liquidity risk,
settlement risk and credit risk. The market risk is centered on daily market fluctuations in theunderlying spot prices, which can potentially expose IB to sharp increases in risk when themarket moves against its open positions. Given that IB trades externally on behalf of its
customers, its exposure to market risk is mitigated by the use of IB’s real-time or near realtime risk management controls described above.
Each Liquidity Provider that quotes on IB’s forex platform is assigned a risk limit by theGroup’s Credit Department (through the process described in section V above), which is coded
into IB’s system. In general, once 90% of the credit limit is used for a specific settlement date,
IB will only pass customer orders along to that Liquidity Provider if the orders reduce theoverall credit exposure.
IB also engages in forex swaps to meet cash management needs and regulatory requirements.
Since the vast majority of the FX swaps IB enters into are continuously rolled over, actual
settlements of particular swap legs reflect incremental changes only, rather than the fulloutstanding amounts.
The Group actively manages its exposure to foreign currency risk by keeping its net worth inproportion to a defined basket of 10 currencies. The Group does so to diversify its risk andalign its hedging strategy with the currencies used in the Group’s business (including U.S.
dollar, Euro, Japanese yen, British pound, Canadian dollar, Australian dollar, Swiss franc,
Hong Kong dollar, Indian rupee and Chinese yuan (Offshore)).
IB also reviews daily reports and monitors risk limits of Liquidity Providers to manage market
and settlement risks associated with IB’s forex business. To mitigate settlement risk associatedwith IB’s forex trading, IB nets payments by currency and confirms netted settlement pay and34

receive amounts with counterparts prior to settlement. IB also delivers on the trade either (i)after receiving counter-currency value or (ii) closer to the settlement cutoff time if the countercurrency value has not yet been received. The firm also conducts daily reconciliations bymultiple independent departments.
Additionally, as described above, Liquidity Providers are thoroughly credit vetted to ensurethat the probability of a potential credit risk event stemming from a default (e.g., failure to pay
the agreed-upon settlement amount) is low.

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