Financial Strength - Strength and Security

Important Strength and Security Facts about Interactive Brokers Group²

Interactive Brokers Securities Japan is a subsidiary of Interactive Brokers Group.

• IBKR IS NOT A BANK, and as a regulated securities broker dealer, we cannot carry securities classified as HTM (Held To Maturity), which are not required to be marked to market on a bank's books. We also cannot make unsecured, long-term loans.
• The only kind of loans we can make are margin loans fully secured by marketable securities.
• Our real-time margining system marks all client positions to market continuously. All orders are credit vetted before being executed and positions in accounts with inadequate margin deposits are liquidated automatically.
• ALL of our positions are marked to market daily and the resulting payables/receivables are reconciled to outside sources automatically.
• IBKR invests cash in very short-term investments maturing within a few months. We hold no material positions in over-the-counter securities or derivatives. We hold no CDOs, MBS or CDS.
• On a consolidated basis, IBG LLC has $ 14.6 billion in equity capital, over $ 10.2 billion in excess of regulatory requirements.
• IBG LLC's owners are our public company, Interactive Brokers Group, Inc. ( 25.4 %) and the firm's employees and their affiliates ( 74.6 %). Unlike at most other firms, where management owns a relatively small share, we participate substantially in the downside just as much as in the upside. Because of this vested interest, we run our business conservatively.
• IBG LLC reported $ 3.069 billion of pretax profit for 2023.
• IBG LLC has no long-term debt.

Important Strength and Security Facts about Interactive Brokers Securities Japan Inc. ("IBSJ")²

How We Handle Client Assets

IBSJ takes a proactive approach to the protection of client assets. IBSJ determines the amount of cash and securities designated for customers daily and segregates funds for the exclusive benefit of customers in a trust bank account specifically identified as a client segregated account.

There are 7 core Client Asset Principles.

• Segregation – distinguishing Client Assets from Company Assets.
• Designation and Registration – correctly titled accounts to include the term "Client Asset" within the account name.
• Daily Reconciliation – relevant for all Client Asset accounts.
• Daily Calculation – ensures that Client Assets (client funds & client financial instruments) match IBSJ’s internal accounting records.
• Client Disclosure & Client Consent – applicable to all clients.
• Risk Management - qualified personnel and internal procedures and plans are in place to safeguard Client Assets.
• Client Asset Examination – annual external review by independent body.

Securities (including foreign securities) and cash (including margins for futures, options, and CFD transactions) deposited by customers with securities firms are considered "customer assets" and are required by the Financial Instruments and Exchange Law to be clearly separated from securities and money held by the securities firms themselves in Japan. Naturally, the Company also manage its customer assets (securities and cash) entrusted to the Company by its customers separately in accordance with the Japanese Financial Instruments and Exchange Law. Note that unsettled open interest in Futures, Options and CFD transactions are not subject to segregation control.

The Company clearly separates the storage locations of "customer securities" and "proprietary securities, etc." held by the Company, and manages the customer securities in a manner that allows the Company to immediately identify which customer holds which securities. The amount of cash deposited with the Company, which is the total amount of cash deposited with the Company minus the amount of cash the Company has advanced for purchases and other amounts that can be deducted from the total amount of cash deposited with the Company for the calculation of the amount to be returned in the event of our bankruptcy ("customer segregated cash"), is kept in the custody of the trust bank designated by the Company. As for cash in foreign currencies, the equivalent amount in Japanese yen is entrusted to the trust bank designated by the Company.

Securities deposited by customers are placed in the custody of a third party (Japan Securities Depository Center, Inc. or a local securities depository in the case of foreign securities). The securities deposited with third parties are kept in segregated storage, and each customer's interest in the securities is immediately identifiable by the customer's own books and records.

As a securities company engaged in the Type I financial instruments business in Japan, the Company is a member of the Japan Investor Protection Fund. The Japan Investor Protection Fund is a fund that provides monetary compensation to customers for the purpose of investor protection in the event that it becomes difficult to return securities or cash entrusted by customers due to the bankruptcy of a financial instruments business operator, etc.

For more information, visit the Japan Investor Protection Fund.