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Executives

Deborah Liston – Director, Investor Relations

Thomas Peterffy – Chairman, President and Chief Executive Officer

Paul J. Brody – Chief Financial Officer, Treasurer and Secretary

Analysts

Richard Repetto – Sandler O'Neill & Partners L.P.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

Matthew Heinz – Stifel, Nicolaus & Co.

Ed Ditmire – Macquarie Research Equities

Interactive Brokers Group, Inc. (IBKR) Q1 2012 Earnings Call April 19, 2012 4:30 PM ET

Operator

Good day, everyone, and welcome to the Interactive Brokers’ First Quarter 2012 Earnings Results Conference Call. This call is being recorded. At this time for opening remarks and introductions, I’d like to turn the call over to Ms. Deborah Liston, Director of Investor Relations. Please go ahead.

Deborah Liston

Thanks operator. Welcome everyone and thanks for joining us today. Just after the close of regular trading, we released our first quarter financial results. We’ll begin the call today with some prepared remarks on our performance that compliments the material included in the press release and I’ll keep the remaining time to Q&A.

Our speakers are Thomas Peterffy, our Chairman and CEO; and Paul Brody, Group CFO. I just want to remind everybody, the discussion might include forward-looking statements. These statements represent the company’s beliefs regarding future events that by their nature are not certain and outside of the company’s control.

The company’s actual results and financial conditions may differ possibly materially from what’s indicated in these statements. For a discussion of some of the risks and factors that can affect our future results, please see a description of the risk factors in our filings made with the SEC and I’d also direct you to read the forward-looking disclaimers in our quarterly earnings release.

With that, I’ll turn the call over to Thomas Peterffy.

Thomas Peterffy

2012 is off to a slow start compared to the results we posted last year. Exchange traded stock and options volumes continued to decrease well into the first quarter and stabilized only towards the end of the period. This affected our customers’ trading activities along with market making which also became subject to other pressures that I will elaborate on during the segment discussion.

Despite these cyclical factors, our brokerage business continues to dominate the competition in the areas of customer account growth and trading technology. As a testament to the latter, Interactive Brokers has been rated number one in several categories by the Wall Street Letter and Barron’s, for Best Options Broker, Best Use of Technology in the Industry, Best for International Investors, Best for Portfolio Analysis and Reports and Best for Trading Experience and Technology.

Most importantly we remain recognized as the Least Expensive Broker.

I am still waiting for a reviewer who would rank brokers by what I think should be the most important criteria, which is execution quality. Traders and investors often pay more in inferior execution prices than in commissions but this remains a hidden charge that is often overlooked even by some of the most sophisticated market participants.

Our distinction as being the broker of choice for financial professionals is driving strong growth in this business, with the number of customer accounts approaching 200 thousand and the equity they hold just shy of $30 billion. We also maintain our position as the largest eBroker by number of trades, thanks to our highly active base of sophisticated traders and investors.

Before I review the performance of our business segments, I’ll briefly mention the results of our currency hedging strategy. As you know, we maintain our equity in a self-defined basket of 16 currencies that we call the GLOBAL in order to minimize our exposure to currency fluctuations. As a globally diversified company doing business in 27 countries, we have found this to be a prudent approach to reducing our currency risk. The value of the GLOBAL, as expressed in USD, ticked up slightly during the quarter, by nearly 1%. This had a positive impact on our comprehensive earnings to the tune of about $35 million. Paul will describe in detail how this flowed through our financials.

Market volumes on exchange traded options have remained flat in the U.S. and decreased 1% globally from the fourth quarter. This compares to our firm’s total option volume which decreased 11% during the same period. As a result, our market share during the first quarter decreased from 10.6% to 9.5% globally and from 14.8% to 13.3% in the U.S.

In the market making segment, our option volume decreased 13% during the first quarter, driving our market share in that segment from 7.1% to 6.2% globally and from 8.7% to 7.7% in the U.S. The diminution in market share is mostly due to exchange volumes concentrating in certain underlyings, such as Apple and SPYDER ETFs. We are generally unable to maintain significant share in very high volume products.

As a reminder, market share is not directly correlated to our profits. We provide it as illustration as to how our participation in the exchange traded options markets moves over time.

Now, I’ll turn my attention to the brokerage segment:

As I mentioned, we have been busy rolling out new tools that complement our sophisticated trading platform in order to continue to enhance value for our existing customers and to provide a compelling reason for new customers to move their accounts to IB.

We are particularly excited about our new trading interface that we have recently unveiled called Mosaic. It’s a very intuitive and user friendly platform that offers the same basic and advanced functionality as our Trader Workstation, but in an easy-to-use layout that can be used straight out of the box, or customized however one pleases. Mosaic can be used alone, or in conjunction with our extensive suite of trading tools. And customers that subscribe to the Interactive Brokers Information System, or IBIS, have access to premium newswire and analyst research reports from tier one providers like Reuters, Dow Jones, Morningstar and Fly on the Wall at a fraction of the cost of some other providers. We are planning to add more content in the coming months.

We’ve also redesigned our account management system to provide customers with a fresh, streamlined interface where they can easily manage important account-related functions.

Last month, we introduced the Tax Optimizer tool, which allows customers to optimize the allocation of their gains and losses for tax purposes, by manually matching specific lots on a daily basis and running real-time “what if” scenarios to pick the best methodology in terms of tax impact to their portfolio. Alternatively they may activate an automated search mechanism to find the optimal match for a desired outcome by income category.

We are seeing slowly increasing participation in our online Hedge Fund investing program which was introduced last summer and allows customers to research and invest in these funds directly through their IB account. To date, we have 11 registered hedge funds participating in the program and we expect this number to continue to grow.

As I’ve mentioned on past calls, we’ve been devoting much of our efforts to developing tools specifically for financial advisors, one of our fastest growing customer segments. One of our recent innovations allows these advisors, who act as wealth managers, to designate multiple money managers to execute and allocate trades among designated clients.

We’ve also introduced High Water Marking in our billing options for advisors that use percent of P&L as the basis for client fees. Additionally, we’ve now opened access to our “no queue” and “no hold time” block trading desk that was previously only available to hedge fund clients. Our advisor clients can now have instant access to a live trading [brokerage?] desk to help work large orders.

Our highly automated business model and low cost structure helped us achieve a 52% pretax profit margin this quarter down slightly from the 55% in the year ago quarter.

Now a brief overview of our market making performance.

As I mentioned, the conditions for market making were not ideal this quarter. Bid offer spreads have remained stable, which indicates that competition has more or less remained steady as well, but lower volatility levels and weaker volumes on global exchanges created a drag on our trading gains.

The VIX averaged 18 during the quarter, which was on par with the year ago quarter, but down from 30 in the previous quarter.

The ratio of actual to implied volatility was probably the biggest culprit this quarter. This ratio, as you know, is an important profit driver for our market making business, with a higher ratio driving higher trading gains. This is because implied volatility determines our cost of hedging while actual volatility measures the price movement of underlying products over time and is directly related to our trading gains. This ratio fell to a multi- year low at 52% which had a very negative effect on our trading results. Despite these conditions, pretax profit margin was 46%.

As we set out in our dividend strategy which was initiated last year, we pay $0.10 per share per quarter from our market making subsidiary, which dictates whether we accumulate or distribute capital from this segment. This quarter we dipped into our market making capital since we earned an 8.9% annualized return on the capital employed in this segment, instead of 10%.

Looking ahead, our focus is aimed at expanding our brokerage business and strengthening our brand. Our dedication to providing our customers access to best-in-class trading technology and superior executions for the lowest possible cost is evidenced by our robust 16% year over year growth in customer accounts, which continues to outpace other large eBrokers. While much of this growth comes from word-of-mouth referrals, we continue to focus our marketing efforts to channels where we’re most likely to reach our target customers, that being savvy financial professionals that understand the value of our offering.

And now for a more detailed review of our performance, I’ll turn it over to Paul.

Paul J. Brody

Thank you, Thomas. Welcome everyone to the call. And as usual, I’ll review first the summary results and then get segment highlights before we take questions.

Although, there were bright spots earnings were lower in both brokerage and market making segments this quarter, impacted primarily by lower trading volumes, which the industry in general has experienced and also market lead by lower currency translation results that revenues were affected by decreases in brokerage commissions and trading gains. However, net interest income held relatively steady this quarter and was up from the year-ago quarter largely on the strength of customer cash balances.

As we discussed in prior quarterly calls, our financial statements include the new GAAP accounting presentation known as Comprehensive Income. Comprehensive Income reports all currency translation gains and losses including those that reflect changes in the US dollar value of the company’s non-U.S. subsidiaries, which is known as Other Comprehensive Income or OCI. These are reported in the statement of Comprehensive Income, which replaces the traditional income statements. Previously, OCI was reported only in the balance sheet.

Beginning with the first quarter of 2012, this presentation is now required, although we adopted early beginning our reporting in the second quarter of 2011. You can expect to see a similar presentation in the financial statements of all U.S. companies with foreign subsidiaries. You will also notice that we have changed the order of presenting these income measures in our earnings release placing Comprehensive Income first. We feel that is appropriate as it represents the full measure of the change in our capital. In light of the weakening of the US dollar against the number of other currencies heading OCI to net income increases our reported earnings per share on $0.06 for the quarter.

Overall operating metrics of the latest quarter were mixed. Average overall daily trading volume was 926,000 trades per day up 1% for the first quarter of 2011. Electronic brokerage metrics showed healthy increases in the number of customer accounts and customer equity. Total and clear customer DARTs were both up from the year-ago quarter though down sequentially.

Orders from clear customers who clear and carry their positions and cash with us and contribute more revenue continues to account for over 90% of total DART. Market making trade volume was up 4% from the prior year quarter, so mixed across product types.

Options contract volumes were up 21%. Our futures contract and stock shares volumes were down 18% and 19% respectively. That higher options volume was driven largely by our decision to tighten our bid/offer spreads, which may have increased volume while reducing per contract gains. The reduction in stock volume in part reflects our actions over the past year to pair back trading in certain instruments and in certain markets that we determines to be less profitable.

Net revenues were $304 million for the first quarter down 17% from the year-ago quarter. Trading gains are $137 million for the quarter, while trading gains compared to the year-ago quarter decreased by 31% that quarter included large currency translation gains without which trading gains would have been just 5% shy of the year-ago results.

Commissions and execution fees were $101 million down 8%. Net interest income was $47 million up 16% from the first quarter of 2011 and brokerage produced $42 million with market making coming in at $5 million. Other income was $18 million, up 5%. Now interest expenses were $154 million up 6% from a year ago quarter. Within the non-interest expense category, execution and clearing expenses, which declined 2% from the year-ago quarter on lower trading volumes totaled $65 million.

Compensation expenses were $63 million, a 20% increase from the year-ago quarter. This increase has two primary components. The first is the revised method for recognizing expenses related to our employees stock incentive plan, which was disclosed last quarter. Our total expense over the life cycle of these grants are unchanged, this treatment accelerates the recognition of the related compensation expense to earlier years and decreases expense recognition in subsequent years.

Second, in January 2012, we made a special onetime grant to all employees except the Chairman to provide them with a greater stake in the success of our business. This bonus was waited in favor of employees towards the lower end of the pay scale. Together, these factors accounted for about 70% of the increase in compensation expenses over the year-ago quarter.

In March 31, our total head count was 885 and increase 3% over the year-ago quarter and 1% over the prior year head count. As a percentage of net revenues, total non-interest expenses were 51% in out of this number, execution and clearing expense accounted for 21% and compensation expense also accounted for 21%. Our fixed expenses were 30% of net revenues. Pre-tax income was $150 million, down 33% from the same quarter last year, and for the quarter brokerage represented 56% in pre-tax income and market making 44%.

For the first quarter, our overall pre-tax profit margin was 49% as compared to 60% of the first quarter of 2011. Brokerage pre-tax profit margin was 52% down from 55% a year-ago in market making and pre-tax profit margin was 46% down from 67% in the year-ago quarter.

Comprehensive diluted earnings per share was $0.30 for the quarter as compared to $0.41 for the first quarter of 2011, and on a non-comprehensive basis, which excludes the effect of the changes of the US dollar on the company’s non-U.S. subsidiary, diluted earnings per share on net income were $0.24 for the quarter as compared to $0.38 for the same period in 2011.

Turning to the balance sheet, it remains highly liquid with low leverage, we actively managed our excess liquidity and we maintained significant borrowing facilities through securities lending markets and with banks. As a general practice, we hold an amounted cash on hand that provides us with a buffer should we need immediately available funds for any reasons.

We also continue to maintain over $2 billion in excess regulatory capital in our broker dealer companies around the world. Long-term debt-to-capitalization at March 31 was 0.6%, which was down from 2.1% at year-end 2011 due to the gradual slinging down of our senior notes program. We expected debt to be entirely retired by June 2012. Our consolidated equity capital at March 31, 2012 was $4.82 billion.

The segment operating results are summarized in the earnings release and will be more fully detailed in our quarterly 10-Q report, so I’ll just highlight the noteworthy items. In electronic brokerage, customer trade volumes were down in line with industry proxies. Cleared customer options and futures contract volumes and stock share volume were down 1%, 8% and 19% respectively from the year-ago quarter.

Stock volume dropped in part in low priced stock after we raise margin rates last year to better protect against certain price moves on low cap companies. Customer accounts grew by 16% over the total of March 31, 2011 and by 3% in the latest quarter. Total customer DARTs were 428,000 up 1% from the year-ago quarter and down 4% from the fourth quarter of 2011.

Our cleared customer DARTs, which generate direct revenue for the brokerage business were 391,000 up 1% on the year-ago quarter and down 5% sequentially. The average number of DARTs per account on an annualized basis was 511 down 14% from the 2011 period and 8% sequentially.

The lower volume and commission revenue on a stable number of DARTs is explained, but smaller average order sizes in options, futures and stocks. In line with the decreases average commission per DART fell 8% from the year-ago quarter to $4.01. Customer equity grew to $28.9 billion, up 17% from March 31, 2011 and 15% sequentially. These increases took place during periods in which the S&P 500 index grows 6% and 12% respectively. The source of this growth continues to be a steady inflow of new accounts and customer deposits. In addition our favorable financing rates have allowed us to return customer margins borrowings to approximately their year ago level despite the drop during the market turmoil of 2011 third quarter.

Increased customer credit balances are the primary driver behind the 14% increase over the year ago quarter in net interest income, which now accounted for 27% of net revenues in brokerage. Lower trade volumes resulted in top line revenue from commissions and execution fees of $101 million, a decrease of 8% from year ago quarter and 8% sequentially. These revenues are spread mainly across options, futures and stocks, but revenue from FX brokerage continues to build steadily.

Execution and clearing fees expenses decreased to $31 million for the quarter, down 13% from the year ago quarter and 14% sequentially, directly impacted by lower trading volume. This demonstrates why our low fixed cost business model works well. The reduction in these direct expenses, which account for 40% of total non-interest expenses substantially soften the impact of lower commission revenues in a period when trading volumes decline.

Fixed expenses increased to $45 million, up 18% on the year ago quarter, primarily due to higher employee compensation expenses related to the stock incentive plan as I mentioned earlier. Pre-tax income from electronic brokerage was $83 million for the first quarter, down 7% on a year ago quarter, and down 3% sequentially.

Now turning to market making. Trading gains from market making for the first quarter of 2012 were $137 million, down 31% on the year ago quarter. This resulted in pre-tax income from market making of $56 million down 51% from the year ago quarter.

Currency translation effects negatively impacted first quarter’s reported earnings by only about $1 million. but the real driver here is that the year ago quarter’s reported earnings were boosted by $54 million that is currency translation accounted for about 80% of the drop in pre-tax income.

Our overall equity as measured in U.S. dollars was increased by the general weakening of the U.S. dollar, more specifically, we measure the overall gain from our strategy of carrying our equity in proportion to the basket of currencies, we call the GLOBAL to be about $35 million for the quarter, because about $36 million of gain is reported pursuant to GAAP as other Comprehensive Income, this leads the loss of $1 million to be included in reported non-comprehensive earnings.

Note that even under the new guidance, OCI is only reflected in earnings per share on Comprehensive Income, and not in pre-tax income itself. To summarize this, if we eliminated all currency effects, pre-tax income from market making would be about $67 million this quarter.

Execution and clearing fees expenses increased to $35 million for the quarter, up 9% on the year ago quarter driven by higher options trading volume. Fixed expenses increased to $42 million, up 16% on the year ago quarter, and as in the brokerage segment, the increase was primarily due to higher employee compensation expenses related to the stock incentive plan.

Now I’d like to turn the call back over to the moderator, and we will take some questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Rich Repetto from Sandler O'Neill, your question please.

Richard Repetto – Sandler O'Neill & Partners L.P.

Yeah, good evening Thomas and Paul, I guess, the question is on the brokers continuous to outperform. On the margin loan balances, just trying to see what the average gross yield? A lot of the competitors have seen drops in the first quarter I am just trying to see whether I know yours is well below theirs, but whether yours has been steady given the spread you’re trying to maintain.

Paul J. Brody

Ours is smaller you are right and it has been relatively steady because effectively credit interest rates has been zero for a long time.

Thomas Peterffy

The question as to what it, is I think it’s something like 1.3% right?

Paul J. Brody

That is probably a little less than that.

Thomas Peterffy

Less than that.

Richard Repetto – Sandler O'Neill & Partners L.P.

Okay. And then on the market-making Thomas, we’ve talked a lot about the competition from HFT prior, it seems like the exchange is doing a little bit, I don’t know whether they are doing a lot or not, but we are putting some rules to limit the quotes. I am just trying to see, do you see that have any real impact on constraining or having any impact on the HFT or exchanges if not done, have they not done enough I guess.

Thomas Peterffy

I think that HFT competition has been fairly stable. And it’s been the same as last quarter or even the quarter before. So it’s stable and it’s intense.

Richard Repetto – Sandler O'Neill & Partners L.P.

And the impact that this limiting the quotes, is that meaningful do you think or is it just, as I said, it’s enough we might have some impact on the HFT?

Thomas Peterffy

I don’t think it has had much impact at all.

Richard Repetto – Sandler O'Neill & Partners L.P.

Okay. And then the very last question is just on your capital, Thomas and Paul. Could you give out the split between, I know it’s around I think $2.8 billion at the market maker, but could you give sort of how you segment out your capital between the broker and the market-maker?

Paul J. Brody

You’re close. Maybe the market-making is a little bit higher, but the brokerage has about...

Thomas Peterffy

It’s 1.7 and change and 2.9 and change.

Paul J. Brody

Yeah, yeah..

Richard Repetto – Sandler O'Neill & Partners L.P.

Got it. Okay, thank you, that’s helpful. That’s all I have.

Operator

Thank you. our next question comes from the line of Niamh Alexander from KBW. Your question, please.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

Hi, thanks for taking my questions. Thomas, I saw something on the tape here from an interview, being quoted that you were talking about maybe retiring in the next couple of years. Can you expand a little bit on that? I don’t know what interview and it was quoting there, but this is the first time we’ve heard you talk about retiring in the next few years, can you expand a little bit more in this context with this audience?

Thomas Peterffy

It didn’t say in the next two years, they asked me if I ever think about retiring and I said sure, I think about my future all the time, and then they said so, how do you see this? And I said it would be a gradual process and as the years go by, I intend to become less and less involved, and hand more and more of my duties over to the capable hands around me.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

But, we shouldn't expect any change in the next two years.

Thomas Peterffy

Okay. Look I mean, as I said, the changes are gradual and that been going down for a year or two already.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

Okay. I guess we are not familiar with the succession planning within the organization or who it is, that you're kind of looking to, to follow you on. So, it will be helpful for us to kind of understand a little bit more about that process. And then, I guess during the interview also did ask you about your, indicate your interest in continuing to own the company if you are no longer running it, but I understand that you're still very much interested in remaining a big shareholder?

Thomas Peterffy

That's exactly what I said. The interview is written correctly.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

Okay.

Thomas Peterffy

It says what I said to him.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

Fair enough, Thomas. All right and can I just take a few things on the special grant to the employees you said it was a special grant that mean it’s going to be your first quarter every year or is it a one-off? And then the second...

Thomas Peterffy

No. It's a one-off.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

It's a one-off.

Paul J. Brody

Yeah.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

And then Paul is this going to be accrued or are we done in the first quarter?

Paul J. Brody

It goes in as of normal grant, which means that the accrued over a long period of time because it's subject to the same six-year investing schedule at all of our other grants are.

Thomas Peterffy

It’s front loaded.

Paul J. Brody

It's the recognition method is more front loaded than it is used to be. But, it's still fully recognized over six years.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

Okay. So, should we expect to kind of see the comp level to be more elevated than it has been, because this has been steadily increasing or almost flat. So, what's the good run rate you think about going forward?

Paul J. Brody

Well, the answer to that is where are you in the cycle of grants? And what grants do we put out every year. And so, hypothetically if we were to put out the same number of grants every year and we had started this in 2007, we would be five years through, a six year grant cycle, which means that it would be fairly stable going forward, if we were to continue to grant the same amount of number of shares every year.

Now we tend to grant more shares as our staff, maybe grows and so forth, and to some extent they’re more front-loaded in terms of expense recognition. So you’ll see some increase, but over time it should be relatively stable.

Thomas Peterffy

I think you could say that this increase that we just saw this quarter is unusually high.

Paul J. Brody

Because, of the one time grants.

Thomas Peterffy

Right.

Paul J. Brody

Yes, but not because…

Thomas Peterffy

So I don’t think that you should expect the same level in the coming quarters, it is going to be less.

Paul J. Brody

No it will be the – it’s accrued over this first year ratably, so the effect of the special grant will take place, it will have the same effect on each quarter of this year.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

Okay.

Paul J. Brody

That’s only a piece of the total comp expense, just from the special grant.

Thomas Peterffy

That is correct for the special grant, but given we had to revamp.

Paul J. Brody

Yes, the effect of the special grant is about $3 million a quarter for this year.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

Okay, fair enough, thank you very much. And then, and just lastly if I could real quick on – the brokerage fee, you did mention sorry, what was driving that lower. There weren’t any explicit changes, it was more contract sizes or something, was it?

Thomas Peterffy

We didn’t make changes? No.

Niamh Alexander – Keefe, Bruyette & Woods, Inc.

Okay, all right thank you.

Operator

Thank you. Our next question comes from the line of Matt Heinz from Stifel, Nicolaus. Your question, please?

Matthew Heinz – Stifel, Nicolaus & Co.

Hi, good afternoon.

Thomas Peterffy

Hello.

Matthew Heinz – Stifel, Nicolaus & Co.

I just had a question about your comments, about the market share in options, you said that given the high concentration in a couple of tickers, Apple and SPY that you don’t make markets in, that was one of the drivers behind your share losses this quarter?

Thomas Peterffy

I didn’t say that we do not make markets in it, but I said that if a large percentage of the overall volume gets bunched up in one underlying security. We usually have difficulty in maintaining our market share at the same level as we have in other products.

Matthew Heinz – Stifel, Nicolaus & Co.

Okay.

Thomas Peterffy

In other words, you just visualize this, that instead of 10 market makers in a product, there are suddenly 100 market makers in the product right, that’s what happens; and therefore, we get diluted.

Matthew Heinz – Stifel, Nicolaus & Co.

I see. Okay, thanks. And then sorry, just one more time on the revenue capture in brokerage, you said you didn’t make any changes in the pricing there, but was it more just mix that drove the rate down?

Thomas Peterffy

Well, it was – we had a fewer number of trades and the trades were smaller in size. And I think that we also had some changes in the futures business where we picked up some larger traders from MF, who quickly reached their lower tiers in commission, because we have a tiered commission rate. And so it goes down, it starts at something like $1.40, the contract that goes down to as low as $0.25.

Matthew Heinz – Stifel, Nicolaus & Co.

Okay, so just like your cleared futures volume is up about 10% or 11% year-over-year, was that mainly just due to that, I mean, I guess industry volume was down closer to 10%. So there’s either very significant share gain in there or some new accounts that are already…

Thomas Peterffy

I think we’ve got some of the MF Global customers.

Matthew Heinz – Stifel, Nicolaus & Co.

Okay, so do you think that had an impact on the – the revenue capture should be similar going forward?

Thomas Peterffy

Well, if we’ll not increase the same way as we’ve had at this time, but you must be aware that in futures brokerage, while we charge say $1.70 for a high volume trader, $1.45 of that goes to the exchange in fees, as we only get to keep the $0.25. But our brokerage charge reflects what we send to the exchange.

Matthew Heinz – Stifel, Nicolaus & Co.

Okay, thanks for the information.

Operator

Thank you. (Operator Instructions) Our next question comes from the line of Ed Ditmire from Macquarie. Your question please?

Ed Ditmire – Macquarie Research Equities

All right, good afternoon. From November through February, you guys have relatively lower net account and adds and what you guys are used to saying and of course in January you talked about the pressures on the account lists that were caused by the MF Global fiasco and how customers were worried about the safety of their funds. And then in March, it looks like you guys had a very healthy net account add number. Has there been a change? Are we getting past that period and has anything really changed that all of a sudden, the net account number became much more healthy?

Thomas Peterffy

We find that when we change, do small changes to our marketing program that is usually a positive response, whatever we do. And that it gets tired and it slows down and then we have to come up with something new.

Ed Ditmire – Macquarie Research Equities

Maybe as a follow on, like I said at the last conference call you talked about having to address client concerns over the safety of their funds, has that pressure alleviated?

Thomas Peterffy

That’s alleviated, but if something disastrous happens to somebody in the industry again then we will be facing the same issues.

Ed Ditmire – Macquarie Research Equities

Okay, thank you.

Operator

Thank you. This does conclude the question-and-answer session of today’s program. I’d like to turn the program back to management for any further remarks.

Deborah Liston

Thanks, operator. We just like to thank everyone for participating today. And as a reminder, this call will be available for replay on our website. Thanks again and have good evening.

Operator

Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.

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