Trading activity at Interactive Brokers LLC (NASDAQ:IBKR) lost further momentum in May with volumes easing on a monthly comparison basis following record gains in March. The broker, however, posted its third-best reading for Daily Average Revenue Trades (DARTs), a sign that it is too early to bet the Corona-spurred rally could be coming to an end.
During May 2020, the number of DARTs were reported at 1.645 million transactions, a fall of -4 percent month-over-month from 1.720 million in April and a record 1.96 million in March. On a year-on-year basis, Interactive Brokers saw a brighter performance in its DARTs with May’s figure up 84 percent relative to nearly 894k transactions reported in the same month last year.
Interactive Brokers, whose two main divisions were online brokerage and market-making before it ceased the latter in 2018, has won more clients, with total May’s active accounts up to 839,000, or four percent higher from 805,600 accounts the previous month. The figure was higher by 31 percent year-over-year when compared to May 2019 (638,600 accounts).
Interactive Brokers had seemingly eased its recent restrictions on borrowed margins, which came amid fears over the impact of the spreading coronavirus on its traders’ bets. The company’s ending client margin loan balances were around $23.3 billion in May 2020. This figure is up 13 percent from $20 billion in April but still lower by over 10 percent than the prior year and also reduces clients’ exposure by a third when compared to February.
On average, in May 2020, Interactive Brokers charged clients commission fees of $2.83 per order relative to $2.77 in April. This figure includes exchange, clearing and regulatory fees, with the key products metrics coming out at $1.98 for stocks, $4.42 for equity options and $4.08 for futures orders.
Interactive Brokers said last month it has been forced to cover $104 million worth of its customers’ losses on April 20, the day when prices plunged below zero for the first time ever. The Greenwich, Connecticut-based broker reported earlier that it had suffered an aggregate provisionary loss of $88 million, but the figure swelled after IBKR made its final calculations for the first quarter.
Interactive said several customers had been caught on the wrong side of April plunge, having held long positions on cash-settled WTI futures at both CME and ICE Futures Europe. The negative settlement price meant customers incurred losses in excess of the equity in their accounts, forcing the broker to step in and pay the margin calls owed to clearing houses. However, it said the $104 million mistake on their part would not have a material effect on its financial condition.
(Photo: Interactive Brokers)