Q4 2019 Earnings Call
Hi, good welcome to the interactive brokers group fourth quarter and full year financial results Conference call. At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During the session you want your press star one on your telephone.
As a reminder, today's program baby recorded and I thought I would like to introduce your host for today's program Nancy Stuebe Director of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us for a yearend 2019 earnings conference call.
Once again Thomas is on the call him will handle the key Wednesday, but asked me to present the rest of his comments.
As a reminder, today's call may include forward looking statements, which by which represent the company's belief regarding future events, which by their nature not certain or outside of the company's control our actual results and financial condition may differ possibly materially from what has indicated in these forward looking statements. We ask that you referred to the disclaimers in our press release.
You should also review a description of risk factors contained in our financial reports filed with the FCC.
Interactive brokers again ended the year with record numbers with client equity up 35% to over 174 billion double that 2016.
Accounts were 690000, a 15% brokerage pretax margin was 65%.
On the balance sheet side margin loans rose to 31 billion tying our previous record. Although total equity is now over 7.9 billion.
Importantly, our net revenues adjusted for our usual noncore items of currency translation and Treasury portfolio marks were up 1% to 503 million in the fourth quarter. Despite events that people believed were likely to lead to a decrease in revenues such as lower volatility lower interest rates and the introduction of zero.
Emissions.
Despite the federal reserve lowering interest rates three times the fear our net interest income rose 18%.
Commission revenue was 205 million down, 18%, but just to be expected in a quarter, where average volatility which has a big effect on how much are clients trade fell 33%.
There are now two ways for clients to trade at interactive brokers.
Our IB K., our pro platform offers our full capabilities and technology with best price execution and are extremely low commission margin rates ranging from 1.85% to 3.05% based on loan size.
Or you can use I'd be k., our light, which we introduced in September where we offer clients zero commissions and low margin rates currently 4.5%.
What we let them know that we will wrap their orders to high frequency traders and return for payment.
So far we have about 5600 light customers 3600 of home switch from pro and about 10% of chosen to switch from light to pro and the less than three months since the introduction of light.
Because we tend to have a more sophisticated client base that is well aware of the benefits to performance the best price execution on orders.
I've chosen to stay with I.B.K., our pro and we've not seen a major impact on our business.
We're very pleased the third party information from I. Hs market analyzed U.S. stock executions and has once again shown interactive brokers execution advantage.
We executed orders at 43 cents per round lot better, meaning cheaper and the industry average.
That translates to major savings for I.B.K., our pro customers, who experience better performance by lowering their trading cost.
For the calculation. We include all our market orders over 100 chairs, we do not pick and choose data.
We achieved this price improvement for I.B.K., our pro through our superior technology, and our founding practice I've never selling our customers' orders.
Instead, we search through many venues for the best available price, which is often hidden as traders do not want to reveal their buying or selling intentions.
During her search we constantly refresh accumulated statistical information about the likelihood of finding a better price for any specific stock at any specific venue.
The software is expensive to develop and maintain but it pays for itself and generating loyal customers, we tend to trade more often and accordingly benefit the most from superior execution.
Our business is now primarily electronic brokerage and in 2019. The brokerage segment earned a record 1.2 billion a pre tax profit and achieved a 65% pre tax margin.
There was no other broker who comes close to our levels of profitability.
And we achieved this well offering state of the our technology low margin rates and high interest rates on customer cash.
Because we are automated and can program for the different currencies regulations and requirements of other countries interactive brokers has always been in international company.
More than 60% of our accounts come from outside the Americas.
Over the last year, well, our accounts grew 15% by country that growth was just over 6% in the U.S.
9.5% in China.
And 23% everywhere else.
So everywhere else is a place where we see ourselves growing more in future.
As a majority of our new customers come to us by recommendation of existing customers. The more we do to give our customers a successful experience the more people who sign up as clients and the more likely they will enthusiastically recommend our platform to others. This helps us achieve faster growth.
The more new clients, we onboard now the more customers they will bring to us in the following weeks and months.
Now I will go over our five client segments.
Individual customers posted the strongest account growth in 2019 up 18% over last year and make up 50% of our accounts, 35% of our client equity and half of our annual conditions.
This is a lucrative and well diversified customer segment had a client equity growth of 36% for the year. So as would be expected with significantly lower volatility so commissions declined 9% for the year.
The worldwide increase in securities markets in the fourth quarter helped our customers account performance. We were pleased to see particularly strong account growth internationally.
[noise], introducing brokers posted account growth of 16% and our 31% of our overall accounts.
Fine equity grew 47% over the past year and is 23% of our total well commission saw a slight decline of 2% and or 9% of our total.
Smaller and mid size brokers as well as international ones continue to find it difficult both to justify building and maintaining their own technology and to offer the global access their customers want.
So they come to us to wipe brand or state of the our technology and capitalize on our low cost.
As competitive pressures increase and his agencies in various countries increase their compliance oversight of the financial services industry.
The commitment and costs required only grow overtime.
Urging more brokers to come to us.
We have not yet seen any change in the ability of our mainland China accounts to fund.
Up until the end of last year, we had extremely fast account growth in China, and then it suddenly slowed significantly.
We hear that there are roughly 8000 people a week, who try to open an account with us and only about 15% of them are able to fund.
We do not have any reason to believe this will change in the near future.
Hedge funds constitute 1% of our accounts, 9% of our client equity and 9% of our commissions as of December 31.
For the year, we saw growth of 4% and hedge fund accounts and 30% in client equity.
Growth achieved despite the hedge fund industry overall experiencing outflows.
Hedge on commissions declined 14% again due to lower market volatility, which can limit trading opportunities.
Headphones remain a large multi trillion dollar global market and we continue to have tremendous room to grow in this area.
Proprietary trading firms are 2% of our accounts, 11% of our client equity and 15% of our commissions.
For the year. This group grew 14% and accounts and 41% in client equity all their commissions fell 7%.
Despite already being well penetrated in the segment the growth here shows that our platform continues to demonstrate value and appeal for sophisticated traders and their larger accounts.
Finally, we have financial advisors.
They are 15% of our accounts, 22% of our customer equity and 16% of our commissions.
Accounts in this group grew by 8% client equity by 24% well commissions declined 12% for the year.
Two factors will continue to drive this business.
Our Greenwich compliance group, which provides registration and compliance assistance for new and existing already <unk> continues to sign up our I used to want to open their own businesses or move away from an existing clearing firm.
Going independent means are you can keep all the fees they earn in an environment, where more advisors are looking to become independent are low commission and financing rates high rates of interest paid on cash and the availability of Greenwich compliance the services all contribute to growth in this segment.
Second what consolidation among our competitors we've heard from many advisors, who do not want to compete for clients with their clearing firm or be subject to the hidden fees that always seem to sprout up.
We welcome all of them with transparent pricing no competing in house advisors pre portfolio performance reporting a free CRM and global market access.
There was a lot that we're looking forward to in 2020 to improve and enhance the customer experience.
You will first see our newly launched bond scanner, where our clients can enjoy low fully transparent commissions on bonds with no markup on bond prices.
We offer a full universe of U.S. government securities as well as over 33000, Cds 38000, corporate bonds and 1.4 million municipal securities.
You can search our inventory work compare available healed against those of other brokers.
We also offer filters that can help you select the yield or ratings you want.
For all this.
We will only charge two and a half to 10 basis points on a corporate bond and as always we pass through the highest bids and lowest offers available at the electronic venues, we access with no markets.
We also have new markets, new improvements to our platform and new product categories. We will soon offer all with the same experience interactive brokers team, who have told me not to say anymore about our future plans.
With that I will turn the call over to our CFO , Paul Brody, who will go through the numbers for the quarter.
Thanks, everyone for joining the call.
Yeah.
Our fourth quarter and the full year results.
Factors that drove those numbers and then we'll open it up to question.
Beginning with this quarter, we will report non-GAAP measures in our earnings release, including the impacts of our global currency diversification strategy marks to market on our treasury portfolio and other material noncore items, we have been describing the effects of these items, which we consider to be outside our core brokerage perform.
In our quarterly earnings calls for some time.
We think this new presentation ILLUMENATE these effects.
Forward manner.
Tables can be found at the end of our earnings release.
Also comprehensive income measures, which.
Noncore currency effect.
No longer stated in our headline numbers. However, they can still be found at the end of the income statement presentation.
Turning to operating data.
Despite lower market volatility in interest rates gains in net revenues of pretax income were driven by strong net interest income built on solid growth and.
Total accounts grew to 690000.
15% year over year, along with rising equity markets around the world.
What do you.
6%.
We saw growth in all customer segments, particularly individuals proprietary traders and introducing brokers.
Lower market volatility.
Market volatility led to lighter trading volumes and lower commissions versus a strong quarter last year when volatility as measured by the average VIX rose to a multi year 20.8.
This quarter the average VIX filled 14.
33%.
Contributing to an 18% decline and commission.
However, despite lower.
Benchmark interest rates.
Our net interest income rose, 18% versus fourth quarter of 20 team.
70% growth in customer cash.
Lower volatility.
Two declines in options futures and stock volumes. These were not out of line with industry volumes.
Which were down in all three categories.
And FX dollar volumes as well.
Measured against our all time high in the fourth quarter of 2018 or total darts for the quarter fell 16%. However, our average commission for darts.
5% to $3.61.
For larger average trade.
In stock options.
Results for the full year reflected the continued momentum in operational leverage of our core brokerage business.
Full year commissions declined 9% on lower volatility and trade volumes.
Net interest income up from 17%.
And by higher customer cash balances and strong securities laws.
Lower volumes were seen in most product categories, echoing overall industry volume trends.
For the full year total darts fell 3%.
Average commission for Dart fell 5% as volatility decline consistently over the course of the year and never reached 2018.
Net interest margin table shows that our NIM widened in the fourth quarter to 1.70% from 1.65 person in a year ago period.
For the year NIM was also 1.7 <unk> percent from 1.62% last year.
Despite lower interest benchmark.
Yes.
Hi, or segregated cash balances, including FDIC sweeps.
And our securities lending business drove this increase.
The Federal reserve lowered three times over the COVID-19 nearly reversing.
Yeah.
During the year, we kept a relatively short duration on our U.S. treasury portfolio in the falling rate environment, we recorded a mark to market gain of $7 million for the year, including a modest 1 million dollar loss in the fourth quarter.
As always we plan to hold these securities to maturity. So these gains and losses are temporary but as brokers. Unlike banks.
Rules require us to Mark these securities to market in our financial reporting.
One of our non-GAAP items that we consider to be noncore.
Outside the U.S. interest rate changes were mix.
About 24% of customer credit balances are not in U.S dollars changes in our net interest income or not fully correlated.
<unk>.
Higher customer cash balances and strong securities lending generated.
Interest income.
Segregate cash interest income rose, 21% over the year ago water.
Early due to higher balance.
Our FDIC insured bank deposits, we program reached $2.2 billion and continues to grow and contribute to higher net interest income.
This program offers high interest rates and FDIC insurance.
Up to two and a half million of cash in our customers accounts.
Addition to the $250000 civic coverage.
Note that this revenues reported in other income on the income statement, but is reported with interest income in the NIM table.
Margin loan interest declined 18% year ago quarter due to a combination of factors, including lower balances for much of the year as well as lower benchmark rate.
The rise in margin lending toward the end of the year.
Flex our growing ability to support the needs of larger customers as opportunities present themselves.
Securities lending interest income was up 60% this quarter and 19% for the year as we took advantage of continued opportunities satisfy demand for hard to borrow.
Security.
Customer short stock value was up 43%.
<unk>.
Our estimate of the impact of the next 25 basis point increase in U.S.
It is as follows.
Market expectations of rate changes are typically built into the yields of the instruments in which means that.
Therefore in our calculation.
Attempt to isolate the impact to our earnings of an unexpected rise or fall.
Separate from the impact of rate hikes circuit.
I'd been baked into prices.
We would therefore expect the next 25 basis point unanticipated increase or decrease in rate to result in $22 million higher or lower respectively net interest income.
The run rate.
And for the media sleep following four quarters.
As our segregated cashes reinvested at the new rate.
This would be $20 million higher for rate hike and $17 million lower for rate cut.
Turning to the segments electronic brokerage produced gains in net interest income.
Both the fourth quarter and full year periods, while commissions declined due to lower trade volumes.
Fourth quarter brokerage net revenues were $486 million down 1%.
Pre tax income it was 314 million <unk>, 1%.
65% pre tax margin.
The expense categories execution, clearing and distribution fell 19% to $56 million in line with trade volumes.
60 expense were 117 million up 8%, including modestly higher levels of compensation in occupancy as well as increased legal and compliance expenses and contributions to reserve.
Customer bad debt expense was a gain of $1 million this quarter, reflecting recoveries of prior period that's it.
For the full year.
Brokerage net revenues rose to a record 1.92 billion.
4%.
With pretax income also reaching a record $1.20 billion.
Fixed expenses rose, 9% to $442 million.
Adjusted for non core items pretax margin was 64%.
Market, making consisted of the customer facilitation activities, we will retain.
And the options market, making in three markets outside the U.S. now down to two as we have Wanda wound up operations in Canada.
For the quarter.
Net revenues were $15 million of which 7 million were trading gains and the rest was net interest income.
Market, making pretax income was $5 million.
And for the year net revenues were $67 million and pre tax income.
Yes.
Expenses from the activities, we're keeping our.
Largely offset by related revenues and such activities should.
It should have minimal impact on margins. If they are later absorbed as brokerage.
Corporate segment reflects the effects of our currency diversification strategy.
We carry or equity in proportion to a basket of 14 currencies, we call the global best reflect the international scope of our business.
As the U.S. dollar weakened against most other major currencies this quarter.
Kurt and overall gain from our strategy of $50 million.
12 million is included in earnings and 38 million is reported as other comprehensive income.
We estimate the total increase and comprehensive earnings per share from currency effect.
To be 11 cents with two cents reported in other income and nine cents those <unk>.
For the year, the overall loss from our currency strategy was $36 million.
Of which a loss of 60 million is included in earnings and a gain of 24 million is reported as those <unk>.
Decrease in comprehensive earnings per share from currency effects for the year was six cents with 12 cents loss reported as other income and six cents gain.
Right.
Taking a look at the income statement for the fourth quarter net revenues were $500 million up 2% over the year ago quarter.
Adjusted for non core items net revenues were 503 million for the quarter up 1% over the last year.
Noncore items include $12 million gain our currency strategy.
And a 7 million dollar loss on our investment in Tiger brokers.
Commission revenue declined 18% on lower volumes in all product categories. The 5% decline in the overall average cleared commission for Dart.
$3.61 reflected a mix of average trade size is larger and stocks and options smaller in futures and for us.
$287 million net interest income.
Brokerage produced 97%.
Other income, which includes our global currency strategy Treasury marks and other fees and income we received was $38 million modestly higher than last year.
For the full year.
Net revenues were $1.94 billion up 2% over the prior year.
Full year adjusted net revenues were 1.98 billion.
4% over last year.
Noncore items for 2019 includes 60 million dollar loss on our currency strategy.
$7 million gain from Treasury marks and a $6 million net gain on our other investments, including Tiger brokers.
In 2018, the primary noncore items were 19.
A million loss on the global.
And a 9 million gain from Treasury marks.
Non interest expenses were $188 million for quarter three.
3% from last year increases reflect support for the continued growth at brokerage business with higher compensation and DNA expenses.
Including legal and compliance costs and reserves, partially offset by lower execution clearing and distribution fees.
Bad debt expense.
For the full year non interest expenses were $780 million up 10% driven primarily by higher compensation Egina expenses.
As well as higher customer bad debt.
On the event previously disclosed in the first quarter.
At year end, our total head count stood at 1643 up 16% from last year.
I have been hiring most aggressively in the areas of client services flying systems development and to this end.
We have continued to build up our operations in India.
For the fourth quarter pretax income was $312 million up 1% over last year.
Adjusted basis pretax income was 315 million also up 1%, representing an adjusted pre tax margin of 63%.
For the full year pretax income was $1.16 billion.
Down, 3% and adjusted for non core items was 1.25 billion.
Up 3% for a pretax margin of 63%.
Diluted earnings per share were 57 cents for the quarter and 58 cents adjusted for non core items, both even with the prior year.
The year diluted earnings per share where $2 and since then.
Adjusted for non core items diluted earnings per share were to $2.27 for 2019 persist $2.28 last year.
Comprehensive diluted earnings per share, which includes all currency effects were 66 cents for the quarter versus 56 cents last year.
For 2019, they were $2.16 first to nine last year.
To help investors better understand our earnings taxes, and the split between the public shareholders and the non controlling interest.
Fourth quarter numbers are as follows.
Starting with income before income taxes of 312 million.
We then deduct.
$7 million for mostly foreign income taxes paid by our operating company.
At least $305 million of which 81.5% for that 250 million reported on our income statement is attributable to non controlling interests.
The remaining 18.5% for $55 million is available for the public company shareholders, but as this is a non-GAAP measure it is not reported on our income statement.
After we deduct remaining taxes of $11 million.
Public companies net income available for common stockholders is the 44 million you see reported on our income statement.
The income tax expense line of $18 million on our income statement.
Is that this 11 million plus 7 million of taxes paid by the operating.
Our balance sheet remains highly liquid with low leverage.
$7.94 billion and consolidated equity.
Well capitalized from a regulatory standpoint.
And our deploying our equity capital in the brokerage business as it continues to grow.
We hold excess capital in order to take advantage of opportunities.
<unk> support for additional customer financing.
As well it demonstrates the strength in depth of our balance sheet.
We continue to carry no long term debt.
At December 31.
Margin Debits peaked.
$31 billion, an increase of 16% from last year, Although average margin debits were off 9% for the year.
We continue to expect swings in margin lending balances due our success in attracting its seasonal hedge fund customers.
And more opportunistic in taking on leverage.
As the end of the your activity demonstrates we are increasingly well positioned to satisfy customers willingness tick on leverage when market yields present opportunities.
Out of our consolidated equity capital at December 31st 2019 of 7.94 billion.
6.77 billion was held in brokerage 940 million in market, making and customer facilitation activities and the remainder in corporate.
Now I'll turn the call back over the moderator, we can take questions.
Certainly once again, ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered and you'd like to move yourself from the Q. Please press the pound Chief our first question comes from the line, though rich Repetto from Piper Sandler Your question. Please.
Yeah, Good evening, Thomas and Paul and Nancy I guess going right back to the beginning of the call I just missed some of the numbers on the I'd be careful pro in what I said I thought you said 5600 like customer reach 3600 came from pro and and you said, 10% moved back on the last part is what I didn't get.
Just trying to understand those numbers and what's the explanation you think behind that the movement I guess.
So let me bring the numbers are so low that it is very difficult to generalize groom them. So.
I give you numbers as of last night.
The last night.
Close of business, we had 8000 lives are gone.
Who approximately 25% <unk> you are Collins our lives.
For the.
Oh, the 8000, I'd gone a one dog and.
$200, who has reached from Peru.
And extra new applicants.
Who is.
Sue very early to tell.
As far as brokered the ability is concerned.
Yeah, I've said before.
Reducing the <unk> to be three alive and Andrew.
Finally, he then.
But it's very difficult to generalize because as you know or commissions are feared and the more you agreed.
The low school issues you.
The next Threed.
So as a result, this small or even pre grand lead the they can get gone.
Roots be more call me shoes on the brew than what you see in in payment for order flow on the other and the more free Granby breathing get gone.
I Love School nation than what we see it even for or.
In addition, the allied they've gone through see lumber cents less.
That is going I don't coach than that brew are gone and they won't person more margin.
And then the through it gone through all in all.
The then.
As we accumulate more and more light that gone through maybe you'd be able to discern a dividend.
Okay. Thanks Thomas.
I guess another question is.
I guess on the commercial bank license can you can you sort of talk about where that stands and.
What sort of an impact will have.
So we see loved the question and answer craze.
And.
As far as impact on <unk> going to start the very gradually the impact will be very gradual.
First we will.
Yeah, the I see shoes deposits in time deposits.
We will enter into some I'm on the secured loans and we are going to boot up very slowly and go.
And last question Thomas the wherever else, where the growth is coming from these days.
I guess can you talk a is the advantage there <unk>. We know you Havent technology advantage, but isn't growing in the same way like through introducing brokers predominant like you did in Asia. We don't was growing fast and just just a little bit more colour on the high growth you're seeing in this wherever else region.
Who actually are the highest growth.
You know individuals.
Yeah, I mean in indeed, your growth has been around a 24% dog side, though the Americas.
And.
You know hedge funds are very few hedge funds.
Oh <unk> outside the Americas or updating group is it's a big done by the boot in Asia.
And.
Financial advisors are growing faster outside of Europe than inside because.
Of course, we have less competition.
And I brokers are also.
A more outside the United States outside of that right.
Okay. Thank you very much Thomas.
Thank you. Our next question comes from a line of Kyle Voigt from KBW. Your question. Please.
Hi, good evening.
Just first question is it's just on China, you noted that the counts are growing 9% year over year in China I just wanted to clarify is that from mainland China, specifically and.
Okay, and then second part of that question is just related to the funding rate I think you previously disclosed a 5% funding rate. So 5%. It accounts that were attempted to be open to actually being funded sounds like that's moved up to 15%. So other although it's already that 5% mugs had been.
So the question is.
The growth to read that you called.
Accounts that applications that start <unk> account that mitigations that complete.
Okay. So completed account applications.
Roughly 15% successfully phone.
Okay. So there's been no change in that it's barked on account application and I would.
That's got nothing to do with <unk>.
In ability to fund.
Understood. So there's been no change in that funding rate over the let's say the past couple of quarters.
That's roughly <unk> I mean, it fluctuates from week to week amongst amongst but no I mean, the that hasn't been a big changes either way.
Over the last six months right.
Understood about over the last nine months.
Correct.
Second question for you just on your your ownership stake I think there was that the trading plan was set to begin showing selling some of your shares in July of last year on a daily basis, just wondering why that hasn't gone into effect, yet and when we could expect those share sales to commence.
I haven't.
Not that Bob I'd be very soon.
They have to do with the share price or.
<unk> getting some emotional [laughter] okay.
And last one for me just on expenses I think the fixed expenses in the broker were up 9% year over year in 2019 for the full year just wondering as we're looking out the 2020 should we think about a similar pace of expense growth for 2020.
Yes.
Okay. Thank you very much.
[noise], but Q. Our next question comes on line of will Nance from Goldman Sachs. Your question. Please.
Hello, everyone. Good afternoon.
Maybe I stood on the net interest margin I know last quarter, there was a bit of a lag impact of rates on some of the earn rates that you saw in the quarter and just wanted to kind of clarify how much of a lag impact isn't there this quarter, if any and I guess holding SEC lending constant because that bounces around just.
How do you think about where the NIM kind of leveled out and you know fully factors and all the rate cuts that we've seen.
[noise] Bull go Oh, yeah, sure so while you're right to identify and what we've spoken about some lag time [noise] that lag time, especially in.
The decreasing rate environment, we've kept very short duration has been.
I'd say typically less than 60 days.
As far as the outlook.
He told me what the feds going to do I might be able to comment on that if it stays.
Constant with no rate changes and <unk> and no expect you know and basically not much of a yield curve.
You're probably going to seize.
Similar results to what we've gotten the in the late this quarter.
Got it that's helpful. And then maybe just a quick one I think you've had this disclosure in the earnings release about responding to inquiries from various regulators due to kind of bank secrecy Act at the monarch money laundering related practices I'm. Just wondering if there's any color you can provide on on the status of these issues or what they relate to just to give us a sense for what.
Driving that disclosure.
Oh, we expect to wind that the the school.
Great all right. Thank thank you for taking all my questions.
Thank you. Our next question comes from a line of Chris Allen from Compass point Your question. Please.
Evening, everyone. One of the follow up a little bit on the growth outside of China in the Americas Wonder if you give us any granularity in terms of specific markets or that are driving the growth and where you're maybe seeing acceleration.
<unk> versus maybe a year ago.
We don't like it anymore granularity.
The our because oh.
No.
No boring in dealing or.
Moving formation do or <unk>.
Fair enough then the pivoting to the on the expense side.
The Goldman Conference you talked about a three year project and rebuilding coupons and surveillance is starting to come to an end.
So it sounds like it was a fairly large project I'm, assuming it's been a part of the Dr. <unk> part of the Oh, sorry living on the expense on recent periods.
Will there be an impact in terms of the falling off in terms of the expense trajectory or do you have other projects coming on that are likely to see in the expenses.
Unlike most other companies we do not go by project.
We tried to hire as many developers.
As we can.
And we always have more work.
For them.
We can get done.
So there you will not see we hope that the expenses, we keep on growing because that means that we are doing more and more development.
So that's where we are.
No just a quick one on the.
Then the other income the mark to market impact to $15 million <unk> Tiger 1 million on the government I'm just wondering what the other piece was the missing 7 million there.
And I'm, sorry, and other income.
Yeah, the mark to market in place of 15 million.
Solution just wanted to do something always Tiger 1 million U.S government <unk>.
Guys really.
Well in in other income as a category there.
You know spread across many different.
Categories, like you know market data and exposure fees and.
So forth and that makes up the remainder of the.
Other income its category.
Gulf <unk> things.
Thank you. Our next question comes with a line of Chris Harris from Wells Fargo. Your question. Please.
Thanks, guys.
The schwab and their trade merger or has the potential to create some disruptions or for the customers are those firms like you guys had mentioned you know having some increased conversations with some financial advisors about.
No the potential for those two companies combining what it could mean for their businesses.
[laughter] <unk>, how big of an opportunity do you think that potential disruption could be.
For interactive and do you guys think that you're advisor platform is like a destination that an average schwab adviser might consider an average merits rate adviser might consider.
Well so.
We generally agreed concern a book.
About the merger among many clubs that are you said the investment advisors. They worry about less competition unless you know radiation.
Many believe that the these technologies better their shops, and Oh, the moves and due to.
On the most then if this platform to be able to continue to use the these technology.
Some.
Our I always worried that.
Ah swap has been doing though.
Internally employed <unk>, who we compete with data I don't really feed this the keys, but that's what you.
As we get <unk> basically most of the inquiries are a rollup to grind.
Some people who used to be on the shop platform and then over for whatever reason to I'm married Threed are not worried about having to go back and they say no I want to go back. So fuel we watch you go out and the other dive boost that many of the larger.
Sure.
Our eye is use both shrub.
And then maybe three then feed reality.
And no that love them move for log or they are looking to us as a substitute.
How big Guy.
No.
Okay. Thank you that's helpful and I'm just one follow up I'm curious about stock lending you know another really strong quarter for that part of your business.
Are there a handful of stocks that are are driving the results. There. If so what are they in if and if not you don't have to you know if dimensional all of them and then I'm just wondering how we should think about sustainability.
You know that body business.
There are already brand through that are more in demand and the others.
So we as throughout the lucky enough.
To have them.
With that that matters, a lot of but I think what is most important news that we have automate the entire process. So people who are or clients can see on the or.
No I can see our automated a presentation Oh, Oh hallmarks. Your inventory we have all March we we have borrow a stock for an on luxury London before so they basically see a BARDA wireline market.
Constantly online and that beings of into certain customers.
So, yes, we expected to grow in the future.
Okay, great. Thank you.
Thank you and as a reminder, if you have a question. Please press Star then one our next question comes to mind, a Mac Sykes from Gabelli Your question. Please.
Oh, good evening everyone.
Just to circle back to churn a little bit could you just talk about what you're seeing in terms of product geography demand from those clients that are funding new accounts is any nuances for some of the things that they are accessing and her platform.
I'm, sorry, I'm I'm unable to answer [laughter].
I don't know young food guide on though.
Okay.
And then.
I think you've talked about kind of this new.
Trading commission environment in sort of the Investor education in understanding with a tree costs are trading I was wondering if you've adjusted kind of your advertising.
That all around this to kind of differentiate yourselves with respect to those two platforms.
[noise] well I've done, though if you see though are bad luck really basically saying that the <unk>.
Come to us and you can experience both sides and decide values that we try is better for you.
Okay. Thank you dog grade believers that the the Peru execution is better by more than the completion that we charge.
But that these again if its a.
Not a <unk> percent and you know.
On different grades maybe that God before.
Thank you.
Thank you and this does conclude be question and answer session of today's program I'd like to hand, the program back to Nancy Stuebe for any further remarks.
Thank you everyone for participating today.
As a reminder, this call will be available for replay on our website. We will also be posting a clean version of our transcript on our site tomorrow. Thank you again, and we will talk to you next quarter rent.
Thank you ladies and gentlemen, few participation that today's conference. This does conclude the program you may now disconnect good day.