Financial Reliability

When using a broker for your investments, it is essential that your broker is reliable and can stand by, even in non profitable situations. We offer financial statements of Interactive Brokers LLC on our website for review.

Note that Interactive Brokers LLC and its associations are owned by IBG LLC.

Important strengths and security facts about Interactive Brokers LLC

  • On a consolidated basis, IBG LLC exceeds $8.1 billion in equity capital, over $6.0 billion in excess of regulatory requirements.
  • IBG LLC’s owners are our public company, Interactive Brokers Group, Inc. (18.5%) and the firm’s employees and their affiliates (81.5%). Unlike at most other firms, where management owns a relatively small share, we participate substantially in the downside just as much as in the upside. Because of this vested interest, we run our business conservatively.
  • We manage our brokerage and market making businesses in separate companies, which are registered with local securities and/or commodities regulators. We maintain strict systematic and procedural separation between the two business lines and we do not commingle or utilize client-segregated assets for proprietary operations. Although certain affiliates of IBKR trade for their own account, our client-facing businesses do not conduct proprietary trading. We have completed the winding down of the bulk of our market making operations.
  • We hold no material positions in over-the-counter securities or derivatives. We hold no CDOs, MBS or CDS.
  • Our positions are marked to market daily and the resulting payables/receivables are reconciled to outside sources automatically.
  • Our real-time margining system marks all client positions to market continuously.
  • All orders are credit vetted before being executed and positions in accounts with inadequate margin deposits are liquidated automatically.
  • IBG LLC reported $1.2 billion of pretax profit for 2019.
  • IBG LLC have no long-term debt.
  • Interactive Brokers LLC is rated ‘BBB+’; Outlook Positive by Standard & Poor’s

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Important Strength and Security Facts about Interactive Brokers LLC

How We Handle Client Assets

Client money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of clients of IBKR. This protection (the SEC term is “reserve” and the CFTC term is “segregation”) is a core principle of securities and commodities brokerage. By properly segregating the client’s assets, if no money or stock is borrowed and no futures positions are held by the client, then the client’s assets are available to be returned to the client in the event of a default by or bankruptcy of the broker.

A portion of client funds are typically invested in U.S. Treasury securities. Although permitted by CFTC regulations, given the credit concerns over foreign sovereign debt IBKR does not currently invest any client money in money market funds.

As a practice, IBKR holds an excess amount of its own money in these reserve and segregated accounts to ensure that there is more than enough cash to protect all clients.

Securities accounts with no borrowing of cash or securities

Securities client money is protected as follows:

  • A majority is invested in U.S. Treasury securities, including direct investments in Treasury bills,Treasury Notes and reverse repurchase agreements, where the collateral received is in the form of U.S. Treasury securities.These transactions are conducted with third parties and guaranteed through a central counterparty clearing house (Fixed Income Clearing Corp., a subsidiary of the Depository Trust & Clearing Corp.). The collateral remains in the possession
    of IBKR and held at a custody bank in a segregated Reserve Safekeeping Account for the exclusive benefit of clients. U.S. Treasury securities may also be pledged to a clearing house to support client margin requirements on securities options positions.
  • Client cash is maintained on a net basis in the reserve accounts, which reflects the long balances of some clients and loans to others. To the extent any one client maintains a margin loan with IBKR, that loan will be fully secured by stock valued at up to 140% of the loan. The security of the loan is enhanced by MEXEM’s conservative margin policies, which do not allow the borrower to correct a margin deficiency within days, as permitted by regulation. Instead, IBKR monitors and acts on a real-time basis to automatically liquidate positions and repay the loan. This brings the borrower back into margin compliance without putting IBKR and other clients at risk.
  • A portion is deposited primarily with large U.S. banks in special reserve accounts for the exclusive benefit of IBKR’s clients. These deposits are distributed across a number of banks with investment-grade ratings so that we can avoid a concentration risk with any single institution.No single bank holds more than 5% of total client funds held by IBKR. As of March 2020, the following banks held deposits from IBKR (this list is subject to change over time at IBKR’s discretion). Certain banks, which are affiliates or branches of foreign financial institutions, are subject to regulatory oversight by the Federal Reserve and the Office of the Comptroller of the Currency.
    • Branch Banking and Trust Company
    • Bank of the West
    • BMO Harris Bank, N.A.
    • Citizens Bank, N.A.
    • KeyBank National Association
    • Standard Chartered Bank
    • SunTrust Bank
    • The Bank of Nova Scotia
    • US Bank, N.A.

Current SEC regulations require broker-dealers to perform a detailed reconciliation of client money and securities (known as the “reserve computation”) at least weekly to ensure that client monies are properly segregated from the broker-dealer’s own funds. In order to further enhance our protection of our clients’ assets, Interactive Brokers sought and received approval from FINRA (the Financial Industry Regulatory Authority), to perform and report the reserve computation on a daily basis, instead of once per week. IBKR initiated daily computations in December 2011 along with daily adjustments of the money set aside in safekeeping for our clients. Reconciling our accounts and client reserves daily instead of weekly is just another way that Interactive Brokers seeks to provide state-of-the-art protection for our clients.

Client-owned, fully-paid securities are protected in accounts at depositories and custodians that are specifically identified for the exclusive benefit of clients. IBKR reconciles positions in securities owned by clients daily to ensure that these securities have been received at the depositories and custodians.

Click below for the Interactive Brokers Firm Specific Disclosure Document required by CFTC Rule 1.55(k).

Interactive Brokers LLC Firm Specific Disclosure Document pursuant to CFTC Rule 1.55(k) and NFA Rule 2-36(n)

Securities accounts with margin loans

For clients who borrow money from IBKR to purchase securities, IBKR is permitted by securities regulations to utilize for financing purposes up to 140% of the loan value of the stock these clients hold with IBKR. In simple terms, IBKR borrows money from a third party (such as a bank or broker-dealer), using the client’s margin stock as collateral, and it lends those funds to the client to finance the client’s margin purchases. Typically, IBKR lends out a small portion of the total stock it is permitted to lend out. When IBKR lends clients’ stock, it must put additional money into the special reserve accounts set aside for the benefit of clients.

Insured Bank Deposit Sweep Program

Under the Insured Bank Deposit Sweep Program, eligible IBKR clients can obtain up to $2,500,000 of FDIC insurance in addition to the existing $250,000 SIPC coverage for total coverage of $2,750,000. IBKR sweeps each participating client’s free credit balances daily to one or more banks, up to $246,500 per bank, allowing for the accrual of interest and keeping within the FDIC protected threshold. Cash balances above $2,750,000 remain subject to safeguarding under the SEC’s Customer Protection Rule 15c3-3, backed by the firm’s equity capital, which exceeds $8.1 billion.

Click below for more information about the Insured Bank Deposit Sweep Program and its benefits. https://www.interactivebrokers.com/en/index.php?f=27462

Investor Protection at MEXEM LLC versus Industry Standards

MEXEM takes a proactive approach to client protection. MEXEM determines the amount of cash and securities owed to clients daily and segregates funds for the exclusive benefit of clients, along with a large buffer. IBKR was the first broker-dealer approved by FINRA to calculate its client reserve obligation (under Rule 15c3-3) on a daily basis, while the industry standard is to perform this calculation on a weekly or monthly basis.

MEXEM enhanced client protection reduces the risk of clients not receiving a full refund in the event of the firm’s liquidation. At nearly all other broker-dealers, the amount owed to clients is determined weekly or monthly. This poses a risk to clients’ funds deposited in the interim, since those firms generally will only protect what was on deposit as of the last time a computation was performed. MEXEM determines what is owed to clients and sets aside funds to cover our obligations every business day. In the highly unlikely event of our dissolution, trustees would more easily be able to determine what is owed to each client. At other broker-dealers, trustees would have to re-create the past week of activity which, as evidenced by the Lehman bankruptcy, would substantially delay the remittance of assets.

MEXEM applies real-time risk margin requirements to client accounts, whereas most the rest of the industry applies end-of-day risk margin. If a client is deemed to have insufficient assets to cover the risk of their open positions, IBKR typically will perform real-time liquidations of their positions to return the account to margin compliance. Other broker-dealers often permit clients to carry this risk over multiple days.

MEXEM real-time risk margin requirement and protective liquidations greatly minimize our clients’ exposure to losses attributable to other clients’ trading, and the risk that client losses pose to MEXEM. The practice of other broker-dealers to calculate risk of the end of the day increases the likelihood that volatile market conditions could expose their clients to risk compared to IBKR clients in similar market conditions. Firms that do not impose real-time liquidations, and allow clients to promise to bring in funds at a future date to cover the risk,expose clients to the credit risk of other clients.

Another major benefit of doing business with MEXEM is that it does not carry any proprietary inventory. MEXEM solely acts as a facilitator for client trading and does not make any directional bets. Two of the most significant broker-dealer bankruptcies of the past decade (Lehman Brothers and MF Global) were caused by the risk generated from proprietary holdings.

Since MEXEM does not make proprietary bets, the risk of IBKR going bankrupt and client funds being tied up in a liquidation is significantly less than other broker-dealers that which take proprietary positions. Additionally, MEXEM clients do not have to worry about their broker making proprietary bets against them.

All broker-dealers are permitted to loan client securities (called “rehypothecation”) if a client borrows on margin. When MEXEM engages in rehypothecation of client securities, it sets aside 103% of the market value of client securities rehypothecated, on daily basis. Most other broker dealers set aside this money only once a week.

By setting aside client funds daily, MEXEM ensures that there is segregated cash in excess of the market value of securities rehypothecated to make clients whole. For other broker-dealers that only perform this calculation weekly, client funds and assets are subjected to an increased risk that the firm has not protected its clients for the intraweek use of client assets, which could result in losses to clients.

Similarly, unlike other broker-dealers, IBKR segregates cash daily to cover securities owed to clients that temporarily are not in a good control location 1. This is a common occurrence in the industry, known as a “segregation deficit”. Other broker-dealers may allow these deficits to persist for several days before taking required action.

MEXEM reduces clients’ risk by ensuring that the market value of all securities not designated in a good control location are properly segregated in cash on a daily basis. This allows MEXEM clients to retain a high level of confidence that it will properly segregate all of their assets. Many other broker dealers will carry the deficit for several days without taking any additional steps to protect clients.

Finally, MEXEM is not affiliated with a bank, which is unlike most comparably capitalized broker-dealers. Not being affiliated with a bank provides MEXEM , with a more stable platform for our clients should a marketwide crisis arise.

Broker-dealers affiliated with banks are subject to further supervision by banking regulators, which results in additional uncertainty as to who has rights to the assets in the event of a bankruptcy. Since MEXEM is not a bank, we believe clients’ assets would be returned in a more timely fashion than for bank- owned broker-dealers. Moreover, in a financial crises scenario, MEXEM’s financial resources would be dedicated solely to ensuring the continued smooth operations of the broker-dealer. Bank-affiliated broker-dealers, on the other hand, are capitalized by their bank affiliate, and are generally set-up as a subsidiary of a bank holding company affiliate. Unlike IBKR these bank-affiliated broker-dealers are not independent, self-capitalized entities adding a layer of additional risk for their clients. In a financial crisis those broker-dealers are competing with their banking affiliates for capital and liquidity. This could result in the capital being pulled out of the broker-dealer and funds being deployed at the affiliated banking entity to the detriment of brokerage clients. Lehman Brothers,and Bear Stearns are historical examples of entities that raided their broker-dealer affiliates for capital to try to save the banks, which were the root cause of their financial troubles.Both entities filed for bankruptcy. As a result, their clients experienced significant delays in accessing their assets and transferring them to an operational broker-dealer.

Indeed, during the height of the financial crisis, while clients were removing funds and equity from these bank- affiliated broker-dealers, those clients were depositing their assets with IBKR as a safe haven. As a result of IBKR’s strong financial position, client equity and client cash increased by 77% and 65% respectively from November 2008 November 2009.

Account Protection

Client securities accounts at IBKR LLC are protected by the Securities Investor Protection Corporation (“SIPC”) for a maximum coverage of $500,000 (with a cash sublimit of $250,000) and under IBKR LLC’s excess SIPC policy with certain underwriters at Lloyd’s of London 1 for up to an additional $30 million (with a cash sublimit of $900,000) subject to an aggregate limit of $150 million. Futures and options on futures are not covered. As with all securities firms, this coverage provides protection against failure of a broker-dealer, not against loss of market value of securities.

For the purpose of determining an IBKR LLC client account,accounts with like names and titles (e.g. John and Jane Smith and Jane and John Smith) are combined, but accounts with different titles are not (e.g. Individual/John Smith and IRA/John Smith).

SIPC is a non-profit, membership corporation funded by broker-dealers that are members of SIPC. For more information about SIPC and answers to frequently asked questions (such as how SIPC works, what is protected, how to file a claim, etc.), please refer to the following websites:

http://www.SIPC.org

https://www.finra.org/investors/have-problem/your-rights-under-sipc-protection

Client securities accounts at IBKR LLC are protected by the Securities Investor Protection Corporation (“SIPC”) for a maximum coverage of $500,000 (with a cash sublimit of $250,000) and under Interactive Brokers LLC’s excess SIPC policy with certain underwriters at Lloyd’s of London 1 for up to an additional $30 million (with a cash sublimit of $900,000) subject to an aggregate limit of $150 million. Futures and options on futures are not covered. As with all securities firms, this coverage provides protection against failure of a broker-dealer, not against loss of market value of securities.

For the purpose of determining an IBKR LLC client account, accounts with like names and titles (e.g. John and Jane Smith and Jane and John Smith) are combined, but accounts with different titles are not (e.g. Individual/John Smith and IRA/John Smith).

SIPC is a non-profit, membership corporation funded by broker-dealers that are members of SIPC. For more information about SIPC and answers to frequently asked questions (such as how SIPC works, what is protected, how to file a claim, etc.), please refer to the following websites:

 

Secure Login System

MEXEM is committed to protecting your account and your account assets from fraudulent practices. The Secure Login System provides an extra layer of security to your account at no charge1 through the use of a free physical security device or IBKR Mobile Authentication, our digital security application designed for smartphones. Although it requires an extra step when logging into your account, the simple practice of entering a randomly generated security code along with your username and password goes a long way toward protecting your account.

Consider this: if an Internet hacker or identity thief should somehow manage to obtain your MEXEM username and password, they WILL NOT be able to access your account without physical possession of your Secure Login System security device or full access to your smartphone. Benefits of the Secure Login System include:

  • The security device provides a layer of additional security to your IBKR account.
  • Participation in the program results in higher daily and weekly withdrawal limits.
  • If you have multiple accounts, you don’t need multiple devices. You can share a security device among multiple usernames registered to the same individual.

Temporary Mobile Two-Factor Authentication

During the account application process, you will be asked to confirm a mobile phone number to continue. This will enable two-factor security through SMS mobile phone messaging. MEXEM will send you a one-time passcode when you try to login.

The mobile two-factor authentication is temporary and will be removed once you activate one of the digital or physical security devices listed below.

Physical Security Devices

Click the link below to learn more about the IBKR physical security device:

Digital Security Card+ – Available to accounts with a balance greater than 500,000 USD, this card adds an extra layer of security through the use of a PIN number, a challenge code and a high count of possible code permutations.

MEXEM Mobile Authentication

MEXEM Mobile Authentication provides two-factor authentication for your IBKR account via our IBKR Mobile app downloaded to your Android or iOS mobile device. IBKR Mobile Authentication requires a PIN code or fingerprint to operate. You use your MEXEM Mobile Authentication alone or as an alternative to your existing physical security device.

How to Request a Security Device

  • New Clients – Register and confirm your mobile phone number or activate the IBKR Mobile Authentication –
    download the iOS version from the App Store or the Android version from Google Play. For detailed instructions, see IBKR Knowledge Base article KB2260.
  • Existing Clients – Accounts with equity above $500,000 may request a Digital Secure Card+ as a complementary device to their IBKR Mobile Authentication. To do that, please follow the instructions here.

When Will I Receive My Device?

We ship physical security devices every day. Projected delivery times range from several business days to several weeks, depending on your shipping address and local delivery options. MEXEM Mobile Authentication is downloaded from the App Store or Google Play.

Activation

Once you have received your physical security device, log into Account Management and follow the instructions here to activate your device.

MEXEM Mobile Authentication users must first install the application from the respective mobile application store. For detailed instructions, see MEXEM Knowledge Base article KB2260.

Once your security device or digital security app is activated, each time you log in to Account Management, TWS, WebTrader or MEXEM Mobile, you will be required to enter two authentication factors – your username and password combination and the security code generated by your device. When you successfully log in, your account will be secured with full perimeter coverage, protecting both your cash and positions from unauthorized access.

How to Request a Replacement Security Device

In the event that your physical security device has been lost, stolen or is inoperable, follow the instructions in IBKR Knowledge Base article KB1943.

Withdrawal Limits

Clients who participate in the Secure Login System enjoy enhanced withdrawal capabilities, while clients who do not participate are subject to daily and weekly withdrawal restrictions. The amount that a participating client may withdraw or transfer over a given one- or five-day period increases commensurate with the protective value of the device and is outlined in the table below.

Security DeviceMaximum Withdrawal per DayMaximum Withdrawal in 5 Business Days
None50K USD100K USD
SMS200K USD600K USD
MEXEM Mobile Authentication200K USD600K USD
Security Code Card*200K USD600K USD
Digital Security Card*1M USD1.5M USD
Digital Security Card+UnlimitedUnlimited
Platinum*/Gold*UnlimitedUnlimited
Notes:
*Represents a legacy device no longer being issued and in the process of being replaced with a version of the Digital Security Card. See IBKR Knowledge Base article KB975 for details.
[1] Please note that while IBKR imposes no fee to use a device, a replacement fee is associated with certain devices if lost, damaged or otherwise not returned should the account be closed.

How We Protect Your Account

From the moment you log in, our account protection features are there to ensure that your account remains secure.

Two-Feature Authentication

Feature One: In order to access an account, a unique username/ password is required.

Feature Two: Protected login System. Members receive a personal security device which supplies a randomly-generated security code. This code is used in coexistence with the username and password to access secure areas. Click here for more details.

Two-Feature Authentication

MEXEM limits account access following a defined number of failed login attempts

Automatic Logoff

We have built in an auto-logoff feature that logs you out of the application after a specified period of inactivity.

Secure Socket Layer

  • MEXEM deploys 2048-bit EV Certificates, TLS 128-bit or higher encryption to establish a secure connection and ensure the confidentiality and integrity of information passed between your computer and MEXEM. Activate SSL by checking the “Use SSL” box on the TWS login dialog. Using SSL may impact the performance of your PC depending on its capabilities.
  • Automated monitoring systems to ensure only strong encryption algorithms are used.
  • MEXEM enforces all website traffic to use encryption.

EV (Extended Validation) technology verifies that you are on a protected website.

Limit Login via IP Restrictions

Restrict access to TWS to a specific list of IP addresses. In cases where multiple traders have access to an account, these restrictions can be set at the individual trader level.

Statements

All statements are accessed through secure login to Account Management.

Statements

We employ state-of-the-art transaction monitoring systems and maintain a dedicated security team that is responsible for detecting suspicious activity. If an unusual or suspicious transaction is noted, a member of this team may contact you to confirm the validity of the transaction. If contacted, you will never be asked to provide your password and we encourage that you call back and request to speak to the security team employee via our toll free number 1–877-442-2757 in order to first confirm their identity. If you believe that your account has been compromised, you should notify IBKR immediately via our toll free number 1–(877)-442-2757.

Know the Threats

Spyware

This refers to software inadvertently downloaded from the Internet when you visit certain websites. Spyware covertly gathers information from your computer without your knowledge. Once installed, spyware monitors user activity on the Internet and transmits that information (including usernames and passwords) to an unauthorized recipient. You should install anti-spyware software on your computer to detect and remove spyware.

Phishing

Thieves use phishing to obtain sensitive information by masquerading as a trustworthy institution. Phishing is typically carried out via an email that contains a link to what appears to be an authentic website. These counterfeit sites prompt you to enter your personal information, which the thieves then use to access your accounts. Note that IBKR will never send an email requesting sensitive information such as your password or social security number. If you receive a suspicious email which identifies itself as originating from IBKR do not respond, andimmediately notify our security team by calling toll-free in the US at (877) 442-2757 or direct at (312) 542-6901.

Viruses, Worms & Trojan Horses

These malicious programs can cause severe and irreparable damage to your hardware, software or files, and in some cases can open your system to unauthorized access and possibly allow confidential information to be compromised. These programs, which differ on how they spread and replicate, are best controlled by first ensuring that your operating system is up-to-date and then installing anti-virus software,
making sure that you frequently download updates to obtain the latest fixes.

For further information about securing your home computer and protecting your privacy see:

CERT® Coordination Center Home Network Security
http://www.cert.org/tech_tips/home_networks.html

Security Focus – Securing Privacy, Part One: Hardware Issues
http://www.securityfocus.com/infocus/1568

Security Focus – Securing Privacy, Part Two: Software Issues
http://www.securityfocus.com/infocus/1573

Security Focus – Securing Privacy Part Three: Email Issues
http://www.securityfocus.com/infocus/1579

Security Focus – Securing Privacy Part Four: Internet Issues
http://www.securityfocus.com/infocus/1585

Recommended Network Security Practices

MEXEM reaches great lengths to maintain our clients’ accounts protected. Following these recommended Network Security Practises can provide an additional layer of security from online threats.

Employ Safe Computing Practices

  • Lock your computer if you’re leaving it for a period of time by setting up a password protected screensaver. Always turn off your computer when you have finished using it.
  • Avoid accessing your account from public computers which may have been targeted by hackers and keystroke-capture software. If you must use a public computer, remember the following:
    • Use the virtual keyboard on the login window to avoid having your keystrokes captured.
    • Log out after accessing your account.
    • Never leave the computer unattended while logged in.
    • Clear the browser cache after logoff so that no sensitive information remains stored on the computer.
  • Do not share files unless it’s absolutely necessary. It’s a smart idea to disable the Windows file and printer sharing features, but if you decide to use these,make sure that you configure the access permissions with strong passwords, and only share for specific users.
  • Pop-ups: We recommend that you turn on your pop-up blocker and set the filter to the highest possible level. Then either add the IBKR web site to your list of “trusted” sites, or disable your pop-up blocker while using this site.
  • Regularly check for security updates and patches for your operating system and use the most current version of your browser.
  • Use email safely, and delete messages that don’t originate from a trusted source as they may contain harmful attachments or links, or may be an attempt to fraudulently obtain sensitive information. Turn off the “preview pane” in your email system as this function can allow some viruses to be executed even if you never open the email.

Create a Strong Password

  • Use the maximum characters available and avoid simple or duplicate alphabetic and numeric sequences or passwords containing personal information.
  • Do not share your password with anyone.
  • Change your password frequently and do not use the same password for multiple systems.
  • Do not leave notes on your monitor, keyboard or desk to help you remember your passwords.
  • Do not enable any application features that would automatically log you in or pre-fill the username or password fields.

Install Security Software

Use/install security tools as noted below:

  • You should install and properly configure a software Internet firewall on your computer to control the flow of traffic to your computer. It is a good idea to use a hardware firewall in addition to that. This is especially important if you are operating with a broadband connection and therefore maintaining continuous Internet access.
  • Use antivirus software to identify and eliminate viruses and other malware you may have downloaded to your computer accidentally. As new viruses are constantly being created, you need to update your antivirus software regularly.
  • Use anti-spyware software to detect and remove spyware programs which can collect various types of personal information, monitor your browsing activity and interfere with the control of your computer.

Monitor Your Account

  • Regularly check your account balances and positions through TWS and the daily statements available in Account Management. Immediately report anything suspicious toll free in the US at (877) 442-2757 or direct at (312) 542-6901.

Maintain Accurate Account Information

  • Regularly check your account balances and positions through TWS and the daily statements available in Account Management. Immediately report anything suspicious toll free in the US at (877) 442-2757 or direct at (312) 542-6901.