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Interactive Brokers to discontinue options market making business

First Published 9th March 2017

Interactive Brokers phasing out options market making, will focus on building brokerage platform.

Greenwich - Interactive Brokers Group has announced that it will discontinue options market making activities globally, which are conducted through its Timber Hill companies. The Company expects to phase out these operations substantially over the coming months. The Company intends to continue conducting certain trading activities in stocks and related instruments.

Thomas Peterffy, Chairman and CEO, said, "Having initiated the first automated option market making operation in the mid '80s, which grew into the largest such business on a global scale over the next 25 years, it's been painful for me to see it deteriorating in the last few years. But we do not have a choice in this matter.

Today retail order-flow is purchased by large order internalizers and joining them would represent a conflict we do not wish to have. On the other hand, providing liquidity to sophisticated, professional synthesizers of short-term fundamental, technical and big data is not a profitable activity.

"We must focus on continuing to build our brokerage platform to empower our customers with first rate execution and account management capabilities at very low cost. This remains our mission, to which we must devote our full attention. In retrospect, 40 years of market making gave us the financial resources and the unique expertise to develop our superior brokerage platform for cost and execution sensitive, professional investors and traders, and to give them the edge to successfully compete in the marketplace."

Management expects to complete its comprehensive review of facilities and staffing in the near future with the goal of optimizing the deployment of the Company's resources.

In connection with this shift toward electronic brokerage, we plan to rebalance the composition of currencies in the GLOBAL, a basket of 15 major currencies in which we hold our equity, by increasing the relative weight of the U.S. dollar vs. the other currencies to approximately 70% from its current approximately 47% weight. The new composition will be effective at the close of business on March 31, 2017 and the conversion to the new targeted currency holdings will take place shortly thereafter."