Q2 2021 Interactive Brokers Group Inc Earnings Call
Good day and thank you for standing by welcome to the interactive brokers group second quarter financial results Conference call. At this time, all participants on a listen only mode. After the speaker's presentation there'll be a question and answer session. Please be advised that today's conference is being recorded.
To ask the question during the session you will need the press star 1 on your telephone if you require any further assistance. Please press star Zero I would now like the handler conference over to Nancy Stuebe Director of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us far of second quarter 'twenty 'twenty, 1 earnings conference call.
Once again Thomas is on the call, but asked me to present his comments on the business he will handle the Q&A.
As a reminder, today's call may include forward looking statements, which represent the company's belief regarding future events, which by their nature are not certain and are outside of the company's control our actual results and financial condition may differ possibly materially from what is indicated in these forward looking statements.
We ask that you refer to the disclaimers in our press release you should also review the description of risk factors contained in our financial reports filed with the SEC.
Q2 was the fantastic quarter.
With the exception of the first quarter. This year. It was the best 1 and interactive brokers history.
Total accounts grew 61% versus a year ago, a record save for the first quarter on.
Client equity grew 79% growth also outpaced only by Q1.
Total client darts of $2.3 million were also except for Q1 of record.
The same is true of our stock share an options contract volume.
Our business strength can also be seen in our overall metrics.
While our client equity or the cash and securities and client accounts grew 79%.
Client margin loans rose, even faster to a record high of 49 billion up 96 per cent.
In contrast client credit balances or the cash and client accounts grew 16%.
Why.
The strong markets and an active client base, let our customers utilize the interactive brokers platform to put proportionately more of their money to work in the market.
As a percent of of client equity margin loans have risen from of pandemic outset low of 11, 5% up to 13, 4% as investors have grown more confident and want to participate on the market.
This increase is even more impressive when you consider that while for margin loans. The numerator is based solely on client activity. The denominator of client equity is based on customer activity plus overall market performance.
Even if there was no change in total margin loans rising markets mean that this ratio will naturally decline.
Instead, we see that this ratio increased nearly 200 basis points within the backdrop of rising global markets.
Showing investor confidence and willingness to participate.
And the more of our clients participate the stronger we become.
Our reported pre tax margin was 72% and adjusted for noncore items was 67%.
We know of no other broker who can claim margins close to this.
We see this investor confidence and strong activity across the globe in all geographies.
As we observed earlier this year. This activity appears to be led more by injured individuals investors than by institution.
These customers tend to be sticky as they become familiar with our platform and especially internationally, we offer the broadest geographic product offering and lowest cost of those investors and there are many who wish to invest internationally.
It is expensive to provide global market access with compliance legal currency and tax and reporting requirements different in each market on the costs to comply with all of these requirements is high.
And 3 quarters of our accounts are international this competitive advantage continues to serve us well.
Overtime, even as this period of Covid winds down we see global interest in the markets.
And the rise of the electronic connectedness of individuals' to financial markets institution and each other.
Driving more people to participate generating further interest in the financial markets among investors old and new.
We continue to see year over year growth in total accounts and the high twenty's to low 30%.
This is well above the high teens level year over year growth, we experienced before the pandemic.
We continue to get better at giving our customers the power to navigate through our numerous high quality features more efficiently.
We continue to improve on giving them a customized work environment.
We continue to listen to them to learn what products and tools they want added.
And now to go over our record, but for the first quarter numbers.
We ended the quarter with a record 1.414 million accounts and net increase of 61 per cent.
Once again, we saw account growth in all client segments in all geographic regions with all areas showing over 50% growth with modestly more rapid growth in Asia.
We saw growth in all 5 of the client types that we service.
I will now go over our 5 client segments.
Individual customers, who made up 63 per cent of our accounts 37 per cent of our client equity and 54 per cent of our commissions continued their growth this quarter with 12 month account growth of 88% and client equity growth of 85 per cent.
Commissions grew 48 per cent.
In addition to the aforementioned factors.
Continued active interest in markets by the investors worldwide increase.
Increases in market indices, and investor desire to improve on zero interest rate environment alternatives.
Are some of the reasons behind the segments of strength.
All of geographic areas, we serve saw triple digit individuals' account growth.
It was close to uniform growth rates across the Americas, Europe and Asia.
This proves the importance of providing a reliable platform to a global audience offering wide product choices and world wide access and shows the clients want the maximum opportunities to invest in the variety of ways. They prefer.
We continued to see growth in the hedge fund customer segment for the 12 months ended June 30th we saw 2% hedge fund account growth, 54% customer equity growth and 5% Commission growth.
We continue to benefit from our reputation for best price execution, low and transparent margin and securities financing rates, the quality of our platform and the strength of our balance sheet.
Hedge funds represent 1% of our accounts 7 per cent of our client equity and 6 per cent of our commissions.
Terry trading firms are 2 per cent of our accounts.
9% of our client equity and 12% of commissions.
For the quarter.
This group grew by 34% and accounts for the 12 month period, 48 per cent and client equity and 21% and commission.
Prop trading firms are sensitive to the direction of volatility and trade more as volatility increases.
While not as high as the spike in the first quarter, continuing strong volatility led to more active trading strategies, while accounts and client equity grew due to more traders wanting to be on our platform to capitalize on its reputation for seamlessness and efficient trade executions.
Financial advisors are 10 per cent of our accounts, 16% of our customer equity and 10% of our commissions.
This group grew accounts by 20% for the 12 month period customer equity by 52% and commissions by 6%.
Account on client equity growth show of increasing penetration of the segment.
Commissions were up by less than the accounting equity growth as advisers typically tend to trade more conservatively.
While the independent advisor business is small relative to fidelity of Schwab.
Those firms sort of the advisor of an individual segments only.
Interactive brokers also caters to hedge funds on prop traders more demanding groups as far of certain functionality is concerned.
We add tools and build out of infrastructure based on input from each client segment and then make these improvements available to all of them.
As a result, our platform has the richest set of tools and capabilities and with the strategy, we get better and grow faster in each of our customer segments and our peers.
Our final segment is introducing brokers.
These represent 26 per cent of our accounts 32 per cent of our client equity and 17% of our commissions.
I brokers segment account growth was 39 per cent for the latest 12 months of client equity more than doubled growing 115% and commissions by 131%.
Interactive brokers platform provides the global trading and seamless back office functionality critical of brokers, who want to provide of global offering in order to of capture clients worldwide, who seek to invest and want to be able to access many markets in order to do so.
We continue to be excited about 'twenty 'twenty, 1 and beyond.
I know you were all going to asked me about a bitcoin introduction and we expected by the end of next month.
In other areas, we have provided contents of coursera, creating a certificate program for them called a practical guide to trading which covers equities for ex U S bond and derivatives trading.
You should also take a look at I B K, our campus, which offers over 50 courses on investment products trading tools and portfolio and risk analysis.
We want informed clients, who will have the knowledge and tools to be with us for the long run.
And finally, we look forward to the Robin Hood IPO, so that our various metrics can be compared to another firm Besides Charles Schwab.
With that I.
I will turn the call over to our CFO, Paul Brody, who will go through the numbers for the quarter.
Paul.
Thank you Nancy thanks, everyone for joining the call.
As usual will review the quarterly operating results the non core items factored.
Factors that drove those numbers and then we will open it up for questions.
Starting with the operating data.
Progressively stronger trading levels and record margin borrowing throughout the quarter drove robust operating metrics, albeit below the unusual spike in the first quarter.
With the tailwind of rising world markets on positive vaccination on economic news and low interest rates.
Continued global interest in financial markets amid the search for higher yield.
Let the 2 industry trading volumes that are still above the activity levels in 2020 in most product.
Mean stock trading volume came down from the extreme highs of the first quarter, which impacted industry volume mainly on stock.
Over the course of the second quarter trading by our active trader customer base rose from April loans.
Volatility as measured by the average VIX fell from the unusually high levels of it reached early last year.
Beginning of the first phase of the Corona virus pandemic of time.
The great uncertainty of amid rising case of members worldwide.
The average VIX fell from 35 in the second quarter last year to 18 this quarter.
And while it has come down recently, the VIX is still stronger than pre pandemic levels, reflecting perhaps the unevenness of the reopening of economies worldwide.
Yeah.
Compared to the second quarter of 2020.
Our quarterly total darts rose, 32% to $2.3 million second only to the unusually active first quarter.
Our customer trade volumes rose year on year in several product classes led by increases of 34% and 160% in options and stock volumes respectively.
Stock volume was inflated by trading of low price stocks.
Even after removing those from our calculation.
Our share of volume still rose 36%.
Again these volumes are second only to those of the first quarter.
Futures volume declined 19% year on year, but remained modestly higher than the pre pandemic level.
FX dollar volumes this quarter were lower the trend we have seen since the explosion of volume in early 2020, and now are about even with pre pandemic levels.
Total accounts reached a record 1 million of 414000 of 61% over the prior year contributing to customer equity, 79% from the second quarter of 2020 to $363.5 billion.
Our overall average commission per cleared commission of the order.
Declined 15% versus last year to $2.38.
Rose, 3% versus first quarter.
Factors impacting this decline include of product mix. The featured smaller average trade sizes in options.
And our continued success in capturing liquidity rebate.
All of which are passed through to our clients capturing these rebates reduces the overall commission of our clients pay.
Decreasing the average commission per Dart, but also reduces the exchange fees, we pay on on the expense side, making their net impact from neutral to our bottom line.
Moving to our net interest margin table.
Our net interest margin rose from 99% to 1.15 per cent year over year, driven by margin lending and securities lending.
Quarter over quarter on NIM declined from $1, 2.6% to 1 point of 1.5% partially impacted by a decrease in the average effective U S benchmark fed funds rate from 8 to 7 basis points for the further impact.
From most of other rates worldwide remaining.
Zero.
Securities lending and margin loans were the largest contributors to our net interest income.
Securities lending was particularly strong this quarter.
Down from the Spike in the first quarter when several stocks presented us opportunities to lend at higher rate.
Utilizing our in house developed system, our team executed on opportunities to lend hard to borrow names that investors were looking to short.
Net interest income from securities lending reached $136 million of this quarter of 70% year over year.
Average margin loan balances rose.
94% versus last year as investors continue to grow more comfortable taking on risk and leverage higher.
Higher year over year balances led to a 97% increase in margin loan interest income to $128 million.
In light of the flat yield curve, we kept the duration of our portfolio of relatively short and recorded an immaterial mark to market loss on our holdings of U S treasuries.
Outside of the U S, notably in Europe.
We have grown accounts at 55% on client equity by 70% net.
Benchmark interest rates and currencies.
The ability to achieve acceptable yields on our segregated cash in this region. This has led to a couple of unusual factors.
Over the past.
A few quarters.
We have earned interest on our customer credit balances as we pass through negative rate costs on large balances in these currencies.
Our aggregate yield on segregated cash in this quarter was immaterial, but slightly negative.
It was driven by increased customer cash balances the negative rate currencies.
Although offset by the pass through of costs I just mentioned.
Aggregate segregated cash balances fell 13% as clients use more cash to invest in the financial markets and more cash was used to fund margin lending in the U S.
This overall decline along with inflows of negative currency.
Led to a drop in our segregated cash net interest to minus $2 million.
Including the pass through of $8 million of the negative rate interest to customers.
The net interest earned on segregated cash balances of $6 million.
Got it.
Note that for accounting purposes, our FDIC sweep program, which was $2.7 billion.
Quarter of removes funds.
Otherwise be included in segregated cash balances on our balance sheet.
Now for our estimate of the impact of the next 25 basis point increase in rates.
The calculating the impact of rate changes, we understand that as the possibility of the future rate increase becomes more certain is the expectation is typically already reflected in the yields of the instruments.
Therefore, we attempt to isolate the impact on unexpected rise or fall of great.
Separate from the impact of rate hikes of cuts that have already been baked into the price of these instruments.
With that assumption, we would expect the next 25 basis point unanticipated rise in rates.
An additional $99 million of net interest income over the next 4 quarters and $102 million.
Run rate based on our current balance sheet.
Our net interest income is highly sensitive to small rate increases due.
Due to the impact of low benchmark rates on the spread between what we earn on our segregated cash and what we pay to our customers.
As the U S rates fell below 50 basis points.
Our spread compressed as we earn less on our segregated cash. However, the converse is also true that as rates move back up towards 50 basis points the spread right.
The $102 million run rate.
Includes the reinvestment of all of our present holdings at the new assumed rate, but does not take into account any change in how we manage our segregated cash.
The 25 basis point unanticipated fall in rates would produce the decline in net interest income of $32 million over the next 4 quarters and $32 million as well.
As a reminder, about a quarter of our customer credit balances are not in U S dollars.
And so of changes in rates that occur in the U S do not apply to all of our balance.
Turning to the income statement.
We define non core items as those not part of our fundamental operating result.
Non core adjusting items versus the year ago quarter are as follows.
Our currency diversification strategy.
From a gain of $16 million a year ago 2 of loss of $9 million. This quarter 4 of comparative decrease in income of $25 million.
Investment gains and losses rose from a gain of $13 million to a gain of $113 million this quarter for a comparative increase of $100 million.
And of Mark to market on U S. Government Securities went from of $13 million loss to about zero this quarter on a comparative increase of $13 million.
The net effect of these items increased pretax income by $104 million of this quarter of positive shift of.
$88 million over the last year's quarter.
Net revenues were a reported $754 million for the quarter up 40% versus last year's second quarter.
Excluding non core items net revenues were up 24% the $650 million.
Commission revenue rose, 11% on higher volumes of year on year, particularly in stocks and options.
Net interest income rose, 40% of $274 million.
Continued low benchmark interest rates, thanks to growth on our balance sheet higher margin loan balances.
Securities lending efforts our growth in net interest.
Other fees and services revenues.
Which include market data exposure the account activity.
Bank suite program and the IPO facilitation fees.
As well as the order flow of income from options exchange mandated programs rose, 38% to $55 million.
The top 3 contributors.
Our at risk of exposure fees, which were up 6 million.
Market data fees, which were up $5 million and liquidity payments from options exchanges, which rose $2 million.
Other income, which includes the gains and losses on our investments and currency diversification strategy as well as principal transactions showed a gain of $118 million up from a gain of 27 million in the last year's quarter.
Ex non core items other income increased 27% of $14 million.
Non interest expenses were $213 million for the quarter down 33% from last year's quarter.
Larger exchange liquidity rebates.
All of our futures volume and a $6 million clearing fee rebate drove a 29% reduction in execution clearing and distribution fees to $54 million. Despite the hires.
And the options volume.
As mentioned a portion of exchange liquidity rebates are passed through to our clients.
<unk> and reduced commission.
Fixed expenses were $158 million down 34%.
Driven by of 73 per cent decrease in G&A expense.
Last year's G&A included a $103 million and costs associated with the double UTI oil futures event.
At quarter end of our total head count stood at 2000, and 429 of 34% increase over the last year.
We continue to hire aggressively of client services to support the influx of new accounts.
As well as in software development.
To that Brexit required that we open offices in Europe.
Which are now fully operational and Hungary as well as in Ireland.
Customer bad debt expense was $1 million well contained for a highly active trading period.
Reported pretax income more than doubled from last year's quarter to $541 million.
More of 72% pre tax margin and.
And excluding noncore items pretax income rose 41% of 400.
$37 million.
67% pre tax margin.
Diluted earnings per share were $1 for the quarter versus <unk> 40 for the same period from 2020.
And the ex non core items diluted earnings per share were <unk> 82 cents versus 57.
The last year.
Now to help investors better understand our earnings taxes on the split between public shareholders.
The interest.
The second quarter numbers are as follows.
Starting with our pre tax income of $541 million.
Remove 1 million income at the holding company.
Then we deduct $12 million for income taxes paid by our operating companies, which are mostly foreign taxes.
This leaves $528 million of.
$78.1 per cent for that $414 million reported on our income statement.
Is attributable to Noncontrolling interests.
The remaining 21, 9%.
Or $114 million is available for the public company shareholders.
As this is the non-GAAP measure it is not reported on our income statement.
After we expense remaining taxes owed by the public company of $23 million on that $114 million.
The net income available for common stockholders.
Is the $92 million you see reported on our income statement.
Note that the public companies taxes proportionately higher than last year, primarily because of.
The IPG Inc ownership.
As from 18, 6% to 21, 9%.
Our total income tax expense of $35 million consists of this $23 million plus the $12 million of taxes paid by the operator.
The company.
Turning to the balance sheet with $9.9 billion in consolidated equity at June 32021 for well capitalized from a regulatory standpoint.
Our strong capital base.
<unk> to grow our business and investment opportunities worldwide.
As well as to emphasize the strength and depth of our balance sheet to current and perspective clients and partners.
Our capital is deployed across 14 registered broker dealer type of entities around the world.
The regulatory capital requirements.
Liquidity needs margin lending and other financing opportunities.
Brokerage business.
And we continue to carry no long term debt.
Now I'll turn the call back.
And we will take questions.
And thank you as a reminder to ask the question you'll need the press star 1 on your telephone to draw. Your question press. The pound key please standby we compile the Q&A roster and once again that is star 1 if you'd like to ask the question.
And our first question comes from Rich Repetto from Piper Sandler Your line is now open.
Yes, good evening Thomas Good evening, Paul I guess my first question is on entrust and interest sensitivity and I know part of you gave us the sensitivity to the 25 basis points move, but I was just trying to.
See.
If when and if the fed get to 50 basis points of above.
I know you share that completely with customers, but you don't share it if they have less than 100000 or pro rata.
And they need 10000 cash is there any way we can get the I think you'd given in the past about how much cash is what you call rate insensitive that would fall.
No that wouldn't be.
Get share that interest above the fed rate of 50 basis points.
And then the other the.
The other part would be just what could you do on treasuries.
On your Reinvestments sort of policy, how could the the NIM expand potentially treasuries were to widen out.
Well I can take the first 1 certainly yeah.
Our fully interest rate sensitive credits.
The amount to about 14% of of the total credits of about 11, $11.2 billion at the at.
At the end of the quarter.
So that can give you the idea of the.
And on which we can.
The fully capture any of the rate increases.
And.
To the second I would.
Turn that 1 over to Thomas with regard to investment policy on the.
Depending on the yield curve I guess.
Yeah sure.
So we're going to remain.
Investing for the short term.
Because I wouldn't dare to.
To go value part of them day use kind of especially on the rising inflation.
Prospects.
But as to your first question the first.
At the center.
Yes.
The outlets.
On the extended.
So hey, Jessica.
It's going to have sort of said.
That is completely all of us from dead wrong.
Sure.
But you know all of the clients at less value.
Okay.
Bob.
Some total of 10.
$10 billion.
Understood.
Yes and.
The.
Yeah. We got you know I'm just trying to understand you know if we looked at past right.
Last great cycle, your net interest NIM expanded dramatically and.
I'm not saying today.
Yes.
On the yield curve changed dramatically in a rising.
Rate scenario.
Wouldn't we expect some NIM expansion because you would.
The go farther out the curve on treasuries, it rather than saying short range on the short end right now.
It's not because he's on a sure thereof, I mean, we've got off maybe.
Maybe a year, but.
It's mostly because the first half day shut in.
As you know.
It's a huge amount of money on.
On the 85 billion of.
Uh huh.
Free cash flow you're seeking.
Costume in cash.
Got it okay.
My last question would be Thomas you talked about regulatory issues.
Any.
Of your views on payment for the flow of what any changes to market structure that you could.
That you're at least bracing farmer or.
Could possibly change over the next 12 to 18 months.
So I cannot foresee any change because basically the day.
As has been the the business books the need for 200 years now, namely customer order comes in and the firm date. So again the states right now all of that is happening withdraw of banner I'll be on other than the.
Alongside the sheets of bodies.
On the other you said they are 2 different companies, but.
So if that prohibit the door there flow, but whose happened as schwab goodbye.
Very true.
By Robin.
And the same thing.
Just continue right.
So I don't think that day.
The payment for the flow can be prohibited.
Bond of the fiduciary logo on the Street model.
Got it.
Great Super helpful. Thomas Thank you.
And thank you.
And our next question comes from Dan Fannon from Jefferies. Your line is now open.
Thanks, So just the follow up on some of the day count metrics and the growth numbers that you guys cited in regions continues to be very strong I believe last quarter, you talked about China, and Hong Kong being slightly weaker, but so just curious if theres anything underneath.
All of the country level or other areas, where things are potentially not as strong as otherwise would be expected.
China continues to be weak.
On.
Of the previous quarter.
And the dwindle to of practically nothing.
And on Congress.
Just you know you could.
So it may not be as thrown out of it towards the year ago, but.
Most of it continues.
Otherwise.
Yeah.
The arrives.
The.
Europe.
Especially eastern Europe, the middle East.
So it's a matter of recall.
These are.
Especially strong.
And the profile of the customer being added today.
The kind of material difference or change than what you've seen historically.
Yes.
Well.
The in the.
I mean, maybe there are some smaller customers but.
But you know we also get larger customers in the day.
Due to our Inc.
To show on that board such as you know the.
30 day for enjoying day.
And the.
The investment advisor so overall of the reason for such things.
And that makes of the.
The size of the costumers.
Thank you.
And thank you and.
Ladies and gentlemen, if you have a question that the star 1 again, if you'd like to ask the question that is star 1.
Next question comes from Kyle Voigt from K BW. Your line is now open.
Hi, good evening.
So Thomas if you look at May and June metrics.
Specifically I think you were running around 23 of 24% annualized account growth.
Right.
In the past you had said you thought the account growth will kind of normalize.
Towards the commodity high 20% on or around 30% range, but it seems like the trajectory of the growth over the past couple of months is trending below that so I guess.
Any updated thoughts on where you think that account growth will stabilize.
Is this kind of work from home environment ends in the end the.
Operating environment normalizes.
My Best guess is 30%.
Yeah.
May was.
The lower <unk>.
It was also lower.
So you book.
Some of it but my best guess going forward with the study.
Okay.
On.
Second question is on the elimination of the the monthly inactivity fees.
I think.
We probably had asked about this.
For a long time all of the the analyst.
On the entity just wondering can you help us understand why you thought now was the right time to eliminate these fees do you think that could.
<unk> to your account growth rate and doesn't this move kind of suggests the shift in strategy in terms of.
Wanting to target and the small or less active individual traders.
Which is a little bit different from where you sit.
Typically targeted.
So it is not and the.
Hey, there is new trade and.
The existing folks that are.
You know of decided to to hang update you had sort of law and not the trade and.
All of what they've been doing as they close the their cards and then.
On the same day and activity of cheap.
So they come back a year or 2 later, but they won't necessarily come back to us.
That goes to some other brokers. So that's what's really going to be bad. So we want to we would like to hold onto to the people who had the condensate. The obviously 1 of them to continue to have the condensate.
They become an active Florida law.
And so that day.
The the icon does open even if they just leave that to the dollars.
And.
Then when day already too.
Julien.
David the lead with us.
Understood.
On <unk>.
And then just maybe the.
Final question from Securities lending and.
Just on from a record first quarter.
But still grew 70% year on year and the revenues there.
When you're thinking about the current.
Second 1 day environment.
Would you still think of this is in the elevated revenue level I guess on <unk>.
This is should be a good run rate going forward, because as I said 70 per cent year on year of growth in revenues, but your average client equity was also up over 70% year over year and account growth is also up very strongly but.
Just curious on any thoughts on the current kind of ex <unk>.
<unk> per second lending.
I understand that the securities funding you said.
Securities lending.
Lending go Oh, Okay sorry.
Yeah, I can comment of Thomas sure sure I mean, as we always say.
It's driven by both as the customer base grows and balances grow it is driven by higher.
Short balances and greater inventory of the land, but it is most particularly driven by stocks.
The stocks that.
Get hot in the marketplace and and for some period of time, sometimes very short sometimes an extended period of time, we can lend them out at very high rates.
And so.
You know we had we had some experience of that this past quarter, we had more of in the first quarter.
The stocks just come and go as you know you can read about them in the news and we're just able to take advantage of them both.
Our customers are of money against them.
But also because we have of fully paid lending program, we call. It the stock yield enhancement program.
And so we've seen.
Growth there and it provides us opportunities to increase <unk>.
Revenues because of our now lending out.
More of our customers' stock.
In that program.
I would add to the debt.
Our especially the lower margin the age brings.
He brings in a lot of clients who want to.
Gary positions on margin and as you know those physicians are the name.
On the book to Us to line so.
That is at the end.
Next week too.
The charging of value.
Okay.
Right makes sense.
Thank you.
Thank you and our next question comes from Chris Allen from Compass Point. Your line is now open.
Evening, everyone, maybe just a follow up on Carls question on the monthly activity fees.
Any estimate in terms of how many accounts have been closed the same on the activity of these maybe over the last year or 2.
I guess for Bob.
Well I need 5 dogs on the gods of year.
But that's a guess.
Got it.
And then.
It was yesterday, you announced the new pricing over in Europe.
The standard pricing I guess the started out in Western Europe, maybe just some color just in terms of.
What was the catalyst to introduce new pricing scheme of any estimate in terms of financial impact.
So the there is no no financial impact to speak of but you.
You know competitors of ours.
Advertising the.
And the simple the rate salary of few holes that all of our rates are not so simple.
And on the the.
So we knock on saying that for the year.
<unk>, who is the we're sitting bond.
Bonds of some.
The other currencies.
And so.
The Golden Beach, so out of it.
I'll do the folks in the marketplace.
Understood. Thanks, that's it from me.
And thank you.
And ladies and gentlemen, I would now like to turn the call back to Nancy Stuebe director of Investor Relations for closing remarks.
Oh I apologize we have a follow up question from rich Repetto from Piper Sandler.
Yes.
Wanted to get 1 more in Thomas.
A quick 1 I think.
Paul could you define fully paid securities lending.
Versus just I guess Martin margin loan lending and then also do you think the just because we're trading in the <unk> in the U S markets, you know almost 50% higher levels of net 10 billion share of the day versus 7 billion of peak.
You know in 2019 does that make it.
More likely the.
The stocks are wanted you know that you'd have these scare stocks just because there's more trading overall line.
In other words more evidence that the elevated securities length of it could be could stay all of the elevated going forward.
Well certainly.
Inventory, we have the more likely it is that we have more shares and the high rates of stocks to land.
And.
This feeds on itself as Thomas said of our low rates of track more margin lending that frees up those that body of stocks for us the land.
On on that we earn 100 per cent of the revenue because of their margin stock.
And on the fully paid.
The stocks, we share of that revenue.
Generally 50.50 with our customer.
Our fully paid mean, it's either complete.
It fully paid even on a cash accounts or or.
And the margin accounts, where there may be margin borrowing by the customer that's not the full amount of margin borrowing that the customer can and can put on which leaves some of the stocks to be not.
Collateralize the margin loans and therefore, they are fully paid and we can still lend them out and in fact, the customer will earn something on.
On those shares.
Got it.
The.
Oh drive the agreement.
Some of our customers.
Mitch we agree that the that weekend day shares.
Fully paid for it and we agree to do all of them on that satisfies the credit risk.
So the guarantee that hey, guys. Great is can we keep them had the proceeds.
Understood. Thank you very very helpful.
All I have.
Thank you and I am showing no further questions I would now like to turn the call back to Nancy Stuebe director of Investor Relations for closing remarks.
Thank you everyone for participating today as a reminder, this call will be available for replay on our website and we will also be posting a clean version of our transcript on the site tomorrow. Thank.
Thank you again, and we will look forward to talking to you next quarter end.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
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Yeah.
Yes.
1 of them.
Yes.
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Total revenue.
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