Interactive Brokers

Interactive Brokers, Inc.
Company type	Public
Industry	Brokerage, Financial services
Predecessor	T.P. & Co., Timber Hill Inc.
Founded	1993; 33 years ago
Founder	Thomas Peterffy
Headquarters	Greenwich, Connecticut, United States
Area served	Worldwide (36 countries, nearly 200 countries served)
Key people	Milan Galik (CEO), Thomas Peterffy (Chairman)
Products	Stocks, options, futures, bonds, mutual funds, currencies, cryptocurrencies, derivatives, prediction markets, omnibus and non-disclosed brokerage accounts, clearing services
Owner	IBG Holdings LLC (74.2%), Thomas Peterffy (91.4% of IBG Holdings)
Number of employees	142 (as of 1992; no recent data provided)
Website	interactivebrokers.com

Interactive Brokers, Inc. (IB) is a multinational brokerage enterprise based in Greenwich, Connecticut, United States. It manages the most extensive electronic trading platform in the U.S. measured by average daily revenue trades, handling approximately 2.6 million transactions each day as of 2024. IB stands as the largest broker in the foreign exchange market and is a prominent prime broker serving commodity brokers. Its offerings encompass direct market access to a variety of financial instruments including stocks, options, futures, bonds, mutual funds, currencies, cryptocurrencies, derivatives, and prediction markets. Additionally, the company provides omnibus and non-disclosed brokerage accounts along with clearing services. Operating across 36 nations and supporting 28 different currencies, IB caters to 3.337 million institutional and retail clients with a combined customer equity totaling US$568.2 billion as of December 2024. More than half of its clientele reside outside the United States, spanning nearly 200 countries worldwide.

The firm was founded and is chaired by entrepreneur Thomas Peterffy, a pioneer in computer-assisted trading technology. Ownership of the company is predominantly held by IBG Holdings LLC, which controls 74.2%, with Peterffy personally owning 91.4% of IBG Holdings. The remaining 25.8% of shares are publicly available on NASDAQ under the ticker IBKR. Interactive Brokers is ranked 473rd on the Fortune 500 list.

The company's origins trace back to T.P. & Co., a market-making business established in 1977 that was renamed Timber Hill Inc. in 1982. It was an early innovator in fair value pricing sheets (introduced in 1979), handheld trading computers (launched in 1983), and the first fully automated algorithmic trading system (developed in 1987). Between 1993 and 1994, the Interactive Brokers Group was formed to separate electronic brokerage services (Interactive Brokers LLC) from market-making operations (Timber Hill). In 2014, IB became the first online broker to provide direct access to IEX, a private securities trading venue. The company further diversified into cryptocurrency trading in 2021 by adding Bitcoin and Ethereum to its product lineup.

History

In 1977, entrepreneur Thomas Peterffy, who had been designing commodity trading software, purchased a seat on the American Stock Exchange (AMEX) as an individual market maker and left his previous position. The following year he launched T.P. & Co., expanding his trading activities under badge number 549. Peterffy developed algorithms aimed at optimizing option pricing and introduced daily printed fair value pricing sheets—a pioneering advancement at that time. By 1982, reflecting Peterffy’s strategic vision for expansion, T.P. & Co. was rebranded as Timber Hill Inc.

Peterffy was an early adopter of technology integration within trading processes. In 1983, he introduced handheld computers for options trading that allowed traders to input stock prices and instantly receive suggested option prices—providing a significant competitive edge in the marketplace. Although initially met with resistance from exchanges such as the Chicago Board Options Exchange (CBOE), Timber Hill extended its technology-driven trading model to other venues including the Philadelphia Stock Exchange and New York Stock Exchange (NYSE).

The computerized trading platform launched by Timber Hill in 1985 centralized pricing and risk management functions across multiple sites, improving efficiency and market presence. Peterffy also devised coded communication methods for traders to use when computer devices were prohibited on exchange floors.

Between 1984 and 1986, the company expanded globally by joining major exchanges including the Options Clearing Corporation, New York Futures Exchange, Pacific Stock Exchange, Chicago Mercantile Exchange, and Chicago Board of Trade. To better manage its growing operations across these markets, Timber Hill relocated its headquarters to the World Trade Center in 1986.

By 1987 Timber Hill had grown its workforce to 67 employees and achieved self-clearing status for equities—a key development for its corporate framework and financial results. That same year Peterffy persuaded the CBOE to permit handheld computers on the trading floor by committing to maintain tight markets for S&P 500 options—now recognized among the most actively traded index options in the United States.

The company’s international footprint expanded further with the establishment of Timber Hill Deutschland GmbH in Germany in 1990 and entry into automated trading at Deutsche Terminbörse (DTB). By 1992 Timber Hill employed 142 people and participated actively on the Swiss Options and Financial Futures Exchange, which later became part of Eurex.

Peterffy's strategic approach also involved pioneering Nasdaq’s fully automated algorithmic trading systems starting in 1987. His team engineered innovative solutions that complied with exchange regulations while preserving speed and efficiency—highlighting his leadership role in advancing technological innovation within financial markets.

1993 to 2000

Interactive Brokers Inc. was established in 1993 as a U.S.-based broker-dealer to deliver electronic trade execution technology originally developed by Timber Hill.

In 1994, Timber Hill Europe commenced trading activities across several European exchanges, while Timber Hill Deutschland joined the Belgium Futures and Options Exchange. That same year, IB secured membership on the New York Stock Exchange, and Timber Hill Group LLC was created as a holding entity.

By 1995, Timber Hill had extended its presence to France and Hong Kong, launched its flagship trading platform Trader Workstation, and executed its initial public customer transactions. The following year, Timber Hill Securities Hong Kong Limited was incorporated and began operations on the Hong Kong Stock Exchange.

From 1997 through 1999, Timber Hill broadened its footprint to include Australia, Norway, Austria, and Canada, introduced smart order routing for equity options, and commenced clearing for stock and derivative trades. In 1999, Goldman Sachs made an acquisition offer for the company, which was ultimately declined.

In 2000, Interactive Brokers (U.K.) Limited was established, and Timber Hill became a primary market maker on the International Securities Exchange (ISE).

2001 to present

In 2001, Timber Hill Group LLC was renamed Interactive Brokers Group LLC, managing approximately 200,000 trades each day.

The year 2002 saw IB co-founding the Boston Options Exchange and launching Mobile Trader with an API enabling mobile platform integration. The firm also emerged as a leading market maker for U.S. single-stock futures.

Between 2003 and 2005, IB expanded its trade execution and clearing services across numerous global markets and introduced its forex trading platform IdealPro (currently known as Ideal FX). In 2006, IB rolled out penny-priced options and acquired stakes in OneChicago, ISE Stock Exchange, and CBOE Stock Exchange.

Interactive Brokers went public in May 2007 through a Nasdaq IPO employing a Dutch auction mechanism, offering 10% of its shares at $30.01 each—the largest brokerage IPO since 2005. Later that year, IB acquired FutureTrade Technologies.

In 2008, Risk Navigator was launched to provide real-time market risk management capabilities alongside advanced trading algorithms integrated into Trader Workstation. The following year brought an iOS mobile app release and expansion of brokerage services into India.

By 2011, IB introduced new offerings such as the Hedge Fund Capital Introduction Program and became the top U.S. online broker by average daily revenue trades. The company's provocative "Join the 1%" advertising campaign attracted significant attention during the Occupy Wall Street movement.

Subsequent enhancements included money manager accounts in 2012; Probability Lab and Traders' Insight tools in 2013; and in 2014 IB became the first online broker to provide direct access to the IEX exchange.

In 2015, IB acquired Covestor’s investment management platform and launched Investors' Marketplace to connect clients with financial advisors. An Apple Watch app followed in 2016.

October 2017 marked the sale of IB’s market maker division Timber Hill to Two Sigma Investments.

Milan Galik took over as CEO from founder Thomas Peterffy in 2019, with Peterffy continuing as chairman. That year also saw the introduction of commission-free trading through "IBKR Lite" along with fractional share trading options.

By 2020, Interactive Brokers’ client base had grown to one million users. In December of that year, it acquired Folio Investments' retail business from Goldman Sachs.

In May 2021, IB launched spot gold trading for U.S.-based customers; cryptocurrency trading including Bitcoin and Ethereum was added in September 2021 and extended to UK clients by May 2024.

Recent developments include access to Taiwan Stock Exchange equities (July 2023), fractional share trading for Canadian securities (August 2023), availability of Bursa Malaysia stocks (August 2024), and the introduction of prediction market contracts on the outcome of the 2024 U.S. presidential election (late 2024).

Legal matters

In August 2018, the firm incurred a $5.5 million penalty due to breaches of federal regulations concerning naked short selling.

Two years later, in August 2020, the company was subjected to a $38 million fine attributed to insufficient anti-money laundering measures and compliance deficiencies, including failures to report suspicious trading activities.

Additional reading

Automate This: How Algorithms Came to Rule Our World by Christopher Steiner (2012) – explores Thomas Peterffy's role in founding Interactive Brokers and pioneering automated trading systems.

Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market by Scott Patterson (2013)

External links