PJC Piper Jaffray Companies

Interactive Brokers Group Inc.’s (IBKR) Electronic Brokerage segment announced improvement in its brokerage metrics for Jan 2013. The segment clears and settles trades globally for both individual and institutional clients.

Interactive’s total customer Daily Average Revenue Trades (DARTs) hiked 10% from Jan 2012 and 16% from Dec 2012 to 460,000. Further, total customer accounts climbed 11% from the prior-year month and 1% from the prior month to 212,100.

Interactive recorded Cleared Customer DARTs of 417,000, increasing 9% from Jan 2012 and 16% from Dec 2012. Yet, on an annualized basis, Cleared Average DART per customer account of 496,000 plunged 2% from 504,000 in the comparable month last year, but grew 15% from 431,000 in the previous month.

Additionally, Interactive’s total options contracts surged 4% from the prior-year month and 23% from the prior month to 21,313 in the month under review. Similarly, futures contracts totaled 7,583, increasing 30% from 5,847 in Jan 2012 and 16% from 6,540 in Dec 2012.

Interactive also reported period-end statistics for customer equity, customer credit balances and customer margin loan balances. For the period ended Jan 2013, customer equity stood at $34.4 billion, augmenting 27% year over year and 5% from the prior month.

Interactive’s Electronic Brokerage segment recorded customer credit balances of $22.2 billion in the month, increasing 26% from Jan 2012 level and 8% from Dec 2012 level. Also, the company’s customer margin loan balances of $11.1 billion at the end of Jan 2013 surged 50% from $7.4 billion at the end of Jan 2012, and 13% from $9.8 billion at the end of Dec 2012.

Although overall brokerage metrics improved, lower trading activities and fluctuating interest rates will likely continue impacting the company’s financials in the near term. In addition, Interactive’s dependence on IBG LLC and its wide international exposure make us apprehensive.

Among other investment brokers, Knight Capital Group, Inc. (KCG) is expected to announce its January metrics in the first half of this month.

Currently, Interactive retains a Zacks Rank #3 (Hold). However, other investment brokers that carry a Zacks Rank #1 (Strong Buy) include Evercore Partners Inc. (EVR) and Piper Jaffray Companies (PJC) and these are highly recommended for investment.

 
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