Interactive Brokers Group (IBKR) 10-K risk factor changes: FY2020 vs FY2019

Mr. Thomas Peterffy, our founder and Chairman, and his affiliates beneficially own approximately 89.6% of the economic interests and all of the voting interests in Holdings, which owns all of our Class B common stock, representing approximately [removed: 81.5%] [added: 78.2%] of the combined voting power of all classes of our voting stock.

Moreover, because of Mr. Thomas Peterffy’s substantial ownership, we are eligible to be and are, treated as a “controlled company” for purposes of the Nasdaq [added: Marketplace] Rules.

We are a holding company and our primary assets are our approximately [removed: 18.5%] [added: 21.8%] equity interest in IBG LLC and our controlling interest and related rights as the sole managing member of IBG LLC and, as such, we operate and control all of the business and affairs of IBG LLC and are able to consolidate IBG LLC’s financial results into our financial statements.

We are required to pay Holdings for the benefit relating to additional tax depreciation or amortization deductions we claim as a result of the tax basis step\-up our subsidiaries received in connection with our initial public offering [added: (“IPO”)] and certain subsequent redemptions of Holdings membership interests.

In connection with our [removed: initial public offering (“IPO”),] [added: IPO,] we purchased interests in IBG LLC from Holdings for cash.

We have agreed to pay 85% of these tax savings, if any, to Holdings as they are realized as additional consideration for the IBG LLC interests that we [removed: acquire.][added: acquire, with the balance to be retained by us.]

As a result of the IPO and the Redemptions by Holdings, the increase in the tax basis attributable to our interest in IBG LLC is [removed: $1.3] [added: $1.6] billion.

Based on facts and assumptions as of December 31, [removed: 2019,] [added: 2020,] including that subsequent purchases of IBG LLC interests will occur in fully taxable transactions, the potential tax basis increase resulting from the historical and future purchases of the IBG LLC interests held by Holdings could be as much as [removed: $9.0] [added: $11.2] billion.

The tax basis [added: increase] of [removed: $9.0] [added: $11.2] billion assumes that (a) all remaining IBG LLC membership interests held by Holdings are purchased by us in [removed: a] [added: one or more] taxable [removed: transaction] [added: transactions] and (b) such purchases in the future are made at prices that reflect the closing share price as of December 31, [removed: 2019.][added: 2020.]

If the Internal Revenue [removed: Services] [added: Service] (“IRS”) successfully challenges the tax basis increase, under certain circumstances, we could be required to make payments to Holdings under the Tax Receivable Agreement in excess of our cash tax savings.

We currently have approximately [removed: 77] [added: 91] million outstanding shares of common stock.

[removed: Assuming no anti\-dilution adjustments based on combinations or] divisions of our common stock, the offerings referred to above could result in the issuance by us of up to an additional approximately [removed: 339] [added: 326] million shares of common stock.

[removed: - rapid] [added: rapid] technological change;

[removed: - changing] [added: changing] customer demands;

[removed: - the] [added: the] need to enhance existing services and products or introduce new services and products; and

[removed: - evolving] [added: evolving] industry standards.

Our future success will depend, in part, on our ability to respond to the demand for new services, products and technologies on a timely and cost\-effective basis and to adapt to technological advancements and changing standards to address the increasingly sophisticated [added: requirements and varied needs of our customers and prospective customers.]

IBC, IBUK, [removed: IBEU, IBKRFS] [added: IBIE, IBLUX, IBKRFS, IBCE, IBHK,] and [removed: IBHK] [added: IBSG] are subject to similar change in control regulations promulgated by the IIROC in Canada, the FCA in the United Kingdom, the [added: CBI in Ireland, the] CSSF in Luxembourg, [added: the] FINMA in [removed: Switzerland and] [added: Switzerland,] the [added: MNB in Hungary, the] SFC in Hong Kong, [added: and the MAS in Singapore,] respectively.

Regulatory bodies include, in the U.S., the SEC, FINRA, the Board of Governors of the Federal Reserve System, the Chicago Board Options Exchange, the Chicago Mercantile Exchange, the CFTC, and the NFA; in Canada, the IIROC and various Canadian securities commissions; in the United Kingdom, the FCA; in [added: Ireland, the CBI; in] Luxembourg, the CSSF; in Switzerland, [added: the] FINMA; in [added: Hungary; the MNB; in] India, the Securities and Exchange Board of India; in Hong Kong, the SFC; in Japan, the [removed: FSA] [added: Financial Supervisory Agency] and the Japan Securities Dealers Association; [added: in Singapore, the MAS;] and in Australia, the Australian Securities and Investment Commission.

[removed: While the outcome] [added: We are also cooperating with a United States Department] of [removed: the examinations] [added: Justice inquiry concerning these matters,] and [removed: inquiries currently in progress] [added: while its outcome] cannot be predicted, we do not believe that [removed: they are] [added: the resolution of this inquiry is] likely to have a materially adverse effect on our financial results.

Our ability to comply with all applicable laws and rules is largely dependent on our internal [removed: system] [added: systems] to ensure compliance, as well as our ability to attract and retain qualified compliance personnel.

[removed: To continue to operate and to] expand our services internationally, we may have to comply with the regulatory controls of each country in which we conduct, or intend to conduct business, the requirements of which may not be clearly defined.

[removed: - prime] [added: prime] brokers who, in an effort to satisfy the demands of their customers for hands\-on electronic trading facilities, universal access to markets, smart routing, better trading tools, lower commissions and financing rates, have embarked upon building such facilities and product enhancements;

[removed: - direct] [added: direct] market access and online options and futures [removed: firms;][added: firms, and online equity brokers;]

[removed: - software] [added: software] development firms and vendors who create global trading networks and analytical tools and make them available to brokers; and

[removed: - traditional] [added: traditional] brokers.

Some of our competitors may also have an ability [added: to charge lower or zero commissions.]

During [removed: 2019,] [added: 2020,] approximately [removed: 21%] [added: 29%] of our net revenues were generated by our operating subsidiaries outside the U.S. We are exposed to risks and uncertainties inherent in doing business in international markets, particularly in the heavily regulated brokerage industry.

[removed: While we currently maintain redundant servers to provide limited service during system disruptions, we] [added: We] do not have fully redundant systems, and our formal [removed: disaster recovery] [added: business continuity] plan does not include restoration of all services.

[removed: These] [added: Our] backup services are currently limited to U.S. markets.

We [removed: do not] currently have [added: limited] separate backup facilities dedicated to our non\-U.S. operations.

[added: Any loss or expense incurred due to defaults by our customers in failing to] repay margin loans or to maintain adequate collateral for these loans would cause harm to our business, financial condition and results of operations.

[removed: - price] [added: price] changes in securities;

[removed: - lack] [added: lack] of liquidity in securities in which we have positions; and

[removed: - the] [added: the] required performance of our market making obligations.

Tighter spreads and increased competition could make [added: our remaining] market making activities less profitable.

Our market making [removed: business is] [added: activities are] substantially dependent on the accuracy of our proprietary pricing mathematical model, which continuously evaluates and monitors the risks inherent in our portfolio, assimilates market data and reevaluates our outstanding quotes many times per second.

Assuming no anti\-dilution adjustments based on combinations or

The impact of the COVID-19 pandemic and the measures implemented to contain the spread of the virus may have a material adverse impact on our business and results of operations.

In March 2020, the World Health Organization recognized the outbreak of COVID-19 caused by a novel strain of the coronavirus as a pandemic.

The pandemic affects all countries in which we operate.

The response of governments and societies to the COVID-19 pandemic, which includes temporary closures of certain businesses; social distancing; travel restrictions, “shelter in place” and other governmental regulations; and reduced consumer spending due to job losses, has significantly impacted volatility in the financial, commodities and energy markets, and general economic conditions.

These measures may have negatively impacted businesses, market participants, our counterparties and customers, and the global economy and could continue to do so for a prolonged period of time.

Our net interest income and profitability could be negatively affected by lower benchmark interest rates caused by central banks lowering target benchmark rates in an attempt to buffer their economies from the uncertainties around the COVID-19 pandemic.

A substantial portion of our employees have been impacted by local COVID-19 restrictions and have been working remotely.

As a result, any disruption to our information technology systems, including from cyber incidents, could have a material adverse effect on our business.

We have taken measures to maintain the health and safety of our employees, but widespread illness could negatively affect staffing levels within certain functions or locations.

In addition, our ability to recruit, hire and onboard employees could be negatively impacted by COVID-19 restrictions.

The impact of the COVID-19 pandemic on our future financial results could be significant but currently cannot be quantified, as it will depend on numerous evolving factors that cannot be accurately predicted, including, but not limited to, the duration and spread of the pandemic; its impact on our customers, employees and vendors; governmental regulations in response to the pandemic; and the overall impact of the pandemic on the economy and society, among other factors.

Any of these events, alone or in combination with others, could exacerbate many of the risk factors discussed or incorporated by reference herein and could have a material adverse effect on our business, financial condition and results of operations.

As announced on August 10, 2020, we agreed to settle certain matters related to our historical anti-money laundering and Bank Secrecy Act practices and procedures with FINRA, the SEC and the CFTC.

As part of the settlements, we agreed to pay penalties of $15 million to FINRA, $11.5 million to the SEC and $11.5 million to the CFTC, plus approximately $700,000 in disgorgement.

In addition, we agreed to continue the retention of an independent consultant to review the implementation of our enhanced compliance practices and procedures.

To continue to operate and to

zero commission brokers, while technically not offering direct market access, who use simplified interfaces and a limited product offering to attract new market participants;

The Tax Receivable Agreement requires 85% of such tax savings, if any, to be paid to Holdings, with the balance to be retained by us.

In order to have a $9.0 billion tax basis, the offering price per share of Class A common stock in such future public offering will need to exceed the then current cost basis per share of Class A common stock by approximately $29.93.

If either immediately before or immediately after any purchase or the related issuance of our stock, the Holdings members own or are deemed to own, in the aggregate, more than 20% of our outstanding common stock, then all or part of any increase in the tax basis of goodwill may not be amortizable and, thus, our ability to realize the annual tax savings that otherwise would have resulted if such tax basis were amortizable may be significantly reduced.

Although the Holdings members are prohibited under the Exchange Agreement from purchasing shares of Class A common stock in a public offering, grants of our common stock to employees and directors who are also members or related to members of Holdings and the application of certain tax attribution rules, such as among family members and partners in a partnership, could result in Holdings members being deemed for tax purposes to own shares of Class A common stock.

requirements and varied needs of our customers and prospective customers.

This regulatory and enforcement environment has created uncertainty with respect to various types of transactions that historically had been entered into by financial services firms and that were generally believed to be permissible and appropriate.

We are currently providing information to certain of such authorities, including FINRA, the SEC, the CFTC and the United States Department of Justice, and cooperating with those authorities.

The regulators are focused on compliance practices, including anti money laundering and Bank Secrecy Act practices.

We periodically review these practices to make them more robust and to keep pace with changing regulatory standards, and we have been enhancing and augmenting our procedures and personnel in these areas over the past several years.

- direct market access and online equity brokers;

to charge lower or zero commissions.

For example, we have backup facilities at our disaster recovery site that enable us, in the case of complete failure of our main North America data center, to recover and complete all pending transactions, provide customers with access to their accounts to deposit or withdraw money, transfer positions to other brokers and manage their risk by continuing trading through the use of marketable orders.

Any loss or expense incurred due to defaults by our customers in failing to

We face competition in our market making activities.

In our market making activities, we compete with other firms based on our ability to provide liquidity at competitive prices and to attract order flow.

These firms include registered market makers as well as HFTs that act as market makers.

Both types of competitors range from sole proprietors with very limited resources to a few highly sophisticated groups which have substantially greater financial and other resources, including research and development personnel, than we do.

These larger and better capitalized competitors may be better able to respond to changes in the market making industry, to compete for skilled professionals, to finance acquisitions, to fund internal growth and to compete for market share generally.

HFTs that are not registered market makers have certain advantages over registered market making firms that may allow them to bypass regulatory restrictions and trade more quickly and cheaply than registered market makers at some exchanges.

We may not be able to compete effectively against HFTs or market makers with greater financial resources, and our failure to do so could materially and adversely affect our business, financial condition and results of operations.

As in the past, we may in the future face enhanced competition, resulting in narrowing bid/offer spreads in the marketplace that may adversely impact our financial performance.

This is especially likely if HFTs continue to receive advantages in capturing order flow or if others can acquire systems that enable them to predict markets or process trades more efficiently than we can.

We custody and service accounts for hedge and mutual funds, [added: ETFs,] registered investment advisers, proprietary trading groups, introducing brokers and individual investors.

We specialize in routing orders and executing and processing trades in stocks, options, futures, forex, bonds, mutual funds and ETFs on more than 135 electronic exchanges and market centers [added: in 33 countries and in 25 currencies seamlessly] around the world.

The proliferation of electronic exchanges [added: and market centers] over [removed: nearly] the last three decades has [removed: provided] [added: allowed] us [removed: with the opportunity] to integrate our software with an increasing number of [removed: exchanges and market centers] [added: trading venues] into one automatically functioning, computerized platform that requires minimal human intervention.

[removed: *Electronic Brokerage.*] As an electronic broker, we execute, clear and settle trades globally for both institutional and individual customers.

Currently, approximately [removed: 70%] [added: 76%] of our customers reside outside the U.S. in over 200 countries and territories, and over 50% of new customers come from outside the U.S. Approximately [removed: 65%] [added: 64%] of our customers’ equity is in institutional accounts such as hedge funds, financial advisors, proprietary trading desks and introducing brokers.

[removed: In addition, lower] [added: Lower] benchmark interest rates, [removed: which can be beneficial by reducing] [added: though they reduced] the rate of interest paid on customer [removed: cash, can] [added: cash to zero in most currencies,] also [removed: give] [added: reduced the rates we earned on margin lending and gave] us fewer opportunities to earn [removed: more] net interest income on fully interest-sensitive balances.

[removed: Healthy inflows] [added: Inflows] from [added: new and existing] customers, combined with [added: rising] securities [removed: market increases] [added: prices] that generally [removed: benefited] [added: lifted] customers’ investment values, led to customer equity growth of [removed: 36%] [added: 66%] to [removed: $174.1] [added: $288.6] billion.

Institutional customers, such as hedge funds, mutual funds, introducing brokers, proprietary trading groups and financial advisors, comprised approximately [removed: 50%] [added: 43%] of total accounts and approximately [removed: 65%] [added: 64%] of total customer equity at the end of [removed: 2019.][added: 2020.]

[removed: We continue to attract large customers that] [added: Customers] seek [added: out] our superior technology and execution capabilities, [removed: high interest rates on cash balances,] [added: global market access,] and low costs, as well as our securities finance services, including margin lending and short sale support.

The following is a summary of the key profit drivers that affect our business and how they compared to [removed: 2018:][added: 2019:]

*Global trading volumes.* According to data received from exchanges, volumes in exchange\-listed equity\-based options [removed: decreased] [added: rose] by approximately [removed: 13%] [added: 93%] in the U.S. for the year ended December 31, [removed: 2019,] [added: 2020,] compared to [removed: 2018.][added: 2019, while U.S. equities volumes increased by 103% and exchange-listed futures increased by 31%.]

*Volatility.* Based on the [removed: Chicago Board Options Exchange Volatility Index (“VIX®”),] [added: VIX®,] average U.S. market volatility [removed: decreased] [added: rose] to [removed: 15.4] [added: 29.2] in [removed: 2019, down 7%] [added: 2020, up 89%] from the average of [removed: 16.6] [added: 15.4] in [removed: 2018.][added: 2019.]

[removed: Lower] [added: Higher] volatility tends to [removed: curtail] [added: improve] our electronic brokerage performance because it generally corresponds to [removed: lower] [added: stronger] trading volumes.

In [removed: 2019,] [added: 2020,] as the VIX [removed: decreased,] [added: maintained elevated levels for most of the year,] we saw [removed: a negative] [added: the] impact on [added: both] customer trading activity, which [removed: decreased 6%,] [added: more than doubled,] and our commissions revenue, which [removed: decreased 9%.][added: rose 58%.]

*Currency fluctuations.* As a global electronic broker [removed: and market maker] trading on exchanges around the world in multiple currencies, we are exposed to foreign currency risk.

We actively manage this exposure by keeping our net worth in proportion to a defined basket of [removed: 14] [added: 10] currencies we call the “GLOBAL” to diversify our risk and to align our hedging strategy with the currencies that we use in our business.

During [removed: 2019] [added: 2020] the value of the GLOBAL, as measured in U.S. dollars, [removed: decreased 0.06%] [added: increased 1.45%] compared to its value as of December 31, [removed: 2018, which had a negative impact on our comprehensive earnings for] 2019.

[removed: In the fourth quarter of this year, we introduced the reporting of] [added: We believe these] non-GAAP financial [removed: measures, which exclude certain items that may not be indicative of our core operating results and business outlook and] [added: measures] may be useful in evaluating the operating performance of our business and provide a better comparison of our results in the current period to those in prior and future periods.

Diluted earnings per share were [removed: $2.10] [added: $2.42] for the year ended December 31, [removed: 2019] [added: 2020] (“current year”), compared to diluted earnings per share of [removed: $2.28] [added: $2.10] for the year ended December 31, [removed: 2018] [added: 2019] (“prior year”).

Adjusted diluted earnings per share were [removed: $2.27] [added: $2.49] for the current year, compared to adjusted diluted earnings per share of [removed: $2.28] [added: $2.27] for the prior year.

The calculation of diluted earnings per share is detailed in Note 4 [added: – “Equity and Earnings Per Share”] to the audited consolidated financial statements, in Part II, Item 8 of this Annual Report on Form 10-K.

[removed: Consolidated*:*] For the current year, our net revenues were [removed: $1,937] [added: $2,218] million and income before income taxes was [removed: $1,157] [added: $1,256] million, compared to net revenues of [removed: $1,903] [added: $1,937] million and income before income taxes of [removed: $1,196] [added: $1,157] million in the prior year.

Adjusted net revenues were [removed: $1,984] [added: $2,204] million and adjusted income before income taxes was [removed: $1,246] [added: $1,346] million, compared to adjusted net revenues of [removed: $1,913] [added: $1,984] million and adjusted income before income taxes of [removed: $1,206] [added: $1,246] million in the prior year.

The increase in [removed: income before income taxes in the current year was mainly driven by a 17% increase in] net [removed: interest] [added: revenues was primarily due to higher commissions, other fees and services, and other] income partially offset by [removed: a 9% decrease in commissions revenue and a 23% decrease in other] [added: lower net interest] income.

[removed: Our pre-tax] [added: Pretax] profit margin was [removed: 60%, compared to 63%] [added: 57%] for the [added: current year and 60% for the] prior year.

[removed: Electronic Brokerage*:* For] [added: Non-interest expenses, for] the current year, [removed: income before income taxes in our electronic brokerage segment] increased [removed: $20] [added: $182] million, or [removed: 2%,] [added: 23%,] compared to the prior year, [removed: driven by higher net interest income] [added: to $962 million, mainly due to a $124 million increase in general] and [removed: lower] [added: administrative expenses; a $42 million increase in] execution, clearing and distribution [removed: fees, partially offset by lower commissions revenue and other income, and higher customer bad debt expense, general and administrative expenses,] [added: fees;] and [added: a $37 million increase in] employee compensation and benefits [added: expenses partially offset by; a $31 million decrease in customer bad debt] expense.

[removed: Pre-tax] [added: Pretax] profit margin was [removed: 62%] [added: 57%] for the current [removed: year and 64% for] [added: year, down from 60% in] the prior year.

[removed: For the current year, total] [added: Total] DARTs for cleared and [removed: execution\-only customers decreased 3%] [added: execution-only customers, for the current year, increased 115%] to [removed: 833 thousand,] [added: 1.79 million] compared to [removed: 862] [added: 833] thousand for the prior year.

[removed: Corporate:] In connection with our currency diversification strategy [removed: (i.e., GLOBALs)] as of December 31, [removed: 2019,] [added: 2020,] approximately [removed: 30%] [added: 27%] of our equity was denominated in currencies other than the U.S. dollar.

In the current year, our currency diversification strategy [removed: decreased] [added: increased] our comprehensive earnings by [removed: $36] [added: $105] million (compared to a decrease of [removed: $99] [added: $36] million in the prior year), as the U.S. dollar value of the GLOBAL [removed: decreased] [added: increased] by approximately [removed: 0.06%,] [added: 1.45%,] compared to its value as of December 31, [removed: 2018.][added: 2019.]

The effects of our currency diversification strategy are reported as (1) a component of other income (loss of [removed: $60] [added: $19] million) in the consolidated [removed: statement] [added: statements] of comprehensive income and (2) other comprehensive income (“OCI”) (gain of [removed: $24] [added: $124] million) in the consolidated [removed: statement] [added: statements] of financial condition and the consolidated [removed: statement] [added: statements] of comprehensive income.

[removed: Net Revenues][added: | Adjusted net revenues | | | | | | | | | |]

In [added: 2020,] 2019, [removed: 2018,] and [removed: 2017] [added: 2018] we generated [added: 29%,] 33%, [removed: 32%,] and 32%, respectively, of commissions from operations conducted internationally.

[removed: *Interest] [added: |] Income [removed: and Interest Expense*][added: tax expense | | | 77 | | | 68 | | | 71 |]

We earn interest on [removed: customer funds segregated in safekeeping accounts; on customer borrowings on margin,] [added: margin lending to customers] secured by marketable securities these customers hold with us; from our investments in U.S. and foreign government securities; from borrowing and lending securities; and on deposits [added: (in positive interest rate currencies)] with banks.

We pay interest on cash balances [added: (in sufficiently positive interest rate currencies)] customers hold with us; for borrowing and lending securities; and on our borrowings.

A [removed: primary] component of other income is foreign currency gains and losses from our currency diversification strategy.

A discussion of our approach to managing foreign currency exposure is contained in Part II, Item 7A of this Annual Report on Form 10-K entitled “Quantitative and Qualitative Disclosures about Market Risk.” [added: Other income also consists of gains (losses) from principal transactions, gains (losses) from our equity method investments, and other revenue not directly attributable to our core business offerings.]

[removed: Other income accounted for approximately 6%, 8%, and 20% of our total net revenues for] [added: For] the years ended December 31, [added: 2020,] 2019, [added: and] 2018, [added: $5 million, $19 million] and [removed: 2017,] [added: $21 million were reported in other income,] respectively.

[removed: Non\-Interest Expenses][added: | Total non-interest expenses | | | 962 | | | 780 | | | 707 |]

We are an automated global electronic broker.

COVID-19 Pandemic

In March 2020, the World Health Organization recognized the outbreak of the COVID-19 caused by a novel strain of the coronavirus as a pandemic.

The pandemic affects all countries in which we operate.

The response of governments and societies to the COVID-19 pandemic, which includes temporary closures of certain businesses; social distancing; travel restrictions, “shelter in place” and other governmental regulations; and reduced consumer spending due to job losses, has significantly impacted market volatility in the financial, commodities and energy markets, and general economic conditions.

The COVID-19 pandemic has precipitated unprecedented market conditions with equally unprecedented social and community challenges.

Amid these challenges:

The Company is committed to ensuring the highest levels of service to its customers so they can effectively manage their assets, portfolios and risks.

The Company’s technical infrastructure has withstood the challenges presented by the extraordinary volatility and increased market volume.

The Company can run its business from alternate office locations and/or remotely if a Company office must temporarily close due to the spread of the COVID-19 pandemic.

As announced on April 9, 2020, during the second quarter of 2020 the Company donated $5 million to assist efforts to provide food and support for people affected by the COVID-19 pandemic in the United States as well as to advance medical solutions.

The effects of the COVID-19 pandemic on the Company’s financial results for 2020 can be summarized as follows: (1) higher commission revenue due to increased trading activity and a higher rate of customer accounts opened during this period; and (2) lower net interest income resulting from lower benchmark interest rates.

The impact of the COVID-19 pandemic on the Company’s future financial results could be significant but currently cannot be quantified, as it will depend on numerous evolving factors that currently cannot be accurately predicted, including, but not limited to, the duration and spread of the pandemic; its impact on our customers, employees and vendors; governmental actions in response to the pandemic; and the overall impact of the pandemic in the economy and society; among other factors.

Any of these events could have a materially adverse effect on the Company’s financial results.

2020 was a unique year, as the onset of the COVID-19 pandemic, together with unpredictable geopolitical events, created great uncertainty and volatility in the world’s financial markets.

U.S. market volatility rose in 2020 over the prior year, with particularly high volatility in the first half of the year as the pandemic took hold.

Fears about economic collapse were especially strong in the first quarter of 2020, as global markets fell and the S&P 500 declined 20%.

Central banks turned to monetary easing to buffer their national economies from a pandemic-induced downturn.

In March, the U.S. Federal Reserve adopted a near-zero interest rate policy and other countries maintained or reduced rates to zero and below.

Following on the heels of the initial panic was a worldwide surge of interest in financial markets, particularly equity markets, as people following stay-at-home guidelines opened brokerage accounts for investing and trading.

Equity market indices, which had fallen in the first quarter as the scope of the pandemic became known, responded to this surge in new participants and most indices rose over the remainder of the year.

North American and Asian markets recovered more strongly than those in Europe, which may have been negatively affected by the final negotiations around Brexit.

A more active trading environment worldwide coincided with higher volatility, with the average Chicago Board Options Exchange Volatility Index (“VIX®”) up 89% in the fourth quarter of 2020, compared to the year-ago quarter.

In 2020, higher volatility, in combination with strong customer account growth, led to significant increases in trading volume.

The resulting boost to commission revenues was tempered by a decline in net interest income.

In this environment, with near-zero interest rates and rising asset values in actively-trading markets, customer account growth was robust.

Total customer accounts increased 56% in 2020 to over 1.07 million.

*Interest Rates.* The U.S. Federal Reserve reduced the target federal funds rate to near-zero in March of 2020, mirroring rates in most other currencies, which generally ranged from near-zero to negative.

Partially offsetting these factors in 2020 were higher average customer credit balances, up 28%, higher average margin lending, up 9%, reduced interest expense due to lower rates, and strong securities lending activity and other financing activities.

In total, our net interest income fell 19% compared to 2019.

In the fourth quarter of 2019, we introduced the reporting of non-GAAP financial measures, which excludes certain items that may not be indicative of our core operating results and business outlook.

Pursuant to the requirements of Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, “Segment Reporting,” we performed a quantitative and a qualitative assessment of our business and determined that our remaining market making activities no longer support our reporting of separate business segments.

Accordingly, effective the first quarter of 2020, we discontinued the reporting of separate business segments.

Since our decision to wind down our market making activities, management has continued to shift its focus to growing and strengthening our electronic brokerage business.

We believe the elimination of segment reporting aligns our financial reporting with our business strategy and management’s focus on the electronic brokerage business.

The remaining market making activity is now reported as a component of “principal transactions,” which is included in other income in the consolidated statements of comprehensive income.

Effective the first quarter of 2020, we also changed the presentation of our consolidated statements of comprehensive income to better align with our business strategy.

Previously reported amounts have been adjusted to conform with the new presentation.

The financial highlights for the current year were:

Commission revenue showed strong growth, increasing $406 million, or 58%, from the prior year on higher customer trading volume within an active trading environment worldwide.

We are an automated global electronic broker and market maker (although, we have substantially exited our options market making business - see Note 2 – “Discontinued Operations and Costs Associated with Exit or Disposal Activities” to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K).

Our primary assets are our ownership of approximately 18.5% of the membership interests of IBG LLC, the current holding company for our businesses, and our controlling interest and related contractual rights as the sole managing member of IBG LLC.

The remaining approximately 81.5% of IBG LLC membership interests are held by Holdings, a holding company that is owned by our founder and Chairman, Mr. Thomas Peterffy and his affiliates, management and other employees of IBG LLC, and certain other members.

The IBG LLC membership interests held by Holdings will be subject to purchase by us over time in connection with offerings by us of shares of our common stock.

Business Segments

We report our results in two operating business segments, electronic brokerage and market making (being discontinued).

These segments are analyzed separately as these are the two principal business activities from which we derive our revenues and to which we allocate resources.

We offer our customers access to all classes of tradable, primarily exchange\-listed products, including stocks, options, futures, forex, bonds, mutual funds and ETFs traded on more than 135 electronic exchanges and market centers in 33 countries and in 25 currencies seamlessly around the world.

*Market Making*.

As previously announced, we transferred our U.S. options market making operations to Two Sigma Securities, LLC effective September 29, 2017 and also exited the majority of our options market making activities outside the U.S. by December 31, 2017.

During 2019, we exited our Canadian market making operations.

We intend to continue conducting certain proprietary trading activities in stocks and related instruments to facilitate our electronic brokerage customers’ trading in products such as ETFs, ADRs, CFDs and other financial instruments, as well as exchange-traded market making activities in a few select markets outside of the U.S. However, we do not expect the remaining activity to be of sufficient size as to require reporting as a separate segment in the future.

During 2019, U.S. market volatility was generally lower than in the prior year, amid greater optimism about global economic growth and continued monetary easing by central banks.

Equity market indices around the globe were predominantly up, led by the U.S., where the S&P 500 index rose 29%.

U.S. interest rates were lowered three times by the Federal Reserve in 2019, nearly reversing all the rate hikes of the prior year, while trends in benchmark rates of other currencies were mixed.

In 2019, lower volatility led to decreases in trading volume, notably in the U.S., as our customers’ trading activity, which is sensitive to overall market trends, showed declines.

In an improving market environment, with mainly lower interest rates and rising asset values, customer account growth was robust, with total customer accounts increasing 15% from 2018 to 690 thousand.

Further, U.S. volumes decreased in exchange-listed futures by 19% and in equities by 20%, due to the decline in volatility among other factors.

*Interest Rates.* The U.S. Federal Reserve conducted a series of reductions in the target federal funds rate in 2019, with rate cuts in July, September and October, while rates in other currencies were mixed.

Lower rates also reduce our interest expense, as we pass along the reduced interest rate to our customers.

Because we pay among the highest rates in the brokerage industry on qualified customer cash balances, and charge among the lowest rates on margin borrowings, we attract customers who seek to maximize their yields and minimize their costs.

We believe our low rates on margin borrowings and high yields on qualified cash balances are important factors that attract customers to our platform.

While the interest we pay on customer cash balances and the interest we earn on customer margin loans is based on fixed spreads around benchmark rates, additional net interest income is earned on lower or non-interest-bearing customer balances, e.g., on securities accounts with less than $100,000 in equity, and on rising balances.

Electronic brokerage net interest income grew 17%, compared to 2018.

Higher net interest income was due to rising average customer credit balances, up 9% in 2019, in part due to an inflow of new accounts, along with expanded prime broker financing and strong securities lending activity.

This was partly offset by average customer margin loan balances decreasing 9%, due to our customers’ reduced appetite for leverage as compared to 2018.

See the “Non-GAAP Financial Measures” section below in this Item 7 for additional details.

Net revenues increased 4%, mainly from a 17% increase in net interest income, driven by higher average Federal Funds rates and higher average customer credit balances; partially offset by a 9% decrease in commissions, primarily driven by lower options and futures contract and stock share volumes and a 3% decrease in other income led by lower net mark-to-market gains on our U.S. government securities portfolio and lower risk exposure fees.

Customer accounts grew 15% and customer equity increased 36% from the prior year.

As previously disclosed, over an extended period in 2018, a small number of our brokerage customers had taken relatively large positions in a security listed on a major U.S. exchange.

We extended margin loans against the security at a conservatively high collateral requirement.

In December 2018, within a very short timeframe, this security lost a substantial amount of its value.

The customer accounts were well margined and at December 31, 2018 they had incurred losses but had not fallen into any deficits.

During the quarter ended March 31, 2019, subsequent price declines in the stock caused these accounts to fall into deficits, despite our efforts to liquidate the customers’ positions.

During the year ended December 31, 2019, we recognized a net aggregate loss of approximately $42 million.

The maximum aggregate loss, which would occur if the security’s price fell to zero and none of the debts were collected, would be approximately $50 million.

The ultimate effect of this incident on our results will depend upon market conditions and the outcome of our debt collection efforts.

Market Making*:* For the current year, income before income taxes in our market making segment decreased $4 million, or 12%, to $30 million compared to the prior year, driven by lower trading gains, partially offset by higher net interest income and lower operating costs on the remaining operations.

In the third quarter of 2017, we completed the transfer of our U.S. options market making business to Two Sigma Securities, LLC and by the end of 2017 we had exited the majority of our market making activities outside the U.S. Pursuant to the agreement with Two Sigma Securities, LLC, we have the opportunity for future income from an earn-out agreement, based on the performance of the options market making business under Two Sigma Securities, LLC’s control.

Under the agreement, we would earn a share of any U.S. profits after variable costs and other agreed-upon costs for three years; and a separate share of any non-U.S. profits after variable costs for four years.

Generally, we incur trading\-related market risk as a result of [removed: activities in the] [added: our remaining] market making [removed: segment,] [added: activities,] where the substantial majority of our Value\-at\-Risk (“VaR”) for market risk exposures is generated.

Our risk management policies are developed and implemented by our [removed: Chairman and our] steering committee, which is [added: chaired by our Chief Executive Officer and] comprised of senior executives of our various [removed: companies.][added: operating subsidiaries.]

[removed: Our] [added: The strategy of our remaining] market making [removed: strategy] [added: activities] is to calculate quotes a few seconds ahead of the market and execute small trades at a tiny but favorable differential as a result.

This [added: strategy] is made possible by our proprietary pricing model, which evaluates and monitors the risks inherent in our portfolio, assimilates external market data and reevaluates the outstanding quotes in our portfolio many times per second.

Although our [added: remaining] market making [removed: is] [added: activities are] completely automated, the trading process and our risk are monitored by a team of individuals who, in real time, observe various risk parameters of our consolidated positions.

The resulting foreign currency gains or losses are reported in IBKRFS’ income statement and, as translated into U.S. dollars for U.S. GAAP purposes, in our consolidated [removed: statement] [added: statements] of comprehensive income as a component of other income.

At the end of each accounting period, IBKRFS’ net worth is translated at the then prevailing exchange rate into U.S. dollars and the resulting translation gain or loss is reported as OCI in our consolidated [removed: statement] [added: statements] of financial condition and consolidated [removed: statement] [added: statements] of comprehensive income.

Our risk management systems incorporate cash forex to hedge our currency exposure at little or no [removed: cost throughout each day on a continuous basis.][added: cost.]

The majority of currency spot positions held as part of our currency diversification strategy are regularly transferred to the parent holding company, IBG LLC, where they are [removed: held and reported in the corporate segment.][added: held.]

The U.S. dollar value of the GLOBAL [removed: decreased 0.06%] [added: increased 1.45%] as of December 31, [removed: 2019] [added: 2020] compared to December 31, [removed: 2018.][added: 2019.]

As of December 31, [removed: 2019,] [added: 2020,] approximately [removed: 30%] [added: 27%] of our equity was denominated in currencies other than the U.S. dollar.

| | | | | | GLOBAL in | | | | % of | Net Equity | | | [added: New] | | [added: |] GLOBAL in | | | | % of | Net Equity | | | CHANGE in | |

| Currency | | Composition | FX Rate | | USD Equiv. | | | | Comp. | (in USD millions) | | | [added: Composition |] FX Rate | | USD Equiv. | | | | Comp. | (in USD millions) | | | % of Comp. | |

| USD | | 0.68 | | 1.0000 | | | 0.680 | | 70.3% | | $ | [removed: 5,031] [added: 5,586] | [added: 0.72] | [added: |] 1.0000 | | | [removed: 0.680] [added: 0.720] | | [removed: 70.3%] [added: 73.4%] | | $ | [removed: 5,586] [added: 6,610] | | [removed: 0.0%] [added: 3.1%] |

| GBP | | 0.02 | | [removed: 1.2760] [added: 1.3261] | | | [removed: 0.026] [added: 0.027] | | [removed: 2.6%] [added: 2.7%] | | | [removed: 189] [added: 218] | [added: 0.02] | [removed: 1.3261] | [added: 1.3666] | | [added: |] 0.027 | | [removed: 2.7%] [added: 2.8%] | | | [removed: 218] [added: 251] | | [removed: 0.1%] [added: 0.0%] |

| HKD | | 0.14 | | [removed: 0.1277] [added: 0.1284] | | | 0.018 | | [removed: 1.8%] [added: 1.9%] | | | [removed: 132] [added: 147] | [added: 0.04] | [removed: 0.1284] | [added: 0.1290] | | [removed: 0.018] | [added: 0.005] | [removed: 1.9%] | [added: 0.5%] | | [removed: 147] | [added: 41] | [removed: 0.0%] | [added: \-1.4% |]

| INR | | 1.10 | | [removed: 0.0144] [added: 0.0140] | | | [removed: 0.016] [added: 0.015] | | 1.6% | | | [removed: 117] [added: 126] | [added: 1.10] | [removed: 0.0140] | [added: 0.0137] | | [added: |] 0.015 | | [removed: 1.6%] [added: 1.5%] | | | [removed: 126] [added: 138] | | [removed: 0.0%] [added: \-0.1%] |

| CHF | | 0.02 | | [removed: 1.0190] [added: 1.0334] | | | [removed: 0.020] [added: 0.021] | | 2.1% | | | [removed: 151] [added: 170] | [added: 0.02] | [removed: 1.0334] | [added: 1.1298] | | [removed: 0.021] | [added: 0.023] | [removed: 2.1%] | [added: 2.3%] | | [removed: 170] | [added: 208] | [removed: 0.0%] | [added: 0.2% |]

| CAD | | 0.02 | | [removed: 0.7332] [added: 0.7699] | | | 0.015 | | [removed: 1.5%] [added: 1.6%] | | | [removed: 108] [added: 127] | [added: 0.02] | [removed: 0.7699] | [added: 0.7853] | | [removed: 0.015] | [added: 0.012] | [removed: 1.6%] | [added: 1.2%] | | [removed: 127] | [added: 108] | [removed: 0.1%] | [added: \-0.4% |]

| AUD | | 0.02 | | [removed: 0.7052] [added: 0.7017] | | | 0.014 | | 1.5% | | | [removed: 104] [added: 115] | [added: 0.02] | [removed: 0.7017] | [added: 0.7693] | | [removed: 0.014] | [added: 0.012] | [removed: 1.5%] | [added: 1.2%] | | [removed: 115] | [added: 106] | [removed: 0.0%] | [added: \-0.3% |]

| MXN | | 0.17 | | [removed: 0.0509] [added: 0.0528] | | | 0.009 | | 0.9% | | | [removed: 64] [added: 74] | [added: \-] | [removed: 0.0528] | [added: \-] | | [removed: 0.009] | [added: \-] | [removed: 0.9%] | [added: 0.0%] | | [removed: 74] | [added: \-] | [removed: 0.0%] | [added: \-0.9% |]

| SEK | | 0.05 | | [removed: 0.1129] [added: 0.1068] | | | [removed: 0.006] [added: 0.005] | | 0.6% | | | [removed: 42] [added: 44] | [added: \-] | [removed: 0.1068] | [added: \-] | | [removed: 0.005] | [added: \-] | [removed: 0.6%] | [added: 0.0%] | | [removed: 44] | [added: \-] | [removed: 0.0%] | [added: \-0.6% |]

| NOK | | 0.03 | | [removed: 0.1157] [added: 0.1139] | | | 0.003 | | 0.4% | | | [removed: 26] [added: 28] | [added: \-] | [removed: 0.1139] | [added: \-] | | [removed: 0.003] | [added: \-] | [removed: 0.4%] | [added: 0.0%] | | [removed: 28] | [added: \-] | [removed: 0.0%] | [added: \-0.4% |]

| DKK | | 0.02 | | [removed: 0.1536] [added: 0.1501] | | | 0.003 | | 0.3% | | | [removed: 23] [added: 25] | [added: \-] | [removed: 0.1501] | [added: \-] | | [removed: 0.003] | [added: \-] | [removed: 0.3%] | [added: 0.0%] | | [removed: 25] | [added: \-] | [removed: 0.0%] | [added: \-0.3% |]

| | | | | | | | 0.967 | | 100.0% | | $ | [removed: 7,156] [added: 7,940] | | | | | [removed: 0.967] | [added: 0.981] | [added: |] 100.0% | | $ | [removed: 7,940] [added: 9,003] | | 0.0% |

The effects of our currency diversification strategy appear in two places in the consolidated financial statements: (1) as a component of other income in the consolidated [removed: statement] [added: statements] of comprehensive income and (2) as OCI in the consolidated [removed: statement] [added: statements] of financial condition and the consolidated [removed: statement] [added: statements] of comprehensive income.

The full effect of the GLOBAL is captured in the consolidated [removed: statement] [added: statements] of comprehensive income.

We had no variable\-rate debt outstanding as of December 31, [removed: 2019.][added: 2020.]

We pay our [removed: electronic brokerage] customers interest based on benchmark overnight interest rates in various currencies, [added: when interest rates are above a benchmark rate plus a small spread,] on cash balances above $10 thousand (or equivalent) in securities accounts holding more than $100 thousand and at lower, tiered rates for accounts holding less than $100 thousand (or equivalent) net asset value.

[removed: In addition, the mark-to-market changes in the value] of these fixed rate securities will be reflected in other income, instead of net interest income.

Based on customer balances and investments outstanding as of December 31, [removed: 2019,] [added: 2020,] and assuming reinvestment of maturing instruments in instruments of short-term duration, an unexpected increase of 0.25% over current U.S. dollar interest rate levels would increase our net interest income by approximately [removed: $20] [added: $98] million over the first year and [removed: $22] [added: $103] million on an annualized basis, assuming the full effect of reinvestment at higher rates.

Based on customer balances and investments outstanding as of December 31, [removed: 2019,] [added: 2020,] and assuming reinvestment of maturing instruments in instruments of short-term duration, an unexpected decrease in U.S. dollar interest rates of 0.25% would decrease our net interest income by approximately [removed: $17] [added: $54] million over the first year and [removed: $22] [added: $56] million on an annualized basis, assuming the full effect of reinvestment at lower rates.

We also face interest rate risk due to positions carried [removed: in] [added: for] our [added: remaining] market making [removed: business] [added: activities] to the extent that long or short stock positions may have been established for future or forward dates on options or futures contracts and the value of such positions are impacted by interest rates.

We face dividend risk in our [added: remaining] market making [removed: business] [added: activities] as we derive revenues and incur expenses in the form of dividend income and expense, respectively, from our inventory of equity securities, and must make payments in lieu of dividends on short positions in equity securities within our portfolio.

As of December 31, [removed: 2019,] [added: 2020,] we had [removed: $31.3] [added: $39.3] billion in margin loans extended to our customers.

Our Risk Management Committee [removed: continuously] [added: continually] monitors and evaluates our risk management policies, including the implementation of policies and procedures to enhance the detection and prevention of [removed: theoretical] [added: potential] events to mitigate margin loan losses.

[removed: Our one\-day VaR is defined as the unrealized loss in portfolio value that, based on] historically observed market risk factors, would have been exceeded with a frequency of one percent, based on a calculation with a confidence interval of 99%.

The VaR calculation simulates the performance of the portfolio based on several years of [removed: the] daily price changes of the underlying assets and determines the VaR as the calculated loss that occurs at the 99th percentile.

| Market Risk Category | | | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | | [removed: 2019] [added: 2020] | | | [removed: 2019] [added: 2020] |

| Equities and [removed: Currencies] [added: currencies] (2) | | $ | 7 | | $ | 7 | | $ | [removed: 7] [added: 8] | | $ | [removed: 8] [added: 9] |

| | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | As of 12/31/2019 | | | | | | | | | | | As of 12/31/2020 | | | | | | | | | | |

| EUR | | 0.09 | | 1.1213 | | | 0.101 | | 10.4% | | | 829 | 0.09 | | 1.2216 | | | 0.110 | | 11.2% | | | 1,009 | | 0.8% |

| JPY | | 4.41 | | 0.0092 | | | 0.041 | | 4.2% | | | 333 | 3.91 | | 0.0097 | | | 0.038 | | 3.9% | | | 348 | | \-0.3% |

| CNH | | 0.10 | | 0.1437 | | | 0.014 | | 1.5% | | | 118 | 0.13 | | 0.1538 | | | 0.020 | | 2.0% | | | 184 | | 0.6% |

Change in the Composition of the “GLOBAL”

As a result of a periodic assessment, we decided to reduce the number of currencies in the GLOBAL and realign the relative weights of each component to better reflect the global diversification of our business going forward.

We removed the Danish krone (DKK), the Mexican peso (MXN), the Norwegian krone (NOK), and the Swedish krona (SEK).

The new composition contains 10 currencies, down from 14 in the prior composition.

The new composition took effect as of the close of business on June 30, 2020 and the conversion to the new targeted currency holdings took place shortly thereafter.

In addition, the mark-to-market changes in the value

Our one\-day VaR is defined as the unrealized loss in portfolio value that, based on

‎

| | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | As of 12/31/2018 | | | | | | | | | | As of 12/31/2019 | | | | | | | | | | |

| EUR | | 0.09 | | 1.1467 | | | 0.103 | | 10.7% | | | 763 | | 1.1213 | | | 0.101 | | 10.4% | | | 829 | | \-0.2% |

| JPY | | 4.41 | | 0.0091 | | | 0.040 | | 4.2% | | | 298 | | 0.0092 | | | 0.041 | | 4.2% | | | 333 | | 0.0% |

| CNH | | 0.10 | | 0.1456 | | | 0.015 | | 1.5% | | | 108 | | 0.1437 | | | 0.014 | | 1.5% | | | 118 | | 0.0% |

We custody and service accounts for hedge and mutual funds, [added: exchange traded funds (“ETFs”),] registered investment advisors, proprietary trading groups, introducing brokers and individual investors.

We specialize in routing orders while striving to achieve best executions and processing trades in stocks, options, futures, foreign exchange instruments (“forex”), bonds, mutual funds and [removed: exchange traded funds (“ETFs”)] [added: ETFs] on more than 135 electronic exchanges and market centers around the world.

Abroad, we conduct our business through offices located in Canada, the United Kingdom, [added: Ireland,] Luxembourg, Switzerland, [added: Hungary,] India, China (Hong Kong and Shanghai), Japan, [added: Singapore,] and Australia.

As of December 31, [removed: 2019,] [added: 2020,] we had [removed: 1,643] [added: 2,033] employees worldwide.

IBG, Inc. is a holding company whose primary asset is the ownership of approximately [removed: 18.5%] [added: 21.8%] of the membership interests of IBG [removed: LLC (the “Group”),] [added: LLC,] the current holding company for our businesses.

Within the time periods required by SEC and the Nasdaq Stock Market [removed: LLC] [added: LLC’s Global Select Market] (“Nasdaq”), we will post on our website any amendment to the Code of Business Conduct and Ethics and any waiver applicable to any executive officer, director or senior financial officer.

Our Investor Relations Department can be contacted at Interactive Brokers Group, Inc., Two Pickwick Plaza, Greenwich, Connecticut 06830, Attn: Investor Relations, [removed: telephone: 203\-618\-4070,] e\-mail: investor\-relations@interactivebrokers.com.

[removed: Description automatically generated](https://www.sec.gov/Archives/edgar/data/1381197/000138119720000006/ibkr-20191231x10kg001.jpg)][added: ]

Our primary assets are our ownership of approximately [removed: 18.5%] [added: 21.8%] of the membership interests of IBG LLC, the current holding company for our businesses, and our controlling interest and related contractual rights as the sole managing member of IBG LLC.

The remaining approximately [removed: 81.5%] [added: 78.2%] of IBG LLC membership interests are held by IBG Holdings LLC (“Holdings”), a holding company that is owned directly and indirectly by our founder and Chairman, Mr. Thomas Peterffy and his affiliates, management and other employees of IBG LLC, and certain other members.

The table below presents the amount of IBG LLC membership interests held by IBG, Inc. and Holdings as of December 31, [removed: 2019.][added: 2020.]

From 2011 through [removed: 2019,] [added: 2020,] the Company issued [removed: 15,417,157] [added: 28,127,765] shares of common stock (with a fair value of [removed: $506] [added: $1,115] million) to Holdings in exchange for an equivalent number of shares of member interests in IBG LLC.

Capitalizing on our proprietary [removed: technology originally developed for our market making business,] [added: technology,] our systems provide our customers with the capability to monitor multiple markets around the world simultaneously and to execute trades electronically in these markets at a low cost in multiple products and currencies from a single trading account.

Since [added: the] launching [removed: this] [added: of our electronic brokerage] business in 1993, we have grown to [removed: approximately 690 thousand] [added: over 1.07 million] institutional and individual brokerage customers.

We provide our customers with what we believe to be one of the most effective and efficient electronic brokerage platforms in the [removed: industry, which includes advanced order management, trade execution and portfolio management.][added: industry.]

No single customer represented more than 1% of our commissions in [removed: 2019.][added: 2020.]

*IBKR LiteSM* [removed: is a new offering that] provides unlimited commission-free trades on U.S. exchange-listed stocks and ETFs as well as low cost access to global markets without required account minimums or inactivity fees to participating U.S. customers.

*Interactive Brokers Debit Mastercard®* \- Interactive Brokers Debit Mastercard® allows customers to spend and borrow directly against their account at lower [added: interest] rates than credit cards, personal loans and home equity lines of credit, with no monthly minimum payments and no late fees.

*Bill Pay* – Our Bill Pay program allows customers to make electronic or check payments to almost any company or individual in the U.S. [removed: It] [added: The service] can be configured for one-time or recurring payments and permits customers to schedule future payments.

*Direct [added: Deposit and Mobile Check] Deposit* – Our Direct Deposit program allows customers to automatically deposit paychecks, pension distributions and other recurring payments to their (non-retirement) brokerage account with us.

*Fractional Trading* – Fractional Trading allows customers to buy and sell using [added: either] a [added: specified] cash [removed: quantity] [added: amount] or fractional shares, which are stock units that amount to less than one full share.

This [removed: new] functionality allows customers to purchase as little as [removed: $1] [added: $1.00] of almost any U.S. stock, experiment with trading and investing without committing substantial sums of money, and learn about building and rebalancing diversified portfolios.

When away from their main workstations, customers are able to access their accounts through our [removed: IB WebTraderSM or MobileTraderSM interfaces] [added: IBKR Mobile platforms] for a seamless experience.

*Trade Desk -* We offer broker\-assisted trading through our block trade desk, which is ideal when customers are away from their [removed: computer;] [added: computer,] and through our corporate bond desk, for times when large customer orders need access to more liquidity than is currently available electronically.

*IB Risk NavigatorSM* [removed: *-*] [added: –] We offer free to all customers our real\-time market risk management platform that unifies exposure across multiple asset classes around the globe.

Predefined reports allow the summarization of a portfolio from different risk perspectives, [removed: and allow] [added: providing] views of Exposure, Value at Risk (“VaR”), Delta, Gamma, Vega and Theta, profit and loss and position quantity [removed: measures for the different portfolio views.][added: measures.]

The system also offers the customer the ability to modify positions through “what\-if” scenarios that show hypothetical changes to the risk [removed: summary.][added: profile.]

*Portfolio [removed: Builder -*] [added: Builder* –] Portfolio Builder allows our customers to set up an investment strategy based on research and rankings from top buy-side providers and fundamental data; use filters to define the universe of equities that will comprise their strategy and back-test their strategy using up to three years of historical performance; work in hypothetical mode to adjust the strategy until the historical performance meets their standards; [removed: and] [added: and,] with the click of a [removed: button] [added: button,] let the system create the orders to invest in a strategy and track its performance in their portfolio.

*Mutual Fund/ETF Parser* [removed: *\-*] [added: –] The Parser categorizes the individual component stocks within mutual funds and [removed: ETFs.][added: ETFs, giving an accurate, granular picture of the overall exposure to asset classes, industry sectors and companies.]

*Interactive AnalyticsSM* *and IB Option AnalyticsSM* [removed: *-*] [added: –] We offer our customers state\-of\-the\-art tools, which include a customizable trading platform, advanced analytic tools and over 100 sophisticated order types and algorithms.

*Probability Lab®* *(Patent [removed: Pending) -*] [added: Pending)* –] The Probability Lab® provides customers with an intuitive, visual method to analyze market participants’ future stock price forecasts based on current option prices.

This tool compares a customer’s stock price forecast versus that of the [removed: market,] [added: market] and scans the entire option universe for the highest Sharpe ratio multi\-leg option strategies that take advantage of the customer’s forecast.

*Model Portfolios* [removed: *-*] [added: –] Model Portfolios offer advisors an efficient and time-saving approach to investing customer assets.

*IBKR Client Risk Profile* [removed: -] [added: –] IBKR Client Risk Profile is designed to help advisors determine the most suitable investments for their customers, based on each customer’s risk tolerance.

*White [removed: Branding -*] [added: Branding* –] Our large financial advisor and broker\-dealer customers may “white brand” our trading interface, account management and reports with their firm’s identity.

*Interactive Advisors* [removed: *(formerly known as IBKR Asset Management)*] – Interactive Advisors recruits registered financial advisors, vets them, analyzes their investment track records, and groups them by their risk profile.

[removed: Retail investors] [added: Investors] who are interested in having their individual accounts robo-traded are grouped by their risk and return preferences.

[removed: Retail investors] [added: Investors] can assign their accounts to be traded by one or more advisors.

[removed: Our] [added: The] strategy [added: of our remaining market making activities] is to calculate quotes [removed: at which supply and demand for] a [removed: particular security are likely to be in balance a] few seconds ahead of the market and execute small trades at [added: a] tiny but favorable [removed: differentials.][added: differential as a result.]

Together with the IB SmartRoutingSM system and our low execution costs, this approach reduces overall transaction costs to our [added: IBKR ProSM] customers and, in turn, increases our transaction volume and [removed: profits.][added: profits (customers who elect to use our IBKR LiteSM offering do not take advantage of our IB SmartRoutingSM technology).]

Interactive Brokers Group, Inc. (“IBG, Inc.” or the “Company”) is an automated global electronic broker.

| | Ownership % | 21.8% | | 78.2% | | 100.0% |

| | Membership interests | 90,780,444 | | 325,960,034 | | 416,740,478 |

Nature of Operations

We offer our customers access to all classes of tradable, primarily exchange\-listed products, including stocks, options, futures, forex, bonds, mutual funds and ETFs traded on more than 135 electronic exchanges and market centers in 33 countries and in 25 currencies seamlessly around the world.

The emerging complexity of multiple market centers has provided us with the opportunity to build and continually adapt our order routing software to secure excellent trade execution prices.

In addition, U.S. customers can use our Mobile Check Deposit to directly deposit checks drawn on a U.S. bank.

__________________________

*Mutual Fund Marketplace –* The Mutual Fund Marketplace offers our customers access to more than 37,000 no-load mutual funds worldwide, including over 8,300 no-transaction-fee funds from more than 380 fund families*.*

*Bonds Marketplace* – The Bonds Marketplace allows customers to search for the best yields from a vast universe of bonds from issuers in the Americas, Europe and Asia.

We provide direct market access at a low cost to a wide array of corporate, government and municipal securities.

Our customers obtain competitive bids and offers with low, transparent commissions and no hidden mark-ups.

*IBKR Campus –* IBKR Campus helps customers learn about the markets, products and tools available through our platforms.

IBKR Campus offers self-directed courses at the Traders’ Academy, live and recorded webinars, our Traders’ Insight market commentary blog, the IBKR Quant Blog, and our Student Trading Lab, which lets educators bring real-world trading experiences to their classroom.

Promotional offerings include:

*IBKR Refer A Friend Program* – Under the Refer A Friend program, we allow existing customers to refer friends and family to IBKR.

The referring customer can earn a flat fee payment of $200 while the new customer can receive up to $1,000 in IBKR stock.

The specific program details and eligibility requirements are described on our website.

PortfolioAnalyst also allows customers to link their investment, checking, savings, annuity, incentive plans and credit card accounts to understand their consolidated financial state and plan for the future.

*Environmental, social and governance (“ESG”) Tools*

*ESG Scores* – ESG scores from Refinitiv give customers a new set of tools for making investment decisions based on more than just financial factors.

Companies are scored along several dimensions, such as reducing emissions and supporting human rights, and customers can easily see how companies rank both overall and on each dimension.

*Impact Dashboard* – The Impact Dashboard allows customers to evaluate and invest in companies that align with their values.

Customers can select the values they care about from a list ranging from clean air to consumer safety and racial equality, and measure how both individual securities and their overall portfolio measure up against their criteria.

*Goal Tracker* \- Interactive Advisors' Goal Tracker projects the hypothetical performance of a portfolio and monitors how likely it is the portfolio might achieve the goal.

Customers can adjust inputs, such as monthly contribution amount, goal target date, or the cost or outflow associated with the goal, to estimate the likelihood of achieving a goal.

*IBKR Allocation Order Tool* – The IBKR Allocation Order Tool streamlines the creation, execution and allocation of group orders.

The tool provides advisors with a single screen to enter trade allocations quickly across many customer accounts, advisors or strategies; allocate total quantity or cash quantity for user-specified values proportionally or equally; and modify orders or allocations on the fly.

*ESG Impact Profile* - The ESG Impact Profile helps advisors understand customer preferences for socially responsible and impact investing.

Advisors’ customers can select personal investment criteria from thirteen impact values and principles and exclude investments based on ten categories.

securities lending and short stock availability;

All new

Human Capital

As of December 31, 2020, we had 2,033 full-time employees worldwide.

Our goal is to attract, develop and retain key employees to achieve our strategic objectives.

We offer a comprehensive benefits program, including stock incentives, to all of our employees and design our compensation programs to attract, retain and motivate employees.

Since our inception, we have been driven to transforming the electronic brokerage business through innovation, with software development, product improvement, expansion of products and geographies, and management focus dedicated to this mission.

“know your customer” requirements;

Our foreign subsidiaries are similarly regulated with regard to capital requirements in support of their brokerage activities.

| IB LLC | | $ | 5,122 | | $ | 674 | | $ | 4,448 |

Interactive Brokers Group, Inc. (“IBG, Inc.” or the “Company”) is an automated global electronic broker and market maker (although, we have substantially exited the options market making business - see Note 2 - Discontinued Operations and Costs Associated with Exit or Disposal Activities to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K).

Our activities are divided into two principal business segments: electronic brokerage and market making (being discontinued).

For a description of these segments and the products and services they provide, refer to “Business Segments” below in this Item 1.

![A close up of a map

___________________________

(1)In connection with redemption transactions in 2018, as of December 31, 2019, IBG Holdings LLC held for sale for the benefit of certain of its members 869,135 shares of IBG, Inc. Class A common stock, representing an additional 0.21% of the voting interests in IBG, Inc.

| | Ownership % | 18.5% | | 81.5% | | 100.0% |

| | Membership interests | 76,759,595 | | 338,670,642 | | 415,430,237 |

Business Segments

*Electronic Brokerage*

Electronic brokerage represented 97% of net revenues and 98% of income before income taxes from electronic brokerage and market making combined during 2019.

Our brokerage system features unique architectural aspects that may impose a significant barrier to entry for firms wishing to compete in this business and permit us to compete favorably against our competitors.

New promotional offerings this year included:

*BET, LEARN, WIN Promotion* – During 2019 we launched our simulated sports betting exchange (“Simulated Exchange”) that operates as a simulated peer-to-peer market where participants can buy, sell and trade simulated bets on real sporting events.

As part of the launch, we are offering the first 2.2 million participants who open a Simulated Exchange account $1,000 in virtual currency for trading these contracts.

Winnings in Simulated Exchange accounts may be converted, by eligible participants, into up to $100 worth of IBKR shares, on a one-time basis, upon opening of a brokerage account with us.

This promotion is intended to teach participants about the probabilistic nature of markets, trading and investing and to introduce new customers to our brokerage platform.

The promotion is scheduled to end on December 31, 2020 or when all awards are distributed, whichever occurs first.

*IBKR Welcome Shares Program* – We offer “Welcome Shares” of up to $1,000 in IBKR to friends of our satisfied customers.

We invite certain customers to refer their friends to open a new account, and those customers will be eligible to receive $1 worth of IBKR shares (capped at $1,000) for each $100 of net deposits into their account during the first year.

Our customers making the referral are not eligible to receive any IBKR shares or other monetary benefit under this program.

Customers can get an accurate, granular picture of their overall exposure to asset classes, industry sectors and companies.

*Market Making*

Market making represented 3% of net revenues from electronic brokerage and market making combined during 2019.

As previously announced, we transferred our U.S. options market making operations to Two Sigma Securities, LLC effective September 29, 2017 and also exited the majority of our options market making activities outside the U.S. by December 31, 2017.

During 2019, we discontinued our market making activities in Canada.

We intend to continue conducting certain proprietary trading activities in stocks and related instruments to facilitate our electronic brokerage customers’ trading in products such as ETFs, ADRs, CFDs and other financial instruments, as well as exchange-traded market making activities in a few select markets outside of the U.S. However, we do not expect the facilitation activity to be of sufficient size as to require reporting as a separate segment in the near future.

‎As a market maker, we provide liquidity by offering competitively tight bid/offer spreads over a broad base of tradable, exchange\-listed products, including equity derivative products, equity index derivative products, equity securities and futures.

As principal, we commit our own capital and derive revenues or incur losses from the difference between the price paid when securities are bought and the price received when those securities are sold.

Historically, our profits have been principally a function of transaction volume and price volatility of electronic exchange\-traded products rather than the direction of price movements.

Other factors, including the ratio of actual to implied volatility and shifts in foreign currency exchange rates, can also have a meaningful impact on our results, as described further in “Business Environment” in Part II, Item 7 of this Annual Report on Form 10\-K.

Because we provide continuous bid and offer quotations and we are continuously both buying and selling quoted securities, we may have either a long or a short position in a particular product at a given point in time.

As a matter of practice, we will generally not take portfolio positions in either the broad market or the financial instruments of specific issuers in anticipation that prices will either rise or fall.

Our entire portfolio is evaluated many times per second and continuously rebalanced throughout the trading day, thus minimizing the risk of our portfolio at all times.

This real\-time rebalancing of our portfolio, together with our real\-time proprietary risk management system, enables us to curtail risk and trade efficiently.

Our quotes are based on our proprietary model rather than customer order flow.

As of December 31, 2019, we continued to conduct market making operations in India through our subsidiary, Interactive Brokers (India) Private Limited (“IBI”), which is a member of the National Stock Exchange of India Ltd. and the Bombay Stock Exchange; and in Hong Kong through our subsidiary, Interactive Brokers Hong Kong Limited (“IBHK”), a member of the cash and derivatives markets of the Hong Kong Exchange.

All other options market making operations we previously conducted were discontinued.

We expect to continue assessing whether and when to discontinue the remaining operations.

The above trading activities take place on exchanges, and all securities and commodities that we trade are cleared by exchange owned or authorized clearing houses.

In the current era of [removed: dramatically] heightened regulatory scrutiny of financial institutions, we have incurred increased compliance costs, along with the industry as a whole.

We receive [removed: thousands of] [added: many] regulatory inquiries each year in addition to being subject to frequent regulatory examinations.

We are currently the subject of [removed: active or dormant] regulatory inquiries regarding subjects including, but not limited to: audit trail reporting, trade reporting, best execution and order execution procedures, short sales, margin lending, anti\-money laundering or potentially manipulative trading by customers, procedures for [removed: transfers and trading of U.S. Micro-Cap securities, procedures for] accounts managed by independent financial advisors or referred by third parties, technology development practices, [added: record-keeping,] business continuity planning and other topics of recent regulatory interest.

For more information regarding pending and threatened legal actions and proceedings see Note 14 - “Commitments, Contingencies, and Guarantees” to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

‎ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

PART II

The following contains information regarding potentially material pending litigation and pending regulatory inquiries.

*Trading Technologies Matter*

On February 3, 2010, Trading Technologies International, Inc. (“Trading Technologies”) filed a complaint in the U.S. District Court for the Northern District of Illinois, Eastern Division, against IBG LLC and IB LLC (“Defendants”).

The complaint, as amended, alleges that the Defendants have infringed and continue to infringe twelve U.S. patents held by Trading Technologies.

Trading Technologies is seeking, among other things, unspecified damages and injunctive relief.

The Defendants filed an answer to Trading Technologies’ amended complaint, as well as related counterclaims.

The Defendants deny Trading Technologies’ claims, assert that the asserted patents are not infringed and are invalid, and assert several other defenses as well.

The asserted patents were the subject of petitions before the United States Patent and Trademark Office (“USPTO”) seeking Covered Business Method Review (“CBM Review”).

The USPTO Patent Trial Appeal Board (“PTAB”) found all claims of ten of the twelve asserted patents to be invalid.

Of the remaining two patents, 53 of the 56 claims of one patent were held invalid and the other patent survived CBM Review proceedings.

Appeals were filed by either Defendants or Trading Technologies on all PTAB determinations.

The United States Court of Appeals for the Federal Circuit vacated the CBM Review determinations of invalidity for four patents, concluding that these patents were not eligible for CBM Review.

The District Court trial with respect to these four patents is scheduled for May 2020; however, the parties have filed a motion with the District Court to move the trial to November 2020.

While it is difficult to predict the outcome of the matter, the Company believes it has meritorious defenses to the allegations made in the complaint and intends to defend itself vigorously against them.

However, litigation is inherently uncertain and there can be no guarantee that the Company will prevail or that the litigation can be settled on favorable terms.

*Class Action Matter*

On December 18, 2015, a former individual customer filed a purported class action complaint against IB LLC, IBG, Inc., and Thomas Frank, PhD, the Company’s Executive Vice President and Chief Information Officer, in the U.S. District Court for the District of Connecticut.

The complaint alleges that the purported class of IB LLC’s customers were harmed by alleged “flaws” in the computerized system used to close out (i.e., liquidate) positions in customer brokerage accounts that have margin deficiencies.

The complaint seeks, among other things, undefined compensatory damages and declaratory and injunctive relief.

On September 28, 2016, the District Court issued an order granting the Company’s motion to dismiss the complaint in its entirety, and without providing plaintiff leave to amend.

On September 28, 2017, plaintiff appealed to the United States Court of Appeals for the Second Circuit.

On September 26, 2018, the Court of Appeals affirmed the dismissal of plaintiff’s claims of breach of contract and commercially unreasonable liquidation but vacated and remanded back to the District Court plaintiff’s claims for negligence.

On November 30, 2018, the plaintiff filed a second amended complaint.

The Company filed a motion to dismiss the new complaint on January 15, 2019, which was denied on September 30, 2019.

On December 9, 2019, the Company filed a motion requesting that the District Court certify to the Connecticut Supreme Court two questions of Connecticut law directly relevant to the motion to dismiss.

Briefing has only recently been completed, and the District Court has not yet ruled on the motion.

Regardless of the outcome of this motion, the Company does not believe that a purported class action is appropriate given the great differences in portfolios, markets and many other circumstances surrounding the liquidation of any particular customer’s margin deficient account.

IB LLC and the related defendants intend to continue to defend themselves vigorously against the case and, consistent with past practice in connection with this type of unwarranted action, any potential claims for counsel fees and expenses incurred in defending the case may be fully pursued against the plaintiff.

*Regulatory Matters*

The Company is currently providing information to the Financial Industry Regulatory Authority (“FINRA”), the SEC, the Commodities and Futures Trading Commission (“CFTC”) and the United States Department of Justice focused on anti-money laundering and Bank Secrecy Act practices.

The Company periodically reviews these practices to make them more robust and to keep pace with changing regulatory standards, and the Company has been enhancing and augmenting its procedures and personnel in these areas over the past several years.

While the outcome of the examinations and inquiries currently in progress cannot be predicted, the Company does not believe that they are likely to have a materially adverse effect on its results of operations.

Most often, regulators do not inform us as to when and if an inquiry has been concluded.

For the year ended December 31, [removed: 2019][added: 2020]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non\-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer”,] “smaller reporting company” [added: and “emerging growth company”] in Rule 12b\-2 of the Exchange Act.

The aggregate market value of the voting and non\-voting common equity stock held by non\-affiliates of the registrant was approximately [removed: $4,032,724,571] [added: $3,155,276,668] computed by reference to the [removed: $54.20] [added: $41.77] closing sale price of the common stock on the [removed: Investors Exchange LLC,] [added: Nasdaq Global Select Market,] on June [removed: 28, 2019,] [added: 30, 2020,] the last business day of the registrant’s most recently completed second fiscal quarter.

As of February 25, [removed: 2020,] [added: 2021,] there were [removed: 76,750,794] [added: 90,780,441] shares of the issuer’s Class A common stock, par value $0.01 per share, outstanding and 100 shares of the issuer’s Class B common stock, par value $0.01 per share, outstanding.

Documents Incorporated by Reference: Portions of Registrant’s definitive proxy statement for its [removed: 2020] [added: 2021] annual meeting of shareholders are incorporated by reference in Part III of this Form 10\-K.

ANNUAL REPORT ON FORM 10\-K FOR THE YEAR ENDED DECEMBER 31, [removed: 2019][added: 2020]

| ITEM 1A | | [Risk Factors](#RiskFactors) | [removed: 17] [added: 16] |

| ITEM 4 | | [Mine Safety Disclosures](#MineSafety) | [removed: 28] [added: 27] |

| ITEM 5 | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#MarketForCommonEquity) | [removed: 29] [added: 28] |

| ITEM 7 | | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#MDA) | [removed: 33] [added: 30] |

| ITEM 7A | | [Quantitative and Qualitative Disclosures about Market Risk](#MarketRisk) | [removed: 57] [added: 51] |

| ITEM 8 | | [Financial Statements and Supplementary Data](#FinancialStatements) | [removed: 62] [added: 56] |

| ITEM 9 | | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#ChangesAndDisagreements) | [removed: 107] [added: 97] |

| ITEM 9A | | [Controls and Procedures](#ControlsAndProcedures) | [removed: 107] [added: 97] |

| ITEM 9B | | [Other [removed: Information](#OtherInformation)] [added: Information](#Other_Information)] | [removed: 109] [added: 99] |

| ITEM 10 | | [Directors, Executive Officers and Corporate Governance](#DirectorsOfficers) | [removed: 109] [added: 99] |

| ITEM 11 | | [Executive Compensation](#ExecutiveCompensation) | [removed: 109] [added: 99] |

| ITEM 12 | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#BeneficialOwners) | [removed: 109] [added: 99] |

| ITEM 13 | | [Transactions with Related Persons, Promoters and Certain Control Persons](#TransactionsRelatedPersons) | [removed: 109] [added: 99] |

| ITEM 14 | | [Principal Accountant Fees and Services](#AccountantFees) | [removed: 109] [added: 99] |

| ITEM 15 | | [Exhibits and Financial Statement Schedules](#Exhibits) | [removed: 111] [added: 101] |

| ITEMS 15 (a)(1) and 15 (a)(2) | | [Index to Financial Statements and Financial Statement Schedule](#Index) | [removed: 112] [added: 102] |

| ITEM 16 | | [10-K Summary](#Summary_10K) | [removed: 112] [added: 102] |

[removed: - general] [added: general] economic conditions in the markets where we operate;

[removed: - increased] [added: increased] industry competition and downward pressures on electronic brokerage commissions and on bid/offer spreads in the remaining market making business we operate;

[removed: - risks] [added: risks] inherent to the electronic brokerage and market making businesses;

[removed: - implied] [added: implied] versus actual price volatility levels of the products in which we continue to make markets;

[removed: - the] [added: the] general level of interest rates;

[removed: - failure] [added: failure] to protect or enforce our intellectual property rights in our proprietary technology;

[removed: - our] [added: our] ability to keep up with rapid technological change;

[removed: - system] [added: system] failures, cyber security threats and other disruptions;

[removed: - non\-performance] [added: non\-performance] of third\-party vendors;

[removed: - conflicts] [added: conflicts] of interest and other risks due to our ownership and holding company structure;

[removed: - the] [added: the] loss of key executives and failure to recruit and retain qualified personnel;

[removed: - the] [added: the] risks associated with the expansion of our business;

[removed: - our] [added: our] possible inability to integrate any businesses we acquire;

[removed: - the] [added: the] impact of accounting standards issued but not yet adopted;

[removed: - compliance] [added: compliance] with laws and regulations, including those relating to the securities industry; [removed: and]

[removed: - other] [added: other] factors discussed under “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10\-K or elsewhere in this Annual Report on Form 10\-K.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its

audit report.

Yes x No o

the impact of the Coronavirus Disease 2019 (“COVID-19”) pandemic and the measures implemented to contain the spread of the virus; and

| ITEM 6 | | [Selected Financial Data](#SelectedFinancialData) | 31 |

We lease office and data center facilities in [removed: 24] [added: 25] cities throughout the world where we conduct our operations as set forth below.

The table below presents certain information with respect to our leased facilities as of December 31, [removed: 2019.][added: 2020.]

| | Other [removed: (7] [added: (9] locations) | 28,662 | | Office space and data center | | |

| | Zug, Switzerland | 25,009 | | Office space [added: and data center] | | |

| | Tallinn, Estonia | [removed: 11,010] [added: 12,731] | | Office space | | |

| | Other [removed: (4] [added: (5] locations) | [removed: 19,980] [added: 26,016] | | Office space | | |

| | Hong Kong | [removed: 17,565] [added: 21,776] | | Office space and data center | | |

| | Other (4 locations) | [removed: 19,741] [added: 13,113] | | Office space | | |

Unless otherwise indicated, all properties are used by both our electronic brokerage and market making segments.

Interactive Brokers Group Inc.’s Class A common stock trades under the symbol “IBKR” on [removed: the Nasdaq Stock Market LLC.][added: Nasdaq.]

As of February [removed: 24,] [added: 19,] 2020, there were [removed: seventeen] [added: 23] holders of record, which does not reflect those shares held beneficially or those shares held in “street” name.

The graph below compares cumulative total stockholder return on our common stock, the S&P 500 Index and the Nasdaq Financial\-100 Index from December 31, [removed: 2014] [added: 2015] to December 31, [removed: 2019.][added: 2020.]

The comparison assumes $100 was invested on December 31, [removed: 2014] [added: 2015] in our common stock and each of the foregoing indices and assumes reinvestment of dividends before consideration of income taxes.

][added: 1](https://www.sec.gov/Archives/edgar/data/1381197/000138119721000008/ibkr-20201231x10kg002.jpg)]

[removed: (1)The] [added: The] Nasdaq Financial\-100 Index includes 100 of the largest domestic and international financial securities listed on The Nasdaq Stock Market based on market capitalization.

[removed: (2)The] [added: The] S&P 500 Index includes 500 large cap common stocks actively traded in the U.S. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock markets, the New York Stock Exchange and Nasdaq.

On [removed: October 7, 2019,] [added: July 27, 2020,] the Company filed a Prospectus Supplement on Form 424B (File Number [removed: 333-219552)] [added: 333-240121)] with the SEC to register up to [removed: 1,000,000] [added: 990,000] shares of common stock, offering the opportunity for eligible persons to receive awards in the form of [added: an offer to receive] such shares by participating in one or more promotions that are designed to attract new customers to the Company’s brokerage platform, increase assets held with the Company’s brokerage [removed: subsidiaries] [added: business] and enhance customer loyalty.

The table below presents information about shares of common stock available for future awards under all the Company’s equity compensation plans as of December 31, [removed: 2019.][added: 2020.]

| approved by security holders | N/A | | N/A | | [removed: 4,659,381] [added: 3,520,149] |

On August 20, 2020 and October 30, 2020, the Company filed a Prospectus Supplement on Form 424B5 with the SEC to issue 1,000,000 shares and 11,710,608 shares, respectively, of common stock (with a fair value of $52 million and $557 million, respectively) in exchange for an equivalent number of shares of member interests in IBG LLC.

The acquired shares were distributed in-kind to the members of Holdings who elected to redeem a portion of their Holdings membership interests.

Mr. Thomas Peterffy and his affiliates elected to redeem 10,000,000 Holdings shares and received 10,000,000 shares of our common stock as part of this redemption.

These common shares are being sold daily in open market transactions pursuant to, and subject to the limitations in, one or more Rule 10b5-1 plans and SEC Rule 144.

It is expected that Mr. Thomas Peterffy and his affiliates will effectuate future redemptions of Holdings shares and continue selling our common stock at a rate of approximately 20,000 shares per trading day on a going forward basis, although that cannot be assured.

As a consequence of these redemption transactions, and distribution of shares to employees, IBG, Inc.’s interest in IBG LLC has increased to approximately 21.8%, with Holdings owning the remaining 78.2% as of December 31, 2020.

The redemptions also resulted in an increase in the Holdings interest held by Mr. Thomas Peterffy and his affiliates from approximately 84.6% at the IPO to approximately 89.6% as of December 31, 2020.

See Note 4 – “Equity and Earnings per Share” and Note 10 – “Employee Incentive Plans” to the financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

| Total | — | | — | | 3,520,149 |

As of December 31, 2019, the Company has issued 10,000 shares to IBG LLC for distribution to eligible customers of certain of its subsidiaries.

Assuming all shares were issued, IBG, Inc.’s interest in IBG LLC would increase from 18.5% to 18.7%.

| Total | — | | — | | 4,659,381 |

| [Report of Independent Registered Public Accounting Firm](#Audit_Opinion) | [removed: 63] [added: 57] |

| [Consolidated Statements of Financial Condition as of December 31, [removed: 2019] [added: 2020] and [removed: 2018](#BalanceSheet)] [added: 2019](#BalanceSheet)] | [removed: 65] [added: 59] |

| [Consolidated Statements of Comprehensive Income for the years ended December 31, [added: 2020,] 2019, [removed: 2018,] and [removed: 201](#IS)7] [added: 20](#IS)18] | [removed: 66] [added: 60] |

| [Consolidated Statements of Cash Flows for the years ended December 31, [added: 2020,] 2019, [removed: 2018,] and [removed: 2017](#StatementOfCashFlows)] [added: 2018](#StatementOfCashFlows)] | [removed: 67] [added: 61] |

| [Consolidated Statements of Change in Equity for the years ended December 31, [added: 2020,] 2019, [removed: 2018,] and [removed: 201](#SSE)7] [added: 201](#SSE)8] | [removed: 68] [added: 62] |

| [Notes to Consolidated Financial Statements](#FinancialStatementNotes) | [removed: 69] [added: 63] |

We have audited the accompanying consolidated statements of financial condition of Interactive Brokers Group, Inc. and subsidiaries (the "Company") as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 28, 2020,] [added: 26, 2021,] expressed an unqualified opinion on the Company's internal control over financial reporting.

The Company is subject to income taxes in both the U.S. and [removed: numerous] [added: various] foreign jurisdictions.

[removed: This required a high degree of audit judgment and an increased effort, including the need to involve our income tax specialists when performing] [added: Performing] audit procedures to evaluate the reasonableness of management’s interpretation of tax law in [removed: multiple countries,] [added: various foreign jurisdictions,] and its estimate of the associated provisions, tax charges, and uncertain tax [removed: positions.][added: positions required a high degree of auditor judgment and increased effort, including the need to involve our income tax specialists.]

We tested the [removed: design and] operating effectiveness of controls over income tax [removed: balances,] [added: balances and disclosures,] including the provision for income taxes, deferred tax assets and liabilities (including valuation allowance) and unrecognized tax benefits.

\-Evaluating the Company’s income tax provision calculation, including testing the appropriateness of income tax rates applied and of income allocations among the taxing jurisdictions, [removed: application of the provisions in the Tax Act,] and the mathematical accuracy of the calculation.

| (in millions, except share [added: or per share] amounts) | | [added: 2020 | | |] 2019 | | | 2018 | |

| Cash and cash equivalents | | [removed: $] | [added: 4,292 | | |] 2,882 | | [removed: $] | 2,597 |

| Cash [removed: -] segregated for regulatory purposes | | | [added: 15,903 | | |] 9,400 | | | 7,503 |

| Securities - segregated for regulatory purposes | | | [removed: 17,824] [added: 27,821] | | | [removed: 15,595] [added: 17,824] |

| Securities borrowed | | | [removed: 3,916] [added: 4,956] | | | [removed: 3,331] [added: 3,916] |

| Securities purchased under agreements to resell | | | [removed: 3,111] [added: 792] | | | [removed: 1,242] [added: 3,111] |

| Financial instruments owned | | | [removed: 1,755] [added: 544] | | | [removed: 1,931] [added: 1,755] |

| Financial instruments owned and pledged as collateral | | | [removed: 161] [added: 86] | | | [removed: 188] [added: 161] |

| Total financial instruments owned, at fair value | | | [removed: 1,916] [added: 630] | | | [removed: 2,119] [added: 1,916] |

| Customers, less allowance for [removed: doubtful accounts] [added: credit losses] of [removed: $86] [added: $17] and [removed: $42] [added: $86] as of December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] | | | [removed: 31,304] [added: 39,333] | | | [removed: 27,017] [added: 31,304] |

| Brokers, dealers and clearing organizations | | | [removed: 685] [added: 1,254] | | | [removed: 706] [added: 685] |

| Interest | | | [removed: 158] [added: 104] | | | [removed: 141] [added: 158] |

| Total receivables | | | [removed: 32,147] [added: 40,691] | | | [removed: 27,864] [added: 32,147] |

| Other assets | | | [removed: 480] [added: 594] | | | [removed: 296] [added: 480] |

| Total assets | | $ | [removed: 71,676] [added: 95,679] | | $ | [removed: 60,547] [added: 71,676] |

| Short-term borrowings | | $ | [removed: 16] [added: 118] | | $ | [removed: 17] [added: 16] |

| Securities loaned | | | [removed: 4,410] [added: 9,838] | | | [removed: 4,037] [added: 4,410] |

| Securities sold under agreements to repurchase | | | [removed: 1,909] [added: —] | | | [removed: —] [added: 1,909] |

| Financial instruments sold, but not yet purchased, at fair value | | | [removed: 457] [added: 153] | | | [removed: 681] [added: 457] |

| Customers | | | [removed: 56,248] [added: 75,882] | | | [removed: 47,993] [added: 56,248] |

| Brokers, dealers and clearing organizations | | | [removed: 220] [added: 182] | | | [removed: 298] [added: 220] |

| Affiliate | | | [removed: 152] [added: 199] | | | [removed: 171] [added: 152] |

| Accounts payable, accrued expenses and other liabilities | | | [removed: 295] [added: 298] | | | [removed: 153] [added: 295] |

| Interest | | | [removed: 29] [added: 6] | | | [removed: 41] [added: 29] |

| Total payables | | | [removed: 56,944] [added: 76,567] | | | [removed: 48,656] [added: 56,944] |

| Total liabilities | | | [removed: 63,736] [added: 86,676] | | | [removed: 53,391] [added: 63,736] |

| Class A – Authorized - 1,000,000,000, Issued - [removed: 76,889,040] [added: 90,909,889] and [removed: 75,230,400] [added: 76,889,040] shares, Outstanding – [removed: 76,750,110] [added: 90,773,105] and [removed: 75,100,952] [added: 76,750,110] shares as of December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] | | | 1 | | | 1 |

\-Evaluating the Company’s disclosures related to the provision for income taxes, deferred tax assets and liabilities (including valuation allowance) and unrecognized tax benefits.

| Other fees and services | | | 175 | | | 141 | | | 148 |

| Total non-interest income | | | 1,346 | | | 854 | | | 974 |

| Total net interest income | | | 872 | | | 1,083 | | | 929 |

| Issuances of senior notes | | | 116 | | | — | | | — |

| Redemptions of senior notes | | | (20) | | | — | | | — |

| Cash, cash equivalents, and restricted cash at end of period | | $ | 20,195 | | $ | 12,282 | | $ | 10,100 |

| Issuance of common stock - Promotions | | 10,000 | | | | | | | | | (1) | | | | | | | | | (1) | | | 1 | | | — |

| Net distribution of common stock - IBKR Promotion | | | | | | | | | | | 1 | | | | | | | | | 1 | | | | | | 1 |

| Comprehensive income | | | | | | | | | | | | | | 195 | | | 26 | | | 221 | | | 1,082 | | | 1,303 |

| Balance, December 31, 2020 | | 90,909,889 | | $ | 1 | | $ | 1,244 | | $ | (3) | | $ | 683 | | $ | 26 | | $ | 1,951 | | $ | 7,052 | | $ | 9,003 |

In March 2020, the World Health Organization recognized the outbreak of the Coronavirus Disease 2019 (“COVID-19”) caused by a novel strain of the coronavirus as a pandemic.

The pandemic affects all countries in which the Company operates.

The response of governments and societies to the COVID-19 pandemic, which includes temporary closures of certain businesses; social distancing; travel restrictions, “shelter in place” and other governmental regulations; and reduced consumer spending due to job losses, has significantly impacted volatility in the financial, commodities and energy markets, and general economic conditions.

The effects of the COVID-19 pandemic on the Company’s financial results for 2020 can be summarized as follows: (1) higher commission revenue due to increased trading activity and a higher rate of customer accounts opened during this period; and (2) lower net interest income resulting from lower benchmark interest rates.

The impact of the COVID-19 pandemic on the Company’s future financial results could be significant but currently cannot be quantified, as it will depend on numerous evolving factors that currently cannot be accurately predicted, including, but not limited to, the duration and spread of the pandemic; its impact on the Company’s customers, employees and vendors; governmental actions in response to the pandemic; and the overall impact of the pandemic in the economy and society; among other factors.

Any of these events could have significant accounting and financial reporting implications (i.e., reassessing accounting estimates related to credit losses, valuation of certain investments, deferred tax assets and contingency reserves).

The Company has reviewed its assumptions related to the above estimates and have not made any adjustments.

Consolidated Statements of Comprehensive Income and Operating Business Segment Presentation Changes

As previously disclosed in the Company’s Form 10-Q for the quarter ended March 31, 2017 and in subsequent filings, the Company intended to eliminate the reporting of separate operating business segments upon its determination that the continued wind-down of the Company’s market making activities rendered it no longer reportable as a business segment.

Pursuant to the requirements of FASB ASC Topic 280, “Segment Reporting,” the Company performed a quantitative and a qualitative assessment of its business and determined that its remaining market making activities no longer support the Company’s reporting of separate business segments.

Accordingly, effective the first quarter of 2020 the Company discontinued the reporting of separate business segments.

Since the Company’s decision to wind down its market making activities, management has continued to shift its focus to growing and strengthening the Company’s electronic brokerage business.

The Company believes the elimination of segment reporting aligns its financial reporting with its business strategy and management’s focus on the electronic brokerage business.

For each of the eight quarters during 2018 and 2019, the market making segment’s contribution to the Company’s consolidated net revenues, income before income taxes, and total assets did not exceed 7%, 4%, and 6%, respectively.

As a result, effective the first quarter of 2020, the Company modified the presentation of its segment financial information with retrospective application to all prior periods presented.

In addition, effective the first quarter of 2020, the Company changed the presentation of its consolidated statements of comprehensive income to better align with its business strategy.

As a result, the Company made the following reclassifications to amounts reported in its consolidated statements of comprehensive income for the years ended December 31, 2019 and 2018:

*Other fees and services* – reclassified $141 million and $148 million for the years ended December 31, 2019 and 2018 respectively, previously reported as other income to other fees and services, which includes market data fees, account activity fees, risk exposure fees, order flow income from options exchange-mandated programs, and revenues from other fees and services.

These items have been historically reported as a component of other income.

*Other income* – reclassified $27 million and $39 million for the years ended December 31, 2019 and 2018 respectively, previously reported as trading gains to other income as a component of “principal transactions.” Other income includes gains (losses) from principal transactions; the impact of the currency diversification strategy; gains (losses) from equity method investments; and other revenues not directly attributable to the Company’s core business offerings.

Previously reported amounts in the consolidated statements of comprehensive income and notes to the consolidated financial statements have been adjusted to conform to the current presentation.

Current Expected Credit Losses

On January 1, 2020, the Company adopted FASB ASC Topic 326 – “Financial Instruments – Credit Losses” (“ASC Topic 326”) which replaces the incurred loss methodology with the current expected credit loss (“CECL”) methodology.

The new guidance applies to financial assets measured at amortized cost, held-to-maturity debt securities and off-balance sheet credit exposures.

For on-balance sheet assets, an allowance must be recognized at the origination or purchase of in-scope assets and represents the expected credit losses over the contractual life of those assets.

Expected credit losses on off-balance sheet credit exposures must be estimated over the contractual period the Company is exposed to credit risk as a result of a present obligation to extend credit.

The Company adopted ASC Topic 326 using the modified retrospective approach for all in-scope assets, which did not result in an adjustment to the opening balance in retained earnings.

Results for reporting periods beginning after January 1, 2020 are presented under ASC Topic 326 while prior periods continue to be reported in accordance with previously applicable U.S. GAAP.

The impact to the current period is not material since the Company’s in-scope assets are primarily subject to collateral maintenance provisions for which the Company elected to apply the practical expedient of reporting the difference between the fair value of collateral and the amortized cost for the in-scope assets as the allowance for current expected credit losses.

| [Supplementary Data—Unaudited Quarterly Results](#SupplementaryData) | 105 |

February 28, 2020

Interactive Brokers Group, Inc. and Subsidiaries

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Trading gains | | | 27 | | | 39 | | | 40 |

| Total revenues | | | 2,580 | | | 2,366 | | | 1,927 |

| Balance, December 31, 2016 | | 68,119,412 | | $ | 1 | | $ | 775 | | $ | (3) | | $ | 203 | | $ | (2) | | $ | 974 | | $ | 4,846 | | $ | 5,820 |

| Comprehensive income | | | | | | | | | | | | | | 76 | | | 11 | | | 87 | | | 771 | | | 858 |

The Company operates in two business segments: electronic brokerage and market making, both supported by corporate.

The electronic brokerage business provides electronic execution and clearing services to customers worldwide.

The market making business currently consists of customer facilitation in products such as CFDs, ETFs and single stock futures, as well as exchange traded market making activities in a few select markets outside the U.S. (See Note 2 – Discontinued Operations and Costs Associated with Exit or Disposal Activities).

Corporate enables the Company to operate cohesively and effectively by providing support via development services and control functions to the business segments and also by executing the Company’s currency diversification strategy.

Discontinued Operations and Costs Associated with Exit or Disposal Activities

On March 8, 2017, the Company announced its intention to discontinue its options market making activities globally.

Additionally, as previously announced, on September 29, 2017 the Company completed the transfer of its U.S. options market making operations to Two Sigma Securities, LLC and recognized a gain on sale of $11 million, reflecting the recovery of exit costs, recorded in other

The Company also exited the majority of its market making activities outside of the U.S. by December 31, 2017 and will report discontinued operations if it meets the criteria under FASB Topic ASC 205-20, “Discontinued Operations.”

The Company recognized approximately $25 million in one-time restructuring costs during the year ended December 31, 2017.

The one-time restructuring costs included approximately $22 million of non-cash expenditures, consisting of impairment of the carrying value of certain exchange trading rights and stock-based compensation, included in general and administrative expenses and employee compensation and benefits, respectively, and $3 million of cash expenditures primarily related to severance costs for employee terminations, included employee compensation and benefits, in the consolidated statements of comprehensive income.

During the years ended December 31, 2019 and 2018, the Company did not incur any additional restructuring costs.

‎

| | | (in billions) | | | | |

| | | $ | 17.8 | | $ | 15.6 |

___________________________

| | | $ | 66 | | $ | 53 |

An operating lease right-of-use asset is initially measured at the

*Trading Gains*

Trading gains and losses are recorded on trade date and are reported on a net basis.

plans and estimates the Company is using to manage the underlying businesses.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, significantly revising the U.S corporate income tax law by, among other things, reducing the corporate income tax rate from 35% to 21% and implementing a modified territorial tax system that includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries (see Note 11).

| | | | | |

| Leases (Topic 842)‎‎*Issued February 2016* | | • All leases greater than one year must be recognized on the statements of financial condition by recording a lease right-of-use asset and a corresponding lease liability. ‎• Additional qualitative and quantitative leasing disclosures required. ‎ | | • Adopted January 1, 2019. ‎• For further information, refer to Note 12 – Leases. |

The Company’s trading activities include providing securities brokerage and market making services.

As a global electronic broker and market maker trading on exchanges around the world in multiple currencies, the Company is exposed to foreign currency risk.

| | Ownership % | 18.5% | | 81.5% | | 100.0% |

| | Membership interests | 76,759,595 | | 338,670,642 | | 415,430,237 |

In 2017, as a result of the reduction of the corporate rate from 35% to 21% under the Tax Act, the Company remeasured the Tax Receivable Agreement liability, payable to Holdings, resulting in the recognition of a $93 million gain which is reported in other income in the consolidated statements of comprehensive income.

This issuance of shares slightly increased the Company’s ownership in IBG LLC.

The

Assuming all shares were issued, IBG, Inc.’s interest in IBG LLC would increase from 18.5% to 18.7%.

| | | | | | | | | | | | | |

Management, including our CEO and our CFO, assessed the effectiveness of IBG, Inc.’s internal control over financial reporting as of December 31, [removed: 2019.][added: 2020.]

Based on management’s assessment and those criteria, management concluded that IBG, Inc. maintained effective internal control over financial reporting as of December 31, [removed: 2019.][added: 2020.]

No changes to our internal control over financial reporting for the year ended December 31, [removed: 2019] [added: 2020] have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial condition as of December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] and the related consolidated statements of comprehensive income, cash flows, and changes in equity for each of the three years in the period December 31, [removed: 2019] [added: 2020] , of the Company and our report dated February [removed: 28, 2020,] [added: 26, 2021,] expressed an unqualified opinion on those financial statements.

February 26, 2021

February 28, 2020

[removed: 1.Consolidated] [added: 1.Consolidated] Financial Statements

[removed: 2.Financial] [added: 2.Financial] Statement Schedule

[removed: 3.Exhibits][added: 3.Exhibits]

| 4.1 | [Description of the Registrant’s [removed: Securities](https://www.sec.gov/Archives/edgar/data/1381197/000138119720000006/ibkr-20191231xex4_1.htm).] [added: Securities](https://www.sec.gov/Archives/edgar/data/1381197/000138119721000008/ibkr-20201231xex4_1.htm).] |

| 21.1 | [Subsidiaries of the [removed: registrant.](https://www.sec.gov/Archives/edgar/data/1381197/000138119720000006/ibkr-20191231xex21_1.htm)] [added: registrant](https://www.sec.gov/Archives/edgar/data/1381197/000138119721000008/ibkr-20201231xex21_1.htm).] |

| 23.1 | [Consent of Independent Registered Public Accounting [removed: Firm.](https://www.sec.gov/Archives/edgar/data/1381197/000138119720000006/ibkr-20191231xex23_1.htm)] [added: Firm](https://www.sec.gov/Archives/edgar/data/1381197/000138119721000008/ibkr-20201231xex23_1.htm).] |

| 31.1 | [Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes\-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1381197/000138119720000006/ibkr-20191231xex31_1.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1381197/000138119721000008/ibkr-20201231xex31_1.htm).] |

| 31.2 | [Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes\-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1381197/000138119720000006/ibkr-20191231xex31_2.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1381197/000138119721000008/ibkr-20201231xex31_2.htm).] |

| 32.1 | [Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes\-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1381197/000138119720000006/ibkr-20191231xex32_1.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1381197/000138119721000008/ibkr-20201231xex32_1.htm).] |

| 32.2 | [Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes\-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1381197/000138119720000006/ibkr-20191231xex32_2.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1381197/000138119721000008/ibkr-20201231xex32_2.htm).] |

* Attached as Exhibit 101 to this Annual Report on Form 10\-K for the annual period ended December 31, [removed: 2019,] [added: 2020,] are the following materials formatted in iXBRL (Inline eXtensible Business Reporting Language) (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated [removed: Statement] [added: Statements] of Changes in Stockholders’ Equity and (v) Notes to the Consolidated Financial Statements tagged in detail levels 1\-4.

| [Condensed Statements of Financial Condition as of December 31, [removed: 2019] [added: 2020] and [removed: 2018](#PC_Balance_Sheet)] [added: 2019](#PC_Balance_Sheet)] | F - 2 |

| [Condensed Statements of Comprehensive Income for the Years ended December 31, [added: 2020,] 2019, [removed: 2018,] and [removed: 2017](#PC_Income_Statement)] [added: 2018](#PC_Income_Statement)] | F - 3 |

| [Condensed Statements of Cash Flow for the Years ended December 31, [added: 2020,] 2019, [removed: 2018,] and [removed: 2017](#PC_Cash_Flows)] [added: 201](#PC_Cash_Flows)8] | F - 4 |

We have audited the consolidated financial statements of Interactive Brokers Group, Inc. and subsidiaries (the “Company”) as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] and the Company’s internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] and have issued our reports thereon dated February [removed: 28, 2020;] [added: 26, 2021;] such consolidated financial statements and reports are included elsewhere in this Form 10-K.

| [removed: INTERACTIVE BROKERS] [added: INTERACTIVE BROKERS] GROUP, INC. | | | | | | |

| (in millions, except share amounts) | | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | |

| Cash and cash equivalents | | $ | [removed: 1] [added: 4] | | $ | 1 |

| Investments in subsidiaries, equity basis | | | [removed: 1,469] [added: 1,962] | | | [removed: 1,302] [added: 1,469] |

| Other assets | | | [removed: 143] [added: 205] | | | [removed: 152] [added: 143] |

| Total assets | | $ | [removed: 1,613] [added: 2,171] | | $ | [removed: 1,455] [added: 1,613] |

| Payable to affiliates | | $ | [removed: 152] [added: 199] | | $ | [removed: 171] [added: 152] |

| Accrued expenses and other liabilities | | | [removed: 9] [added: 21] | | | [removed: 2] [added: 9] |

| Class A – Authorized - 1,000,000,000, Issued - [removed: 76,889,040] [added: 90,909,889] and [removed: 75,230,400] [added: 76,889,040] shares, Outstanding – [removed: 76,750,110] [added: 90,773,105] and [removed: 75,100,952] [added: 76,750,110] shares as of December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] | | | 1 | | | 1 |

| Class B – Authorized, Issued and Outstanding – 100 shares as of December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] | | | — | | | — |

| Additional paid-in capital | | | [removed: 934] [added: 1,244] | | | [removed: 898] [added: 934] |

| Retained earnings | | | [removed: 520] [added: 683] | | | [removed: 390] [added: 520] |

| Accumulated other comprehensive income, net of income taxes [added: of] $0 and $0 as of December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] | | | [removed: —] [added: 26] | | | [removed: (4)] [added: —] |

| Treasury stock, at cost, [removed: 138,930] [added: 136,784] and [removed: 129,448] [added: 138,930] shares as of December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] | | | (3) | | | (3) |

| Total equity | | | [removed: 1,452] [added: 1,951] | | | [removed: 1,282] [added: 1,452] |

| Total liabilities and equity | | $ | [removed: 1,613] [added: 2,171] | | $ | [removed: 1,455] [added: 1,613] |

| (in millions) | | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | |

| Income (loss) before income from subsidiaries | | $ | [removed: (2)] [added: (3)] | | $ | [removed: 2] [added: (2)] | | $ | [removed: 92] [added: 2] |

| Undistributed gains of subsidiaries, net | | | [removed: 208] [added: 237] | | | [removed: 206] [added: 208] | | | [removed: 147] [added: 206] |

| Income tax expense | | | [removed: 45] [added: 39] | | | [removed: 39] [added: 45] | | | [removed: 163] [added: 39] |

| Net income | | $ | [removed: 161] [added: 195] | | $ | [removed: 169] [added: 161] | | $ | [removed: 76] [added: 169] |

| Net income available for common stockholders | | $ | [removed: 161] [added: 195] | | $ | [removed: 169] [added: 161] | | $ | [removed: 76] [added: 169] |