Interactive Brokers: Boosting Growth with a Broader Client Base

Interactive Brokers is a leading digital brokerage firm with access to over 160 markets in 36 countries and 28 currencies. It caters to retail traders and institutions, offering a wide range of products and services. The company's brokerage flywheel is accelerating with each new account, driven by its expanding customer base and innovative trading technologies.

Interactive Brokers (IBKR) has emerged as a leading digital brokerage firm, offering access to over 160 markets in 36 countries and 28 currencies. The company caters to both retail traders and institutional clients, providing a wide range of products and services. IBKR's brokerage flywheel is accelerating with each new account, driven by its expanding customer base and innovative trading technologies [2].

As of Q2 2025, IBKR reported 3.87 million active accounts, a significant increase over the past four years. The company's growth is fueled by rising interest in financial markets, particularly among younger generations. The number of individuals below the age of 40 transferring funds to investment accounts has surged since the start of the pandemic [2].

IBKR's success can be attributed to its advanced trading platform and competitive pricing structure. The company offers two primary variants: IBKR Lite and IBKR Pro. IBKR Lite caters to retail traders with zero commission trading, while IBKR Pro is designed for advanced investors with more pronounced functionality and lower costs through SmartRouting technology [2].

The company's business model is relatively straightforward. Each account makes an average of 194 trades per year, with an average commission of $2.64 per trade. This results in approximately $500 of trading commission per account per year, or $2 billion in total. Commission income represents roughly 35% of total revenue as of Q2 2025. The primary driver for IBKR's upside is account growth [2].

IBKR's customer base includes a mix of 55% retail traders and 45% institutional clients, including hedge funds, registered investment advisors, and proprietary trading groups. These institutional clients are highly valuable due to their higher trading frequency, account balances, and interest in margin loans and securities lending [2].

IBKR's Net Interest Income (NII) represents roughly 60% of total revenues as of Q2 2025. The company offers its infrastructure to other brokers through the Introducing Broker model, allowing them to white-label the platform without significant investments in building their own solution. This model is highly profitable for IBKR, as it takes a share of commission revenues and NII without incurring customer acquisition costs [2].

In times of market uncertainty, trading volumes at IBKR typically rise, as the company offers a variety of instruments for risk hedging, such as options and futures. This is evident in the company's recent performance, with a +63% y/y increase in Daily Average Revenue Trades (DARTs) during periods of heightened volatility [2].

In conclusion, Interactive Brokers' rapid growth is driven by its advanced trading platform, competitive pricing, expanding customer base, and innovative business models. The company's ability to attract and retain both retail and institutional clients, along with its strong earnings power through commission income and NII, positions it as a leading player in the digital brokerage market.

References:
[1] https://www.cnbc.com/quotes/IBKR
[2] https://seekingalpha.com/article/4820188-interactive-brokers-the-brokerage-flywheel-turning-faster-with-every-new-account