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Investor Presentation February, 2014

IBKR prez

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Page 1: IBKR prez

Investor Presentation

February, 2014

Page 2: IBKR prez

Disclaimer

The following information contains certain forward-looking statements that reflect the Company's current views with

respect to certain current and future events and financial performance. These forward-looking statements are and will be,

as the case may be, subject to many risks, uncertainties and factors relating to the Company's operations and business

environment which may cause the Company's actual results to be materially different from any future results, expressed

or implied, in these forward-looking statements. Any forward-looking statements are based upon information available to

the Company on the date of this presentation. The Company does not undertake to publicly update or revise its forward-

looking statements even if experience or future changes make it clear that any statements expressed or implied therein

will not be realized. Additional information on risk factors that could potentially affect the Company's financial results

may be found in the Company's filings with the Securities and Exchange Commission.

2

Page 3: IBKR prez

Our Business Today

Business transformation – Brokerage is our focus

• Our brokerage segment is growing at a rapid pace

• Market maker is a mature business in a challenging

environment, yet highly complementary to brokerage

Highly diversified enterprise

• Broad global reach and breadth of products

• Serving multiple customer segments and geographies

Largest U.S. electronic broker by number of trades

Strong value proposition is fueling industry-leading growth

Financial Strength

• $5.1B consolidated equity capital at 12/31/13

• IB LLC is rated 'A-/A-2'; Outlook Stable by Standard & Poor's

3

Page 4: IBKR prez

Recent history of the business: • 2008 - Highest annual earnings ever • 2009 - Market activity slows substantially, HFT’s begin to compete • 2010 - Market making business bottoms amid intense HFT competition • 2011 - Market making stabilizes and brokerage continues to grow • 2012 – Trading volumes slowed, yet continued focus is on expanding the brokerage business

Business Transformation Our electronic brokerage segment, born 20 years ago,

now the driving force of our business

4

Page 5: IBKR prez

Diversified Enterprise

Customer Accounts - by Region1

Our customers

reside in 190+

countries

Customer Equity – by Segment

1Based on country of residence as of Dec. 31, 2013

We serve a broad array of customers across the globe

5

Other

10%

U.S.

43%

Asia

19%

Europe

28%Individual

traders and investors

44%

Financial advisors

27%

Proprietary

trading groups

15%

Hedge and mutual funds

7%

Introducing

brokers

7%

EQUITY

Page 6: IBKR prez

Diversified Enterprise Asia continues to drive our strongest growth abroad

6

Customer Accounts

Customer Equity Commissions

239.3K 157.9K $22.1B $45.7B $386.8M $502.1M

Based on country of legal residence

9.5% 9.8% 13.5% 8.9%17.8% 12.0%

15.9% 18.6% 15.8%18.3%

15.3% 21.8%

27.2%28.6%

15.1% 20.5%21.3% 24.2%

47.4% 43.0%55.6% 52.3%

45.6% 42.0%

Other Asia Europe U.S.

Page 7: IBKR prez

Diversified Enterprise

Our customers can trade on over 100 market centers in 23 countries and 20 currencies. Electronic market access to stocks, options, futures, forex, bonds, ETFs and CFDs from a

single IB Universal Account™.

Multi-product, country and currency

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Page 8: IBKR prez

Recognized Industry Leader

Winner 2013 "Best Broker-Dealer Options"

Winner 2013 "Best Broker-Dealer Futures"

Winner 2013 Stock Brokerage

Winner 2013 Futures Brokerage

Winner 2013 Forex Brokerage

1st Runner Up 2013 Institutional Platform

1st Runner Up 2013 Professional Platform

1st Runner Up 2013 Options Analysis Software

IB’s multiple trading platforms, extensive suite of advanced trading tools, algos

and order types continue to earn awards, year after year

8

* Supporting documentation for any claims and statistical information will be provided upon request. For additional information see www.interactivebrokers.com/compare.

Page 9: IBKR prez

Recognized Industry Leader We strive to offer the best price execution and lowest trading and financing

costs so our customers can realize more profits

9

Forex – Our customers are more profitable

Data provided by forexmagnates.com, includes the impact of any commissions

The same philosophy and technology that enables our clients to achieve

superior forex trading results also drives our clients’ trading and investing of

stocks, options, futures, and bonds worldwide on over 100 market centers.

Everybody says they provide best executions but only

one can be best and only we can prove it.

Page 10: IBKR prez

Value Proposition: Low Costs

Rated Lowest Margin Rates and Low Cost Broker

9 years in a row by Barron’s

10

* Supporting documentation for any claims and statistical information will be provided upon request. For additional information see www.interactivebrokers.com/compare.

1 Stock

Option

Interactive Brokers 1.58% 1.33% 0.95% 0.73% $1.00 $1.00 $0.85

E-Trade 7.94% 6.14% 3.89% 3.89% $7.99 $8.74 $2.99

Fidelity 7.58% 6.58% 3.75% 3.75% $7.95 $8.70 N/A

optionsXpress 8.25% 7.00% 6.00% 6.00% $8.95 $12.95 $3.50

Schwab 8.00% 6.88% 6.25% 6.00% $8.95 $9.70 N/A

TD Ameritrade 8.50% 7.25% 6.25% 6.25% $9.99 $10.74 $2.25

thinkorswim 8.50% 7.25% 6.25% 6.25% $9.99 $10.74 $2.25

1 E-mini S&P

500 Future

US Commission Rates ComparisonUS Margin Loan Rates Comparison

Interactive Brokers has lower commission rates for larger volumes and comparable rates worldwide. Services vary by firm.

$25K $200K $1.5M $3.5M 100 Shares

Page 11: IBKR prez

Value Proposition: Low Costs Our industry low margin rates have increased our

market share of total margin borrowing

IB6%

ETFC25%

SCHW40%

AMTD29%

Total Customer Margin of Industry (1)Dec 2007 - $29 billion

Dec. 2007

Total - $29 Billion Dec. 2013

Total - $42 Billion

11

IB

32%

ETFC15%

SCHW30%

AMTD23%

Dec 2013 - $42 billion

In four years, IB’s margin balances have increased over 600%

Page 12: IBKR prez

Value Proposition: Best Execution

The IB SmartRoutingSM Advantage

Unlike other routers, IB

SmartRoutingSM dynamically

routes and re-routes all or parts

of the order for optimal

execution.

We do NOT sell order flow to

internalizers.

Transaction Auditing Group,

Inc., (TAG), a third-party

provider of transaction analysis,

has determined that Interactive

Brokers’ U.S. stock and options

price executions and European

stock price executions were

significantly better than the

industry during 2013.

(1) Net $ Improvement per Share Definition: ((# of Price Improved Shares * Price Improvement Amount) - (# of Price Disimproved Shares*Price Disimprovement Amount)) / Total Number of Executed Shares

*For more information visit

www.interactivebrokers.com

Net Dollar Price Improvement vs. Best Bid/Offer(1) – 1st Half 2013

12

Page 13: IBKR prez

Financial Strength Liquid balance sheet and low financial leverage

Low Financial Leverage

Highly Liquid Solid balance sheet Dec. 31, 2013 - $38 billion total assets,

98.9% liquid Low financial leverage

Distributing capital from market making segment Quarterly dividend of $0.10/share started

June 2011 (represents ~10% post-tax return of MM capital)

Special dividends paid: $1.00 in Dec. 2012; $1.79 in Dec. 2010

S&P Credit Ratings Comparison1:

[1] Ratings were obtained on July 26 2013 from each firm's website. Supporting documentation for any claims and statistical information will be provided upon request.

13

Page 14: IBKR prez

#1 Strategic Priority:

Brokerage Expansion

We will achieve this through:

Leader in

Options Trading

Technology

Enhancements

Institutional

Branding

Measuring success:

Maintain our lead as largest eBroker by number of trades

Strong progress towards goal to be largest eBroker by profits

Industry leading growth in all key metrics

Increase market share in options trading (currently 12% of US exchange-trade volume)

Building upon our nearly 4 decade history of options trading

Strategic focus on developing innovative tools for options

traders is the key to our continued success

Continuously optimizing our platform and trading tools

2013 improvements: Probability Lab, EmployeeTrack,

expanded mobile solutions, Mosaic trading workspace, market

scanners, Money Manager Marketplace

Targeted marketing to increase market share amongst

advisors, hedge funds, prop traders, introducing brokers

These institutional customers are our fastest growing segment

14

Page 15: IBKR prez

Brokerage Expansion Maintaining position as largest eBroker by number of DARTs

4Q13 Results

Very active customer base:

• Our customers trade on

average ~500 times/year

• Daily average revenue

trades grew 23% YoY

15

-

100,000

200,000

300,000

400,000

500,000

AMTD ETFC IBKR SCHW

414,000

160,000

499,000

297,000

Dai

ly A

vera

ge R

even

ue

Tra

de

s (D

AR

Ts)

Page 16: IBKR prez

Brokerage Expansion Strong progress towards our goal to be the largest broker by

profits—

Rapidly gaining on the competition

1Brokerage segment only 4Q13 excludes unusual item ($64M Singapore loss)

16

162%

-100%

-50%

0%

50%

100%

150%

200%Pretax Profits - Normalized to Q408

Interactive Brokers (1) Schwab TD Ameritrade

Page 17: IBKR prez

Brokerage Expansion Market leading growth in every key metric

-20%

0%

20%

40%

60%

80%

100%

Jan

-09

Mar

-09

Ma

y-0

9

Jul-

09

Se

p-0

9

No

v-0

9

Jan

-10

Mar

-10

Ma

y-1

0

Jul-

10

Se

p-1

0

No

v-1

0

Jan

-11

Mar

-11

Ma

y-1

1

Jul-

11

Average Customer Equity/Account

IB AMTD ETFC SCHW17

-20%

0%

20%

40%

60%

80%

100%

120%

140%

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Customer Accounts

IB AMTD ETFC SCHW

-50%

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Customer Equity

IB AMTD ETFC SCHW

-60%

-40%

-20%

0%

20%

40%

60%

80%

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Daily Average Revenue Trades (DARTs)

IB AMTD ETFC SCHW

-20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Average Customer Equity/Account

IB AMTD ETFC SCHW

Peer data only available through Dec 2013

Page 18: IBKR prez

Brokerage Expansion

IB Brokerage Statistics

18

2

3

4

5

6

7

8

9

10

11

12

100

120

140

160

180

200

220

240

Acc

ou

nt A

dd

s (0

00's

)

Acc

ou

nts

(000

's)

Customer Accounts

Accounts Accounts adds

$100

$110

$120

$130

$140

$150

$160

$170

$180

$190

$200

0

5

10

15

20

25

30

35

40

45

50

Equ

ity

pe

r A

cco

un

t (0

00's

)

Cu

sto

me

r Eq

uit

y $B

Customer Equity

Equity Equity per account

20%

22%

24%

26%

28%

30%

32%

34%

36%

38%

40%

0

2

4

6

8

10

12

14

16

Mar

gin

as

% o

f C

ust

om

er

Eq

uit

y

Cu

sto

me

r Mar

gin

($B

)

Margin

Margin Margin as % of Customer Equity

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

0

100

200

300

400

500

600

700

Ye

ar-o

ver-

year

gro

wth

Tota

l Cu

sto

me

r D

AR

Ts (

000'

s) DARTs

Total Customer DARTs YoY Growth

Page 19: IBKR prez

Institutional Branding Focused marketing and specialized institutional tools

and services are driving the shift in customer segments

19

Customer Accounts

Customer Equity Commissions

231.3K 157.9K $22.1B $45.7B $386.8M $502.1M

73.3% 71.4%

50.6%44.2%

60.2%56.0%

18.3% 20.2%

22.2%27.3%

17.0%17.7%

4.2% 3.9%

15.7% 14.7%

15.3%17.8%

0.5% 0.5%5.6% 6.5%

6.1% 6.5%3.7% 4.0% 5.9% 7.3%

1.4% 2.0%

Dec 2010 Dec 2013 Dec 2010 Dec 2013 2010 2013

Introducing brokers

Hedge and mutual funds

Proprietary trading groups

Financial advisors

Individual traders and investors

Page 20: IBKR prez

Technology Enhancements Our latest developments

Mosaic Market Scanners Allows customers to quickly and easily scan

global markets for the top performing contracts,

including stocks, options, futures, bonds, indexes

and more, in numerous categories

Scan multiple products around the world

Choose from popular scan parameters

Save your favorites

Create custom scans

Redefine a scan in two clicks

Run scans after market hours

20

IB FYIs Free, customized portfolio event notifications and reminders Upcoming Earnings Reminder one day prior to portfolio company earnings announcements

Option Expiry Reminder one day prior to option position expiry

M&A Event Notification of takeover involving a portfolio company

Borrow Locate Notification that IB stock loan desk has secured a borrow on shares for which you

initiated a locate request

Exercise Advisory Notification that an option position’s value would be maximized through exercise prior

to an upcoming dividend

Page 21: IBKR prez

Technology Enhancements Our latest developments cont.

21

The IB Investors’

Marketplace is an

electronic forum where

IB customers and IB

service providers meet

to form connections and

conduct business with

one another on

Interactive Brokers’

platform

www.interactivebrokers.com/

marketplace

Page 22: IBKR prez

Technology Enhancements Our latest developments cont.

Our new blog tool provides market insights throughout the trading day direct from global market

participants to the public at large

IB Traders’ Insight

22

Page 23: IBKR prez

Leader in Options Trading

23

Options Tools: Our sophisticated option trading “Labs” make it easier than ever for clients to understand, price, and create profitable option and combination trades - The Probability Lab – Provides a practical way to think about options without complicated mathematics - The Options Strategy Lab – Create strategies tailored specifically to your price or volatility forecast - The Volatility Lab – A suite of nine volatility and option activity tools that provides an in-depth snapshot across a variety of option analytics

Page 24: IBKR prez

Leader in Options Trading

24

Interactive Brokers Probability Lab℠ (Patent Pending)

The ultimate options trading tool:

Encompasses the basic understanding and approach to options trading in a visual, interactive tool

Customers can use Probability Lab to experiment with the shape of probability distributions and study

the resulting best combination trades

We introduced this tool in order to increase our customers’ profitability which remains our ultimate

objective

Subsequent releases of this tool will address buy writes, rebalancing for delta, multi-expiration

combination trades, rolling forward of expiring positions and further refinements