10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑Q

(Mark One)
☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2018 OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition  period from           to

Commission File Number: 001‑33440

INTERACTIVE BROKERS GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 30‑0390693
(I.R.S. Employer
Identification No.)

One Pickwick Plaza

Greenwich, Connecticut 06830

(Address of principal executive office)

(203) 618‑5800

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‑T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b‑2 of the Exchange Act. (Check one):

Large accelerated filer ☒ Accelerated filer ☐ Non‑accelerated filer ☐
(Do not check if a
smaller reporting company) Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the ExchangeAct.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐   No ☒

As of May 7, 2018, there were 71,481,133 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.

QUARTERLY REPORT ON FORM 10‑Q FOR THE QUARTER ENDED MARCH 31,  2018

Table of Contents

PART I	FINANCIAL INFORMATION
ITEM 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Financial Condition	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Changes in Equity	5
	Notes to Condensed Consolidated Financial Statements	6
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	60
ITEM 4.	Controls and Procedures	64
PART II.	OTHER INFORMATION
ITEM 1.	Legal Proceedings	65
ITEM 1A.	Risk Factors	65
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
ITEM 3.	Defaults upon Senior Securities	65
ITEM 5.	Other Information	65
ITEM 6.	Exhibits	66
SIGNATURES

1

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

Interactive Brokers Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Financial Condition

(Unaudited)

	March 31,		December 31,
(in millions, except share amounts)	2018		2017
Assets
Cash and cash equivalents	$	1,901	$	1,732
Cash - segregated for regulatory purposes		7,515		6,547
Securities - segregated for regulatory purposes		12,753		13,685
Securities borrowed		2,968		2,957
Securities purchased under agreements to resell		677		2,035
Financial instruments owned, at fair value:
Financial instruments owned		1,801		1,950
Financial instruments owned and pledged as collateral		614		1,204
Total financial instruments owned, at fair value		2,415		3,154
Receivables:
Customers, less allowance for doubtful accounts of $43 and $40 as of March 31, 2018 and December 31, 2017		29,464		29,821
Brokers, dealers and clearing organizations		1,002		823
Interest		99		116
Total receivables		30,565		30,760
Other assets		299		292
Total assets	$	59,093	$	61,162
Liabilities and equity
Short-term borrowings	$	19	$	15
Securities loaned		4,171		4,444
Securities sold under agreements to repurchase		—		1,316
Financial instruments sold, but not yet purchased, at fair value		242		767
Payables:
Customers		47,423		47,548
Brokers, dealers and clearing organizations		170		283
Affiliate		187		187
Accounts payable, accrued expenses and other liabilities		148		147
Interest		27		22
Total payables		47,955		48,187
Total liabilities		52,387		54,729
Commitments, contingencies and guarantees (see Note 12)
Equity
Stockholders’ equity
Common stock, $0.01 par value per share:
Class A – Authorized - 1,000,000,000, Issued - 71,610,581 and 71,609,049 shares, Outstanding – 71,481,133 and 71,475,755 shares as of March 31, 2018 and December 31, 2017		1		1
Class B – Authorized,  Issued and Outstanding – 100 shares as of March 31, 2018 and December 31, 2017		—		—
Additional paid-in capital		834		832
Retained earnings		290		251
Accumulated other comprehensive income, net of income taxes of $1 and  $1 as of March 31, 2018 and December 31, 2017		10		9
Treasury stock, at cost, 129,448 and 133,294 shares as of March 31, 2018 and December 31, 2017		(3)		(3)
Total stockholders’ equity		1,132		1,090
Noncontrolling interests		5,574		5,343
Total equity		6,706		6,433
Total liabilities and equity	$	59,093	$	61,162

See accompanying notes to the condensed consolidated financial statements.

2

Interactive Brokers Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended March 31,
(in millions, except share or per share amounts)	2018		2017
Revenues
Commissions	$	220	$	154
Interest income		311		177
Trading gains		13		2
Other income		77		76
Total revenues		621		409
Interest expense		94		35
Total net revenues		527		374
Non-interest expenses
Execution and clearing		73		61
Employee compensation and benefits		70		62
Occupancy, depreciation and amortization		12		13
Communications		6		8
General and administrative		23		16
Customer bad debt		3		1
Total non-interest expenses		187		161
Income before income taxes		340		213
Income tax expense		21		18
Net income		319		195
Less net income attributable to noncontrolling interests		273		171
Net income available for common stockholders	$	46	$	24
Earnings per share
Basic	$	0.64	$	0.35
Diluted	$	0.63	$	0.34
Weighted average common shares outstanding
Basic		71,475,950		67,985,107
Diluted		72,512,462		69,157,614
Comprehensive income
Net income available for common stockholders	$	46	$	24
Other comprehensive income
Cumulative translation adjustment, before income taxes		1		4
Income taxes related to items of other comprehensive income		—		—
Other comprehensive income, net of tax		1		4
Comprehensive income available for common stockholders	$	47	$	28
Comprehensive income attributable to noncontrolling interests
Net income attributable to noncontrolling interests	$	273	$	171
Other comprehensive income - cumulative translation adjustment		7		19
Comprehensive income attributable to noncontrolling interests	$	280	$	190

See accompanying notes to the condensed consolidated financial statements.

3

Interactive Brokers Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,
(in millions)	2018		2017
Cash flows from operating activities
Net income	$	319	$	195
Adjustments to reconcile net income to net cash from operating activities
Deferred income taxes		4		5
Depreciation and amortization		7		6
Employee stock plan compensation		14		13
Unrealized (gain) loss on other investments, net		(2)		—
Bad debt expense		3		1
Impairment loss		1		—
Change in operating assets and liabilities
Securities - segregated for regulatory purposes		932		295
Securities borrowed		(11)		(294)
Securities purchased under agreements to resell		1,358		(1)
Financial instruments owned, at fair value		742		1,014
Receivables from customers		354		(1,865)
Other receivables		(162)		(17)
Other assets		(12)		(2)
Securities loaned		(273)		(326)
Securities sold under agreement to repurchase		(1,316)		—
Financial instruments sold, but not yet purchased, at fair value		(525)		(779)
Payable to customers		(125)		2,570
Other payables		(107)		(36)
Net cash provided by operating activities		1,201		779
Cash flows from investing activities
Purchases of other investments		—		—
Distributions received and proceeds from sales of other investments		—		—
Purchase of property, equipment and intangible assets		(8)		(6)
Net cash used in investing activities		(8)		(6)
Cash flows from financing activities
Short-term borrowings, net		4		(36)
Dividends paid to stockholders		(7)		(7)
Distributions to noncontrolling interests		(61)		(34)
Net cash used in financing activities		(64)		(77)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		8		23
Net increase in cash, cash equivalents, and restricted cash		1,137		719
Cash, cash equivalents, and restricted cash at beginning of period		8,279		7,549
Cash, cash equivalents, and restricted cash at end of period	$	9,416	$	8,268
Cash, cash equivalents, and restricted cash
Cash and cash equivalents		1,901		1,656
Cash segregated for regulatory purposes		7,515		6,612
Cash, cash equivalents, and restricted cash at end of period	$	9,416	$	8,268
Supplemental disclosures of cash flow information
Cash paid for interest	$	89	$	30
Cash paid for taxes, net	$	13	$	7

See accompanying notes to the condensed consolidated financial statements.

4

Interactive Brokers Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

Three Months Ended March 31, 2018 and 2017

(Unaudited)

	Common Stock									Accumulated
				Additional						Other		Total		Non-
	Issued	Par		Paid-In		Treasury		Retained		Comprehensive		Stockholders'		controlling		Total
(in millions, except share amounts)	Shares	Value		Capital		Stock		Earnings		Income		Equity		Interests		Equity
Balance, January 1, 2018	71,609,049	$	1	$	832	$	(3)	$	251	$	9	$	1,090	$	5,343	$	6,433
Common stock distributed pursuant to stock incentive plans	1,532												—				—
Compensation for stock grants vesting in the future					2								2		12		14
Dividends paid to stockholders									(7)				(7)				(7)
Distributions from IBG LLC to noncontrolling interests													—		(61)		(61)
Comprehensive income									46		1		47		280		327
Balance, March 31, 2018	71,610,581	$	1	$	834	$	(3)	$	290	$	10	$	1,132	$	5,574	$	6,706

	Common Stock									Accumulated
				Additional						Other		Total		Non-
	Issued	Par		Paid-In		Treasury		Retained		Comprehensive		Stockholders'		controlling		Total
(in millions, except share amounts)	Shares	Value		Capital		Stock		Earnings		Income		Equity		Interests		Equity
Balance, January 1, 2017	68,119,412	$	1	$	775	$	(3)	$	203	$	(2)	$	974	$	4,846	$	5,820
Common stock distributed pursuant to stock incentive plans	1,962												—				—
Compensation for stock grants vesting in the future					2								2		11		13
Dividends paid to stockholders									(7)				(7)				(7)
Distributions from IBG LLC to noncontrolling interests													—		(34)		(34)
Comprehensive income									24		4		28		190		218
Balance, March 31, 2017	68,121,374	$	1	$	777	$	(3)	$	220	$	2	$	997	$	5,013	$	6,010

See accompanying notes to the condensed consolidatedfinancial statements.

5

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

1.   Organization of Business

Interactive Brokers Group, Inc. (“IBG, Inc.”) is a Delaware holding company whose primary asset is its ownership of approximately 17.4% of the membership interests of IBG LLC, which, in turn, owns operating subsidiaries (collectively, “IBG LLC”). IBG, Inc. together with IBG LLC and its consolidated subsidiaries (collectively, “the Company”), is an automated global electronic broker specializing in executing and clearing trades in securities, futures, foreign exchange instruments, bonds and mutual funds on more than 120 electronic exchanges and market centers around the world and offering custody, prime brokerage, securities and margin lending services to customers. In the United States of America (“U.S.”), the Company conducts its business primarily from its headquarters in Greenwich, Connecticut and from Chicago, Illinois. Abroad, the Company conducts its business through offices located in Canada, the United Kingdom, Switzerland, Liechtenstein, India, China (Hong Kong and Shanghai), Japan, and Australia. As of March 31, 2018, the Company had 1,252 employees worldwide.

IBG LLC is a Connecticut limited liability company that conducts its business through its operating subsidiaries (collectively, the “Operating Companies”): Interactive Brokers LLC (“IB LLC”); Interactive Brokers (U.K.) Limited and its subsidiary, Interactive Brokers (U.K.) Nominee Limited (collectively, “IBUK”); Interactive Brokers (India) Private Limited (“IBI”); Timber Hill LLC (“TH LLC”); Timber Hill Australia Pty Limited (“THA”); Timber Hill Canada Company (“THC”); Interactive Brokers Financial Products S.A. (“IBFP”); Interactive Brokers Software Services (India) Private Limited (“IBSSI”);IB Global Investments LLC (“IBGIL”); IB Exchange Corp. (“IBEC”) and its subsidiaries; Interactive Brokers Canada Inc. (“IBC”); Interactive Brokers Securities Japan, Inc. (“IBSJ”); Interactive Brokers Hong Kong Limited (“IBHK”);Interactive Brokers Australia Pty Limited and its subsidiary, Interactive Brokers Australia Nominees Pty Limited (collectively, “IBA”); IB Business Services (Shanghai) Company Limited (“IBBSS”); Timber Hill Europe AG and its subsidiary, Timber Hill (Liechtenstein) AG (collectively, “THE”);  Interactive Brokers Hungary KFT (“IBH”); Interactive Brokers Software Services Estonia OU (“IBEST”); Interactive Brokers Software Services Russia (“IBRUS”);Interactive Brokers Corp. (“IB Corp”), Covestor, Inc. and its subsidiary, Covestor Limited (collectively, “Covestor”), and Greenwich Advisor Compliance Services Corp. (“Greenwich Compliance”).

The Company operates in two business segments: electronic brokerage and market making, both supported by corporate. The Company conducts its electronic brokerage business through certain Interactive Brokers subsidiaries, which provide electronic execution and clearing services to customers worldwide. The Company conducts its market making business principally through its Timber Hill subsidiaries and it 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.

Certain of the Operating Companies are members of various securities and commodities exchanges in North America, Europe and the Asia/Pacific region and are subject to regulatory capital and other requirements (see Note 14). IB LLC, IBC, IBUK, IBSJ, IBHK, IBI and IBA carry securities accounts for customers or perform custodial functions relating to customer securities.

2.   Significant Accounting Policies

Basis of Presentation

These condensedconsolidated financial statements are presented in U.S. dollars and have been preparedin accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) andpursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10‑Q.

These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2017 Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on March 1, 2018. The condensed consolidated financial information as of December 31, 2017 has been derived from the audited consolidated financial statements not included herein.

These condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the periods presented. The operating results for interim periods are not necessarily indicative of the operating results for the entire year.

6

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Principles of Consolidation, including Noncontrolling Interests

These condensed consolidated financial statements include the accounts of IBG, Inc. and its majority and wholly owned subsidiaries. As sole managing member of IBG LLC, IBG, Inc. exerts control over IBG LLC’s operations. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” the Company consolidates IBG LLC’s financial statements and records the interests in IBG LLC that it does not own as noncontrolling interests.

The Company’s policy is to consolidate all other entities in which it owns more than 50% unless it does not have control. All inter‑company balances and transactions have been eliminated.

Condensed Consolidated Statements of Cash Flows and Financial Condition Presentation Changes

On January 1, 2018, the Company adopted FASB Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash” (“ASU 2016-18”). This accounting update requires an entity to include in its cash and cash equivalents amounts that are deemed to be restricted cash and to present a reconciliation of such amounts in the statement of cash flows. Restricted cash represents cash and cash equivalents that are subject to withdrawal or usage restrictions. For purposes of the condensed consolidated statements of cash flows, cash, cash equivalents, and restricted cash consist of “cash and cash equivalents” and “cash – segregated for regulatory purposes.”

ASU 2016-18 also requires prior periods to be retrospectively adjusted to conform to the current period presentation. Upon adoption, the Company recorded an increase of $988 million in net cash provided by operating activities, for the three months ended March 31, 2017 to reflect the reclassification of changes in restricted cash balances from the operating section to the cash, cash equivalent, and restricted cash balances within the condensed consolidated statements of cash flows.

In addition, the Company reclassified restricted cash amounts previously included within “cash and securities – segregated for regulatory purposes” into a separate line item, “cash – segregated for regulatory purposes,” in the condensed consolidated statements of financial condition to be consistent with the presentation of restricted cash in the condensed consolidated statements of cash flows under ASU 2016-18. Previously reported amounts in the condensed consolidated statements of financial condition and notes to the condensed consolidated financial statements have been adjusted to conform to the current presentation.

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. The Company also exited the majority of its market making activities outside of the U.S. by December 31, 2017 and expects to report discontinued operations when 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 and $3 million of cash expenditures primarily related to severance costs for employee terminations.

During the three months ended March 31, 2018, the Company did not incur any additional restructuring costs. During the three months ended March 31, 2017, the Company recorded restructuring costs of approximately $1 million for severance resulting from obligations related to employment terminations, included in employee compensation and benefits in the condensed consolidated statements of comprehensive income.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these condensed consolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Therefore, actual results could differ materially from those estimates. Such estimates include the allowance for doubtful accounts, valuation of certain investments, compensation accruals, current and deferred income taxes, costs associated with exit or disposal activities, and contingency reserves.

7

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Fair Value

Substantially all of the Company’s assets and liabilities, including financial instruments are carried at fair value based on published market prices and are marked to market, or are assets and liabilities which are short‑term in nature and are carried at amounts that approximate fair value.

The Company applies the fair value hierarchy in accordance with FASB ASC Topic 820, “Fair Value Measurement” (“ASC Topic 820”), to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are:

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2	Quoted prices for similar assets in an active market, quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.
Level 3	Prices or valuations that require inputs that are both significant to fair value measurement and unobservable.

Financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are generally classified as Level 1 of the fair value hierarchy. The Company’s Level 1 financial instruments, which are valued using quoted market prices as published by exchanges and clearing houses or otherwise broadly distributed in active markets, include active listed stocks, options, warrants and discount certificates, and U.S. and foreign government securities. The Company does not adjust quoted prices for financial instruments classified as Level 1 of the fair value hierarchy, even in the event that the Company may hold a large position whereby a purchase or sale could reasonably impact quoted prices.

Currency forward contracts are valued using broadly distributed bank and broker prices, and are classified as Level 2 of the fair value hierarchy since inputs to their valuation can be generally corroborated by market data. Other securities that are not traded in active markets are also classified as Level 2 of the fair value hierarchy. Level 3 financial instruments are comprised of securities that have been delisted or otherwise are no longer tradable in active markets and have been valued by the Company based on internal estimates.

Earnings per Share

Earnings per share (“EPS”) is computed in accordance with FASB ASC Topic 260, “Earnings per Share.” Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of the basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s stock-based compensation plans, with no adjustments to net income available for common stockholders for dilutive potential common shares.

Stock‑Based Compensation

The Company follows FASB ASC Topic 718, “Compensation - Stock Compensation” (“ASC Topic 718”), to account for its stock‑based compensation plans. ASC Topic 718 requires all share‑based payments to employees to be recognized in the condensed consolidated financial statements using a fair value‑based method. Grants, which are denominated in U.S. dollars, are communicated to employees in the year of grant, thereby establishing the fair value of each grant. The fair value of awards granted to employees are generally expensed as follows: 50% in the year of grant in recognition of the plans’ post-employment provisions (as described below) and the remaining 50% over the related vesting period utilizing the “graded vesting” method permitted under ASC Topic 718. In the case of “retirement eligible” employees (those employees older than 59), 100% of awards are expensed when granted.

Awards granted under stock‑based compensation plans are subject to the plans’ post-employment provisions in the event an employee ceases employment with the Company. The plans provide that employees who discontinue employment with the Company without cause and continue to meet the terms of the plans’ post‑employment provisions will be eligible to earn 50% of previously granted but not yet earned awards, unless the employee is over the age of 59, in which case the employee would be eligible to receive 100% of previously granted but not yet earned awards.

8

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Cash and Cash Equivalents

Cash and cash equivalents consist of deposits with banks and all highly liquid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes or to meet margin requirements at clearing houses.

Cash and Securities - Segregated for Regulatory Purposes

As a result of customer activities, certain Operating Companies are obligated by rules mandated by their primary regulators to segregate or set aside cash or qualified securities to satisfy such regulations, which have been promulgated to protect customer assets. Securities segregated for regulatory purposes consisted of U.S. government securities of $4.5 billion and $4.5 billion as of March 31, 2018 and December 31, 2017, respectively, and securities purchased under agreements to resell in the amount of$8.3 billion and $9.2 billion as of March 31, 2018 and December 31, 2017, respectively, which amounts approximate fair value.

Securities Borrowed and Securities Loaned

Securities borrowed and securities loaned are recorded at the amount of the cash collateral advanced or received. Securities borrowed transactions require the Company to provide counterparties with collateral, which may be in the form of cash, letters of credit or other securities. With respect to securities loaned, the Company receives collateral, which may be in the form of cash or other securities in an amount generally in excess of the fair value of the securities loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as permitted contractually. It is the Company’s policy to net, in the condensed consolidated statements of financial condition, securities borrowed and securities loaned entered into with the same counterparty that meet the offsetting requirements prescribed in FASB ASC Topic 210-20, “Balance Sheet – Offsetting” (“ASC Topic 210-20”).

Securities lending fees received and paid by the Company are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income.

Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase

Securities purchased under agreements to resell and securities sold under agreements to repurchase, which are reported as collateralized financing transactions, are recorded at contract value, which approximates fair value. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. It is the Company’s policy to net, in the condensed consolidated statements of financial condition, securities purchased under agreements to resell transactions and securities sold under agreements to repurchase transactions entered into with the same counterparty that meet the offsetting requirements prescribed in ASC Topic 210-20.

Financial Instruments Owned and Financial Instruments Sold, But Not Yet Purchased, at Fair Value

Financial instrument transactions are accounted for on a trade date basis. Financial instruments owned and financial instruments sold, but not yet purchased are stated at fair value based upon quoted market prices, or if not available, are valued by the Company based on internal estimates (see Fair Value above). The Company’s financial instruments pledged to counterparties where the counterparty has the right, by contract or custom, to sell or repledge the financial instruments are reported as financial instruments owned and pledged as collateral in the condensed consolidated statements of financial condition.

Customer Receivables and Payables

Customer securities transactions are recorded on a settlement date basis and customer commodities transactions are recorded on a trade date basis. Receivables from and payables to customers include amounts due on cash and margin transactions, including futures contracts transacted on behalf of customers. Securities owned by customers, including those that collateralize margin loans or other similar transactions, are not reported in the condensed consolidated statements of financial condition. Amounts receivable from customers that are determined by management to be uncollectible are recorded as customer bad debt expense in the condensed consolidated statements of comprehensive income.

Receivables from and Payables to Brokers, Dealers and Clearing Organizations

Receivables from and payables to brokers, dealers and clearing organizations include net receivables and payables from unsettled trades, including amounts related to futures and options on futures contracts executed on behalf of customers, amounts receivable for securities not delivered by the Company to the purchaser by the settlement date (“fails to deliver”) and cash deposits. Payables to brokers, dealers and clearing organizations also include amounts payable for securities not received by the Company from a seller by the settlement date (“fails to receive”).

9

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Investments

The Company makes certain strategic investments related to its business and accounts for these investments (a) under the equity method of accounting as required under FASB ASC Topic 323, “Investments - Equity Method and Joint Ventures” or (b) at fair value or, if the investment in equity securities does not have a readily determinable fair value, at historical cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer in accordance with FASB ASC Topic 321, “Investments in Equity Securities.”

Investments accounted for under the equity method, including where the investee is a limited partnership or limited liability company, are recorded at the fair value amount of the Company’s initial investment and are adjusted each period for the Company’s share of the investee’s income or loss. The Company’s share of the income or losses from equity method investments is included in other income in the condensed consolidated statements of comprehensive income. The recorded amounts of the Company’s equity method investments,$23 million as of March 31, 2018 ($23 million as of December 31, 2017), which are included in other assets in the condensed consolidated statements of financial condition, increase or decrease accordingly. Contributions paid to and distributions received from equity method investees are recorded as additions or reductions, respectively, to the respective investment balance.

Investments in equity securities that do not qualify for equity method accounting are recorded at historical cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The recorded amounts of the Company’s investments in such equity securities, $5 million as of March 31, 2018 ($5 million as of December 31, 2017) are included in other assets in the condensed consolidated statements of financial condition. Dividends received from these investments are included in other income in the condensed consolidated statements of comprehensive income when such dividends are received.

The Company also holds exchange memberships and investments in equity securities of certain exchanges, as required to qualify as a clearing member. Such investments,$5 million as of March 31, 2018 ($6 million as of December 31, 2017), are recorded at cost less impairment, and are included in other assets in the condensed consolidated statements of financial condition. Dividends received from these investments are included in other income in the condensed consolidated statements of comprehensive income when such dividends are received.

A judgmental aspect of accounting for investments is evaluating whether a decline in the value of an investment has occurred. The evaluation of an impairment is dependent on specific quantitative and qualitative factors and circumstances surrounding an investment, including recurring operating losses, credit defaults and subsequent rounds of financing. The Company’s equity investments do not have readily determinable market values. All investments are reviewed for changes in circumstances or occurrence of events that suggest the Company’s investment may not be recoverable. An impairment loss, if any, is recognized in the period the determination is made.

Property, Equipment, and Intangible Assets

Property, equipment, and intangible assets, which are included in other assets in the condensed consolidated statements of financial condition, consist of leasehold improvements, computer equipment, software developed for the Company’s internal use, office furniture, equipment and acquired technology.  

Property and equipment are recorded at historical cost, less accumulated depreciation and amortization. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation and amortization are computed using the straight‑line method. Equipment is depreciated over the estimated useful lives of the assets, while leasehold improvements are amortized over the lesser of the estimated economic useful life of the asset or the term of the lease. Computer equipment is depreciated over three to five years and office furniture and equipment are depreciated over five to seven years. Intangible assets with a finite life are amortized on a straight line basis over their estimated useful lives of three years, and tested for recoverability whenever events indicate that the carrying amounts may not be recoverable. Qualifying costs for internally developed software are capitalized and amortized over the expected useful life of the developed software, not to exceed three years. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the condensed consolidated statements of financial condition and any resulting gain or loss is recorded in other income in the condensed consolidated statements of comprehensive income. Fully depreciated (or amortized) assets are retired on an annual basis.

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Comprehensive Income and Foreign Currency Translation

The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to FASB ASC Topic 220, “Comprehensive Income.”

Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The Company’s OCI is comprised of gains and losses resulting from translating foreign currency financial statements of non-U.S. subsidiaries, net of related income taxes, where applicable. In general, the practice and intention of the Company is to reinvest the earnings of its non‑U.S. subsidiaries in those operations, therefore tax is usually not accrued on OCI.

The Company’s non‑U.S. domiciled subsidiaries have a functional currency that is other than the U.S. dollar. Such subsidiaries’ assets and liabilities are translated into U.S. dollars at period‑end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary’s functional currency to the U.S. dollar (as described above) are reported net of tax, where applicable, in accumulated OCI in the condensed consolidated statements of financial condition.

Revenue Recognition

Commissions

Commissions earned for executing and/or clearing transactions are accrued on a trade date basis and are reported as commissions in the condensed consolidated statements of comprehensive income. See Note 8 for further information on revenue from contracts with customers.

Interest Income and Expense

The Company earns interest income and incurs interest expense primarily in connection with its electronic brokerage customer business and its securities lending activities, which are recorded on an accrual basis and are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income.

Trading Gains

Trading gains and losses are recorded on trade date and are reported on a net basis. Trading gains and losses are comprised of changes in the fair value of financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value (i.e., unrealized gains and losses) and realized gains and losses related to the Company’s market making business segment. Included in trading gains are net gains and losses on stocks, U.S. and foreign government securities, options, futures, foreign exchange and other derivative instruments. Dividends are integral to the valuation of stocks and interest is integral to the valuation of fixed income instruments. Accordingly, both dividends and interest income and expense attributable to financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are reported on a net basis in trading gains in the condensed consolidated statements of comprehensive income.

Foreign Currency Gains and Losses

Foreign currency balances are assets and liabilities in currencies other than the Company’s functional currency. At every reporting date, the Company revalues its foreign currency balances to its functional currency at the spot exchange rate and records the associated foreign currency gains and losses. These foreign currency gains and losses are reported in the condensed consolidated statements of comprehensive income, as follows: (a) foreign currency gains and losses related to the Company’s currency diversification strategy are reported in other income; (b) foreign currency gains and losses related to the market making core-business activities are reported in trading gains; (c) foreign currency gains and losses arising from currency swap transactions in the electronic brokerage business are reported in interest income; and (d) all other foreign currency gains and losses are reported in other income.

Rebates

Rebates consist of volume discounts, credits or payments received from exchanges or other market centers related to the placement and/or removal of liquidity from the order flow in the marketplace and are recorded on an accrual basis. Rebates are recorded net within execution and clearing expenses in the condensed consolidated statements of comprehensive income. Rebates received for trades executed on behalf of customers that elect tiered pricing are passed, in whole or part, to these customers; and such pass-through amounts are recorded net within commissions in the condensed consolidated statements of comprehensive income.

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC Topic 740, “Income Taxes” (“ASC Topic 740”). The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits are based on enacted tax laws (see Note 11) and reflect management’s best assessment of estimated future taxes to be paid. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Determining income tax expense requires significant judgments and estimates.

Deferred income tax assets and liabilities arise from temporary differences between the tax and financial statements recognition of underlying assets and liabilities. In evaluating the ability to recover deferred tax assets within the jurisdictions from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax‑planning strategies, and results of recent operations. In projecting future taxable income, historical results are adjusted for changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax‑planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, three years of cumulative operating income (loss) are considered. Deferred income taxes have not been provided for U.S. tax liabilities or for additional foreign taxes on the unremitted earnings of foreign subsidiaries that have been indefinitely reinvested.

The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company’s global operations. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. 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).

The Company records tax liabilities in accordance with ASC Topic 740 and adjusts these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in payments that are different from the current estimates of these tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information becomes available.

The Company recognizes a tax benefit from an uncertain tax position only when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. A tax position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement.

The Company recognizes interest related to income tax matters as interest income or interest expense and penalties related to income tax matters as income tax expense in the condensed consolidated statements of comprehensive income.

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Recently Issued Accounting Pronouncements

Following is a summary of recently issued FASB Accounting Standards Updates (“ASUs”) that have affected or may affect the Company’s condensed consolidated financial statements:  

	Affects	Status
ASU 2016-02	Leases (Topic 842):  Requires the recognition of a right-of-use asset and a lease liability for leases previously classified as operating lease in the statements of financial condition.	Effective for fiscal years beginning after December 15, 2018.
ASU 2016-13	Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.	Effective for fiscal years beginning after December 15, 2019.
ASU 2017-04	Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.	Effective for fiscal years beginning after December 15, 2019.
ASU 2017-08	Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20):  Amending the amortization period for certain purchased callable debt securities held at a premium.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2017-11	Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815): changing the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2017-12	Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2018-02	Income Statement – Reporting Comprehensive Income (Topic 220):  Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.	Effective for fiscal years and first interim periods beginning after December 15, 2018.
ASU 2018-03	Technical Correction and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.	Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years beginning after June 15, 2018.

Adoption of those ASUs that became effective during 2017 and 2018, prior to the issuance of the Company’s condensed consolidated financial statements, had no material effect on these financial statements, except for as described in the notes to these financial statements.  

3.Trading Activities and Related Risks

The Company’s trading activities include providing securities brokerage and market making services. Trading activities expose the Company to market and credit risks. These risks are managed in accordance with established risk management policies and procedures. To accomplish this, management has established a risk management process that includes:

•a regular review of the risk management process by executive management as part of its oversight role;

•defined risk management policies and procedures supported by a rigorous analytic framework; and

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

•articulated risk tolerance levels as defined by executive management that are regularly reviewed to ensure that the Company’s risk‑taking is consistent with its business strategy, capital structure, and current and anticipated market conditions.

Market Risk

The Company is exposed to various market risks. Exposures to market risks arise from equity price risk, foreign currency exchange rate fluctuations and changes in interest rates. The Company seeks to mitigate market risk associated with trading inventories by employing hedging strategies that correlate rate, price and spread movements of trading inventories and related financing and hedging activities. The Company uses a combination of cash instruments and exchange traded derivatives to hedge its market exposures. The Company does not apply hedge accounting. The following discussion describes the types of market risk faced:

Equity Price Risk

Equity price risk arises from the possibility that equity security prices will fluctuate, affecting the value of equity securities and other instruments that derive their value from a particular stock, a defined basket of stocks, or a stock index. The Company is subject to equity price risk primarily in financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value. The Company attempts to limit such risks by continuously reevaluating prices and by diversifying its portfolio across many different options, futures and underlying securities and avoiding concentrations of positions based on the same underlying security.

Currency Risk

Currency risk arises from the possibility that fluctuations in foreign exchange rates will impact the value of financial instruments. The Company manages this risk using spot (i.e., cash) currency transactions, currency futures contracts and currency forward contracts. 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. The Company actively manages its currency exposure using a currency diversification strategy that is based on a defined basket of 14 currencies internally referred to as the “GLOBAL.” These strategies minimize the fluctuation of the Company’s net worth as expressed in GLOBALs, thereby diversifying its risk in alignment with these global currencies, weighted by the Company’s view of their importance. As the Company’s financial results are reported in U.S. dollars, the change in the value of the GLOBAL as expressed in U.S. dollars affects the Company’s earnings. The impact of this currency diversification strategy in the Company’s earnings is included in other income in the condensed consolidated statements of comprehensive income. In light of the Company’s decision to discontinue its options market making activities globally, the Company removed the Singapore dollar (SGD) and realigned the relative weight of the U.S. dollar (USD) versus the other currency components to better reflect its businesses going forward. The new composition went into effect as of the close of business on March 31, 2017. 

Interest Rate Risk

Interest rate risk arises from the possibility that changes in interest rates will affect the value of financial instruments. The Company is exposed to interest rate risk on cash and margin balances, positions carried in equity and fixed income securities, options, futures and on its borrowings. These risks are managed through investment policies and by entering into interest rate futures contracts.

Credit Risk

The Company is exposed to risk of loss if an individual, counterparty or issuer fails to perform its obligations under contractual terms (“default risk”). Both cash instruments and derivatives expose the Company to default risk. The Company has established policies and procedures for mitigating credit risk on principal transactions, including reviewing and establishing limits for credit exposure, maintaining collateral, and continually assessing the creditworthiness of counterparties.

The Company’s credit risk is limited in that substantially all of the contracts entered into are settled directly at securities and commodities clearing houses and a small portion is settled through member firms and banks with substantial financial and operational resources. The Company seeks to control the risks associated with its customer margin activities by requiring customers to maintain collateral in compliance with regulatory and internal guidelines.

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

In the normal course of business, the Company executes, settles, and finances various customer securities transactions. Execution of these transactions includes the purchase and sale of securities which exposes the Company to default risk arising from the potential that customers or counterparties may fail to satisfy their obligations. In these situations, the Company may be required to purchase or sell financial instruments at unfavorable market prices to satisfy obligations to customers or counterparties. Liabilities to other brokers and dealers related to unsettled transactions (i.e., securities fails to receive) are recorded at the amount for which the securities were purchased, and are paid upon receipt of the securities from other brokers or dealers. In the case of aged securities fails to receive, the Company may purchase the underlying security in the market and seek reimbursement for any losses from the counterparty.

For cash management purposes, the Company enters into short‑term securities purchased under agreements to resell and securities sold under agreements to repurchase transactions (“repos”) in addition to securities borrowing and lending arrangements, all of which may result in credit exposure in the event the counterparty to a transaction is unable to fulfill its contractual obligations. Repos are collateralized by securities with a market value in excess of the obligation under the contract. Similarly, securities lending agreements are collateralized by deposits of cash or securities. The Company attempts to minimize credit risk associated with these activities by monitoring collateral values on a daily basis and requiring additional collateral to be deposited with or returned to the Company as permitted under contractual provisions.

Concentrations of Credit Risk

The Company’s exposure to credit risk associated with its trading and other activities is measured on an individual counterparty basis, as well as by groups of counterparties that share similar attributes. Concentrations of credit risk can be affected by changes in political, industry, or economic factors. To reduce the potential for risk concentration, credit limits are established and exposure is monitored in light of changing counterparty and market conditions. As of March 31, 2018, the Company did not have any material concentrations of credit risk outside the ordinary course of business.

Off‑Balance Sheet Risks

The Company may be exposed to a risk of loss not reflected in the condensed consolidated financial statements to settle futures and certain over‑the‑counter contracts at contracted prices, which may require repurchase or sale of the underlying products in the market at prevailing prices. Accordingly, these transactions result in off‑balance sheet risk as the Company’s cost to liquidate such contracts may exceed the amounts reported in the Company’s condensed consolidated statements of financial condition.

4.Equity and Earnings per Share

In connection with IBG, Inc.’s initial public offering of Class A common stock (“IPO”) in May 2007, it purchased 10.0% of the membership interests in IBG LLC from IBG Holdings LLC (“Holdings”), became the sole managing member of IBG LLC and began to consolidate IBG LLC’s financial results into its financial statements. Holdings owns all of IBG, Inc.’s Class B common stock, which has voting rights in proportion to its ownership interests in IBG LLC.  The table below shows the amount of IBG LLC membership interests held by IBG, Inc. and Holdings as of March 31, 2018.

	IBG, Inc.	Holdings	Total
Ownership %	17.4%	82.6%	100.0%
Membership interests	71,481,136	340,229,444	411,710,580

These condensed consolidated financial statements reflect the results of operations and financial position of IBG, Inc., including consolidation of its investment in IBG LLC and its subsidiaries. The noncontrolling interests in IBG LLC attributable to Holdings are reported as a component of total equity in the condensed consolidated statements of financial condition.

Recapitalization and Post‑IPO Capital Structure

Immediately prior to and immediately following the consummation of the IPO, IBG, Inc., Holdings, IBG LLC and the members of IBG LLC consummated a series of transactions collectively referred to herein as the “Recapitalization.” In connection with the Recapitalization, IBG, Inc., Holdings and the historical members of IBG LLC entered into an exchange agreement, dated as of May 3, 2007 (the “Exchange Agreement”), pursuant to which the historical members of IBG LLC received membership interests in Holdings in exchange for their membership interests in IBG LLC. Additionally, IBG, Inc. became the sole managing member of IBG LLC.

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

In connection with the consummation of the IPO, Holdings used the net proceeds to redeem 10.0% of members’ interests in Holdings in proportion to their interests. Immediately following the Recapitalization and IPO, Holdings owned approximately 90% of IBG LLC and 100% of IBG, Inc.’s Class B common stock, which has voting power in IBG, Inc. in proportion to Holdings’ ownership of IBG LLC.

Since consummation of the IPO and Recapitalization, IBG, Inc.’s equity capital structure has been comprised of Class A and Class B common stock. All shares of common stock have a par value of $0.01 per share and have identical rights to earnings and dividends and in liquidation. As ofMarch 31, 2018 and December 31, 2017,  1,000,000,000 shares of Class A common stock were authorized, of which 71,610,581 and 71,609,049 shares have been issued; and 71,481,133 and 71,475,755 shares were outstanding, respectively. Class B common stock is comprised of 100 authorized shares, of which 100 shares were issued and outstanding as of March 31, 2018 and December 31, 2017, respectively. In addition, 10,000 shares of preferred stock have been authorized, of which no shares are issued or outstanding as of March 31, 2018 and December 31, 2017, respectively.

As a result of a federal income tax election made by IBG LLC applicable to the acquisition of IBG LLC member interests by IBG, Inc., the income tax basis of the assets of IBG LLC acquired by IBG, Inc. have been adjusted based on the amount paid for such interests. Deferred tax assets were recorded as of the IPO date and in connection with subsequent redemptions of Holdings member interests in exchange for common stock. These deferred tax assets are included in other assets in the Company’s condensed consolidated statements of financial condition and are being amortized as additional deferred income tax expense over 15 years from the IPO date and from the additional redemption dates, respectively, as allowable under current tax law. As of March 31, 2018 and December 31, 2017, the unamortized balance of these deferred tax assets was $142 million and $146 million, respectively.

IBG, Inc. also entered into an agreement (the “Tax Receivable Agreement”) with Holdings to pay Holdings (for the benefit of the former members of IBG LLC) 85% of the tax savings that IBG, Inc. actually realizes as the result of tax basis increases. These payables to Holdings are reported as payable to affiliate in the Company’s condensed consolidated statements of financial condition. The remaining 15% is accounted for as a permanent increase to additional paid‑in capital in the Company’s condensed consolidated statements of financial condition.  

The cumulative amounts of deferred tax assets, payables to Holdings and additional paid‑in capital arising from stock offerings from the date of the IPO throughMarch 31, 2018 were $483 million, $410 million, and $73 million, respectively. Amounts payable under the Tax Receivable Agreement are payable to Holdings annually following the filing of IBG, Inc.’s federal income tax return. The Company has paid Holdings a cumulative total of$131 million through March 31, 2018 pursuant to the terms of the Tax Receivable Agreement.

The Exchange Agreement, as amended, provides for future redemptions of member interests and for the purchase of member interests in IBG LLC by IBG, Inc. from Holdings, which could result in IBG, Inc. acquiring the remaining member interests in IBG LLC that it does not own. On an annual basis, members of Holdings are able to request redemption of their interests.

At the time of IBG, Inc.’s IPO in 2007, three hundred sixty (360) million shares of authorized common stock were reserved for future sales and redemptions. From 2008 through 2010, Holdings redeemed 5,013,259 IBG LLC interests with a total value of $114 million, which redemptions were funded using cash on hand at IBG LLC. Upon cash redemption these IBG LLC interests were retired. From 2011 through 2017, IBG, Inc. issued 13,858,355 shares of common stock (with a fair value of $410 million) directly to Holdings in exchange for an equivalent number of member interests in IBG LLC.

As a consequence of these redemption transactions, and distribution of shares to employees (see Note 10), IBG, Inc.’s interest in IBG LLC has increased to approximately 17.4%, with Holdings owning the remaining 82.6% as of March 31, 2018.  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 approximately89.2%as ofMarch 31, 2018.

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Earnings per Share

Basic earnings per share is calculated utilizing net income available for common stockholders divided by the weighted average number of shares of Class A and Class B common stock outstanding for that period.

	Three Months Ended March 31,
	2018		2017
	(in millions, except share or per share amounts)
Basic earnings per share
Net income available for common stockholders	$	46	$	24
Weighted average shares of common stock outstanding
Class A		71,475,850		67,985,007
Class B		100		100
		71,475,950		67,985,107
Basic earnings per share	$	0.64	$	0.35

Diluted earnings per share are calculated utilizing the Company’s basic net income available for common stockholders divided by diluted weighted average shares outstanding with no adjustments to net income available to common stockholders for potentially dilutive common shares.

	Three Months Ended March 31,
	2018		2017
	(in millions, except share or per share amounts)
Diluted earnings per share
Net income available for common stockholders	$	46	$	24
Weighted average shares of common stock outstanding
Class A
Issued and outstanding		71,475,850		67,985,007
Potentially dilutive common shares
Issuable pursuant to employee stock incentive plans		1,036,512		1,172,507
Class B		100		100
		72,512,462		69,157,614
Diluted earnings per share	$	0.63	$	0.34

Member Distributions and Stockholder Dividends

During the three months ended March 31, 2018,  IBG LLC made distributions totaling$74 million,  to its members, of which IBG, Inc.’s proportionate share was $13 million. For the three months ended March 31, 2018, the Company paid quarterlycash dividends of $0.10 per share of common stock, totaling$7 million.  

On April 17, 2018, the Company declared a cash dividend of $0.10 per common share, payable on June 14, 2018 to stockholders of record as of June 1, 2018.

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

5.   Comprehensive Income

The following table presents comprehensive income and earnings per share on comprehensive income:

	Three Months Ended March 31,
	2018		2017
	(in millions, except share or per share amounts)
Comprehensive income available for common stockholders	$	47	$	28
Earnings per share on comprehensive income
Basic	$	0.66	$	0.41
Diluted	$	0.65	$	0.40
Weighted average common shares outstanding
Basic		71,475,950		67,985,107
Diluted		72,512,462		69,157,614

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

6.   Financial Assets and Financial Liabilities

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables set forth, by level within the fair value hierarchy (see Note 2), financial assets and liabilities, measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017. As required by ASC Topic 820, financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the respective fair value measurement.

	Financial Assets At Fair Value as of March 31, 2018
	Level 1		Level 2		Level 3		Total
	(in millions)
Securities segregated for regulatory purposes	$	4,472	$	—	$	—	$	4,472
Financial instruments owned, at fair value
Stocks		1,604		—		1		1,605
Options		731		—		—		731
Warrants and discount certificates		2		—		—		2
U.S. and foreign government securities		72		—		—		72
Corporate and municipal bonds		—		1		3		4
Currency forward contracts		—		1		—		1
Total financial instruments owned, at fair value		2,409		2		4		2,415
Total financial assets at fair value	$	6,881	$	2	$	4	$	6,887

	Financial Liabilities At Fair Value as of March 31, 2018
	Level 1		Level 2		Level 3		Total
	(in millions)
Financial instruments sold, but not yet purchased, at fair value
Stocks	$	181	$	—	$	—	$	181
Options		56		—		—		56
Currency forward contracts		—		5		—		5
Total financial instruments sold, but not yet purchased, at fair value		237		5		—		242
Total financial liabilities at fair value	$	237	$	5	$	—	$	242

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

	Financial Assets At Fair Value as of December 31, 2017
	Level 1		Level 2		Level 3		Total
	(in millions)
Securities segregated for regulatory purposes	$	4,519	$	—	$	—	$	4,519
Financial instruments owned, at fair value
Stocks		2,000		—		1		2,001
Options		1,052		—		—		1,052
Warrants and discount certificates		5		—		—		5
U.S. and foreign government securities		60		—		—		60
Corporate and municipal bonds		—		1		3		4
Currency forward contracts		—		32		—		32
Total financial instruments owned, at fair value		3,117		33		4		3,154
Total financial assets at fair value	$	7,636	$	33	$	4	$	7,673

	Financial Liabilities At Fair Value as of December 31, 2017
	Level 1		Level 2		Level 3		Total
	(in millions)
Financial instruments sold, but not yet purchased, at fair value
Stocks	$	302	$	—	$	—	$	302
Options		464		—		—		464
Currency forward contracts		—		1		—		1
Total financial instruments sold, but not yet purchased, at fair value		766		1		—		767
Total financial liabilities at fair value	$	766	$	1	$	—	$	767

Transfers between Level 1 and Level 2

Transfers of financial assets and financial liabilities at fair value to or from Levels 1 and 2 arise where the market for a specific financial instrument has become active or inactive during the period. The fair values transferred are ascribed as if the financial assets or financial liabilities had been transferred as of the end of the period.During the three months ended March 31, 2018 and 2017, there were no transfers between levels for financial assets and liabilities, at fair value.

Level 3 Financial Assets and Financial Liabilities

The Company’s Level 3 financial assets are comprised of delisted and illiquid securities reported within financial instruments owned, at fair value in the condensed consolidated statements of financial condition. During the three months ended March 31, 2018, financial assets included $1 million in stocks and $3 million in corporate and municipal bonds, which were not traded in active markets and were valued by the Company based on internal estimates. During the three months ended March 31, 2017, there were no transfers between levels for financial assets and liabilities, at fair value.

20

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Trading Gains from Market Making Transactions

Trading gains and losses from market making transactions reported in the condensed consolidated statements of comprehensive income, by major product type, are comprised of:

	Three Months Ended March 31,
	2018		2017
	(in millions)
Equities	$	13	$	3
Fixed income		—		—
Foreign exchange		—		(1)
Total trading gains, net	$	13	$	2

These transactions are related to the Company’s financial instruments owned and financial instruments sold, but not yet purchased, at fair value and include both derivative and non‑derivative financial instruments, including exchange traded options and futures. These gains and losses also include market making related dividend and fixed income trading related interest income and expense.

The gains(losses) in the table above are not representative of the integrated trading strategies applied by the Company, which utilizes financial instruments across various product types. Gains and losses in one product type frequently offset gains and losses in other product types.

Financial Assets and Liabilities Not Measured at Fair Value

The following tables represent the carrying value, fair value, and fair value hierarchy category of certain financial assets and liabilities that are not recorded at fair value in the Company'scondensedconsolidated statements of financial condition. The following table excludes certain financial instruments such as equity investments and all non-financial assets and liabilities:

	March 31, 2018
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
	(in millions)
Financial assets, not measured at fair value
Cash and cash equivalents	$	1,901	$	1,901	$	1,901	$	-	$	-
Cash - segregated for regulatory purposes		7,515		7,515		7,515		-		-
Securities - segregated for regulatory purposes		8,281		8,281		-		8,281		-
Securities borrowed		2,968		2,968		-		2,968		-
Securities purchased under agreements to resell		677		677		-		677		-
Receivables from customer		29,464		29,464		-		29,464		-
Receivables from broker, dealers, and clearing organizations		1,002		1,002		-		1,002		-
Interest receivable		99		99		-		99		-
Other assets		5		6		-		6		-
Total financial assets, not measured at fair value	$	51,912	$	51,913	$	9,416	$	42,497	$	-

Financial liabilities, not measured at fair value
Short-term borrowings	$	19	$	19	$	-	$	19	$	-
Securities loaned		4,171		4,171		-		4,171		-
Securities sold under agreements to repurchase		-		-		-		-		-
Payables to customer		47,423		47,423		-		47,423		-
Payables to brokers, dealers and clearing organizations		170		170		-		170		-
Interest payable		27		27		-		27		-
Total financial liabilities, not measured at fair value	$	51,810	$	51,810	$	-	$	51,810	$	-

21

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

	December 31, 2017
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
	(in millions)
Financial assets, not measured at fair value
Cash and cash equivalents	$	1,732	$	1,732	$	1,732	$	-	$	-
Cash - segregated for regulatory purposes		6,547		6,547		6,547		-		-
Securities - segregated for regulatory purposes		9,166		9,166		-		9,166		-
Securities borrowed		2,957		2,957		-		2,957		-
Securities purchased under agreements to resell		2,035		2,035		-		2,035		-
Receivables from customer		29,821		29,821		-		29,821		-
Receivables from broker, dealers, and clearing organizations		823		823		-		823		-
Interest receivable		116		116		-		116		-
Other assets		6		6		-		6		-
Total financial assets, not measured at fair value	$	53,203	$	53,203	$	8,279	$	44,924	$	-

Financial liabilities, not measured at fair value
Short-term borrowings	$	15	$	15	$	-	$	15	$	-
Securities loaned		4,444		4,444		-		4,444		-
Securities sold under agreements to repurchase		1,316		1,316		-		1,316		-
Payables to customer		47,548		47,548		-		47,548		-
Payables to brokers, dealers and clearing organizations		283		283		-		283		-
Interest payable		22		22		-		22		-
Total financial liabilities, not measured at fair value	$	53,628	$	53,628	$	-	$	53,628	$	-

Netting of Financial Assets and Financial Liabilities

It is the Company’s policy to net securities borrowed and securities loaned, and securities purchased under agreements to resell and securities sold under agreements to repurchase that meet the offsetting requirements prescribed in ASC Topic 210-20. In the tables below, the amounts of financial instruments that are not offset in thecondensedconsolidated statements of financial condition, but could be netted against cash or financial instruments with specific counterparties under master netting agreements, according to the terms of the agreements, including clearing houses (exchange traded options, warrants and discount certificates) or over the counter currency forward contract counterparties, are presented to provide financial statement readers with the Company’s net payable or receivable with counterparties for these financial instruments.

22

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

The following tables set forth the netting of financial assets and of financial liabilities as of March 31, 2018 and December 31, 2017:

	March 31, 2018
	Gross			Amounts			Net Amounts		Amounts Not Offset
	Amounts			Offset in the			Presented in		in the Condensed
	of Financial			Condensed			the Condensed		Consolidated Statement
	Assets and			Consolidated			Consolidated		of Financial Condition
	Liabilities			Statement of			Statement of		Cash or Financial
	Recognized			Financial Condition		2	Financial Condition		Instruments		Net Amount
	(in millions)
Offsetting of Financial Assets
Securities segregated for regulatory purposes - purchased under agreements to resell	$	8,281	1	$	—		$	8,281	$	(8,281)	$	—
Securities borrowed		2,968			—			2,968		(2,856)		112
Securities purchased under agreements to resell		677			—			677		(677)		—
Financial Instruments owned, at fair value
Options		731			—			731		(56)		675
Warrants and discount certificates		2			—			2		—		2
Currency forward contracts		1			—			1		—		1
Total	$	12,660		$	—		$	12,660	$	(11,870)	$	790

	(in millions)
Offsetting of Financial Liabilities
Securities loaned	$	4,171	$	—	$	4,171	$	(4,020)	$	151
Securities sold under agreements to repurchase		—		—		—		—		—
Financial instruments sold, but not yet purchased, at fair value
Options		56		—		56		(56)		—
Warrants and discount certificates		—		—		—		—		—
Currency forward contracts		5		—		5		—		5
Total	$	4,232	$	—	$	4,232	$	(4,076)	$	156

23

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

	December 31, 2017
		Gross		Amounts			Net Amounts		Amounts Not Offset
		Amounts		Offset in the			Presented in		in the Condensed
		of Financial		Condensed			the Condensed		Consolidated Statement
		Assets and		Consolidated			Consolidated		of Financial Condition
		Liabilities		Statement of			Statement of		Cash or Financial
		Recognized		Financial Condition		2	Financial Condition		Instruments		Net Amount
	(in millions)
Offsetting of Financial Assets
Securities segregated for regulatory purposes - purchased under agreements to resell	$	9,166	1	$	—		$	9,166	$	(9,166)	$	—
Securities borrowed		2,957			—			2,957		(2,822)		135
Securities purchased under agreements to resell		2,035			—			2,035		(2,035)		—
Financial Instruments owned, at fair value
Options		1,052			—			1,052		(451)		601
Warrants and discount certificates		5			—			5		—		5
Currency forward contracts		32			—			32		—		32
Total	$	15,247		$	—		$	15,247	$	(14,474)	$	773

	(in millions)
Offsetting of Financial Liabilities
Securities loaned	$	4,444	$	—	$	4,444	$	(4,201)	$	243
Securities sold under agreements to repurchase		1,316				1,316		(1,316)
Financial instruments sold, but not yet purchased, at fair value
Options		464		—		464		(451)		13
Warrants and discount certificates		—		—		—		—		—
Currency forward contracts		1		—		1		—		1
Total	$	6,225	$	—	$	6,225	$	(5,968)	$	257

(1) As of March 31,  2018 and December 31, 2017, the Company had $8.3 billion and $9.2 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in “securities - segregated for regulatory purposes” in thecondensed consolidated statements of financial condition.

(2) The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at March 31, 2018 and December 31,2017.

24

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Secured Financing Transactions – Maturities and Collateral Pledged

The following tables present gross obligations for securities loaned transactions by remaining contractual maturity and class of collateral pledged as of March 31, 2018 and December 31, 2017:

	March 31, 2018
	Remaining Contractual Maturity
	Overnight		Less than		30 – 90		Over 90
	and Open		30 days		days		days		Total
	(in millions)
Securities loaned
Stocks	$	4,109	$	-	$	-	$	-	$	4,109
Corporate bonds		57		-		-		-		57
Foreign government securities		5		-		-		-		5
Total securities loaned	$	4,171	$	-	$	-	$	-	$	4,171

	December 31, 2017
	Remaining Contractual Maturity
	Overnight		Less than		30 – 90		Over 90
	and Open		30 days		days		days		Total
	(in millions)
Securities Loaned
Stocks	$	4,389	$	-	$	-	$	-	$	4,389
Corporate bonds		55		-		-		-		55
Total securities loaned		4,444		-		-		-		4,444
Securities sold under agreements to repurchase
U.S. government securities		1,316		-		-		-		1,316
Total	$	5,760	$	-	$	-	$	-	$	5,760

7.Collateralized Transactions

The Company enters into securities borrowing and lending transactions and agreements to repurchase and resell securities to finance trading inventory, to obtain securities for settlement and to earn residual interest rate spreads. In addition, the Company’s customers pledge their securities owned to collateralize margin loans. Under these transactions, the Company either receives or provides collateral, including equity, corporate debt and U.S. government securities. Under typical agreements, the Company is permitted to sell or repledge securities received as collateral and use these securities to secure securities purchased under agreements to resell, enter into securities lending transactions or deliver these securities to counterparties to cover short positions.

The Company also engages in securities financing transactions with and for customers through margin lending. Customer receivables generated from margin lending activity are collateralized by customer‑owned securities held by the Company. Customers’ required margin levels and established credit limits are monitored continuously by risk management staff using automated systems. Pursuant to the Company’s policy and as enforced by such systems, customers are required to deposit additional collateral or reduce positions, when necessary to avoid automatic liquidation of their positions.

Margin loans are extended to customers on a demand basis and are not committed facilities. Factors considered in the acceptance or rejection of margin loans are the amount of the loan, the degree of leverage being employed in the customer account and an overall evaluation of the customer’s portfolio to ensure proper diversification or, in the case of concentrated positions, appropriate liquidity of the underlying collateral. Additionally, transactions relating to concentrated or restricted positions are limited or prohibited by raising the level of required margin collateral (to 100% in the extreme case). Underlying collateral for margin loans is evaluated with respect to the liquidity of the collateral positions, valuation of securities, volatility analysis and an evaluation of industry concentrations. Adherence to the Company’s collateral policies significantly limits the Company’s credit exposure to margin loans in the event of a

25

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

customer’s default. Under margin lending agreements, the Company may request additional margin collateral from customers and may sell securities that have not been paid for or purchase securities sold but not delivered from customers, if necessary. As ofMarch 31, 2018 and December 31, 2017, approximately $29.5 billion and $29.8 billion, respectively, of customer margin loans were outstanding.

The following table summarizes the amounts related to collateralized transactions as of March 31, 2018 and December 31, 2017:

	March 31, 2018				December 31, 2017
	Permitted		Sold or		Permitted		Sold or
	to Repledge		Repledged		to Repledge		Repledged
	(in millions)
Securities lending transactions	$	23,556	$	3,346	$	23,662	$	3,041
Securities purchased under agreements to resell transactions (1)		8,976		8,976		11,231		11,231
Customer margin assets		29,412		7,520		30,236		9,013
	$	61,944	$	19,842	$	65,129	$	23,285

(1) As of March 31,  2018,  $8.3 billion or 92% (as of December 31, 2017,  $9.2 billion or 82%) of securities acquired through agreements to resell that are shown as repledged have been deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3.

In the normal course of business, the Company pledges qualified securities with clearing organizations to satisfy daily margin and clearing fund requirements. As of March 31, 2018 and December 31, 2017, the majority of the Company’s U.S. and foreign government securities owned were pledged to clearing organizations.

Financial instruments owned and pledged as collateral, including amounts pledged to affiliates, where the counterparty has the right to repledge, as of March 31, 2018 and December 31, 2017 are presented in the following table:

	March 31,		December 31,
	2018		2017
	(in millions)
Stocks	$	553	$	1,150
U.S. and foreign government securities		61		54
	$	614	$	1,204

8. Revenues from Contracts with Customers

Adoption

On January 1, 2018, the Company adopted ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASC Topic 606”) using the modified retrospective method (i.e., applied prospectively effective January 1, 2018 without revising prior periods), which had no impact on the Company’s opening retained earnings.

Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring the promised services to the customers. A service is transferred to a customer when, or as, the customer obtains control of that service. A performance obligation may be satisfied at a point in time or over time. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised service. Revenue from a performance obligation satisfied over time is recognized by measuring the Company’s progress in satisfying the performance obligation in a manner that depicts the transfer of the services to the customer. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration, if any.

The Company’s revenues from contracts with customers are recognized when the performance obligations are satisfied at an amount that reflects the consideration expected to be received in exchange for such services. The majority of the Company’s performance obligations are satisfied at a point in time and are typically collected from customers by debiting their brokerage account with the Company.

26

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Nature of Services

The Company’s services under contracts with customers are mainly related to its electronic brokerage business. The Company’s main sources of revenues from contracts with customers are as follows:

- Commissions are charged to customers for order execution services and trade clearing and settlement services. The Company recognizes revenue at the time of execution of the order (i.e., trade date). Commissionsare generally collected from cleared customers on trade date and from non-cleared customers monthly.

- Market data fees are charged to customers for market data services to which they subscribe,  that are delivered by the Company. The Company recognizes revenue monthly and collects the fees monthly, in arrears.

- Risk exposure fees are charged to customers who carry positions with market risk that exceeds defined thresholds. The Company recognizes revenue and collects the fees daily.

- Payments for order flow are earned from various options exchanges based upon options trading volume originated by the Company that meets certain criteria. The Company recognizes revenue daily. Payments for order flow are collected monthly, in arrears.

- Minimum activity fees – are charged to customers that do not generate the required minimum monthly commission. The Company recognizes revenue monthly and collects thefees monthly, in arrears.

The Company’s electronic brokerage business also earns revenues from other services, including order cancelation or modification fees, position transfer fees, telecommunications fees, withdrawal fees, and bank sweep program fees, among others.

Disaggregation of Revenue

The following table sets forth revenue from contracts with customers by business segment, geographic location, and major types of services for the three months ended March 31, 2018, as follows:

	Three Months Ended March 31, 2018
	Electronic brokerage		Market making		Corporate		Total
	(in millions)
Geographic location 1
United States	$	182	$	2	$	-	$	184
International		72		-		-		72
	$	254	$	2	$	-	$	256
Major types of services
Commissions	$	220	$	-	$	-	$	220
Market data fees 2		11		-		-		11
Risk exposure fees 2		8		-		-		8
Payments for order flow 2		5		-		-		5
Minimum activity fees 2		5		-		-		5
Other 2		5		2		-		7
	$	254	$	2	$	-	$	256

(1) Based on the location of the subsidiaries in which the revenues are recorded.

(2) Included in other income on the condensed consolidated statements of comprehensive income.

27

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Receivables and Contract Balances

Receivables arise when the Company has an unconditional right to receive payment under a contract with a customer and are derecognized when the cash is received. Receivables of $12 million, as of March 31, 2018, are reported in other assets in the condensed consolidated statements of financial condition.

Contract assets arise when the revenue associated with the contract is recognized prior to the Company’s unconditional right to receive payment under a contract with a customer (i.e., unbilled receivable) and are derecognized when either it becomes a receivable or the cash is received. Contract assets are reported in other assets in the condensed consolidated statements of financial condition. As of March 31, 2018, contract asset balances were not material.

Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized either when a milestone is met triggering the contractual right to bill the customer or when the performance obligation is satisfied. Contract liabilities are reported in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition.As of March 31, 2018, contract liability balances were not material.

9.Other Income

The components of other income for the three months ended March 31, 2018 and 2017 were:

	Three Months Ended March 31,
	2018		2017
	(in millions)
Market data fees1	$	11	$	9
Minimum activity fees1		5		5
Risk exposure fees1		8		5
Payments for order flow1		5		4
Gains on financial instruments, at fair value and other investments, net		2		2
Gains from currency diversification strategy, net		38		49
Other, net		8		2
	$	77	$	76

(1) See Note 8 for description of these revenues.

Gains on financial instruments, at fair value and other investments, net include (1) realized and unrealized gains and losses on financial instruments that (a) are held for purposes other than the Company’s market making activities, (b) are subject to restrictions, or (c) are accounted for under the equity method and (2) dividends on investments accounted at cost less impairment.  

10. Employee Incentive Plans

Defined Contribution Plan

The Company offers substantially all employees of U.S.-based Operating Companies who have met minimum service requirements the opportunity to participate in defined contribution retirement plans qualifying under the provisions of Section 401(k) of the Internal Revenue Code. The general purpose of this plan is to provide employees with an incentive to make regular savings in order to provide additional financial security during retirement. This plan provides for the Company to match 50% of the employees’ pre-tax contribution, up to a maximum of 10% of eligible earnings. The employee is vested in the matching contribution incrementally over six years of service. Included in employee compensation and benefits expenses in thecondensed consolidated statements of comprehensive income were $1 million of plan contributions for each of the three months ended March 31, 2018 and 2017.

28

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

2007 ROI Unit Stock Plan

In connection with the IPO, the Company adopted the IBG, Inc. 2007 ROI Unit Stock Plan (“ROI Unit Stock Plan”). An aggregate of 1,271,009 shares of restricted common stock (consisting of 1,250,000 shares issued under the ROI Unit Stock Plan and 21,009 shares under the 2007 Stock Incentive Plan, as described below), with a fair value at the date of grant of $38 million were issued to IBG LLC and held as treasury stock.

As of March 31, 2018, the Company has distributed all shares of restricted common stock under the ROI Unit Stock Plan.

2007 Stock Incentive Plan

In 2017, the Company amended the 2007 Stock Incentive Plan (the “Stock Incentive Plan”) to extend its term for a ten-year period through April 24, 2027, which was approved by the Company’s stockholders at its 2018 Annual Meeting, held on April 19, 2018. Under the Company’s Stock Incentive Plan, up to 30 million shares of the Company’s common stock may be issued to satisfy vested restricted stock units granted to directors, officers, employees, contractors and consultants of the Company. The purpose of the Stock Incentive Plan is to promote the Company’s long‑term financial success by attracting, retaining, and rewarding eligible participants.

As a result of the Company’s organizational structure, a description of which can be found in “Business – Our Organizational Structure” in Part I Item 1 of the Company’s Annual Report on Form 10-K, there is no dilutive effect upon ownership of common stockholders of issuing shares under the Stock Incentive Plan. The issuances do not dilute the book value of the ownership of common stockholders since the restricted stock units are granted at market value, and upon their vesting and the related issuance of shares of common stock, the ownership of IBG, Inc. in IBG LLC, increases proportionately to the shares issued. As a result of such proportionate increase in share ownership, the dilution upon issuance of common stock is borne by IBG LLC’s majority member (i.e., noncontrolling interest), Holdings, and not by IBG, Inc. or its commonstockholders.Additionally, dilution of earnings that may take place after issuance of common stock is reflected in EPS reported in the Company’s financial statements. The EPS dilution can be neither estimated nor projected, but historically it has not been material.

The Stock Incentive Plan is administered by the Compensation Committee of the Company’s Board of Directors. The Compensation Committee has discretionary authority to determine the eligibility to participate in the Stock Incentive Plan and establishes the terms and conditions of the awards, including the number of awards granted to each participant and all other terms and conditions applicable to such awards in individual grant agreements. Awards are expected to be made primarily through grants of restricted stock units. Stock Incentive Plan awards are subject to issuance over time. All previously granted but not yet earned awards may be cancelled by the Company upon theparticipant’s termination of employment or violation of certain applicable covenants prior to issuance, unless determined otherwise by the Compensation Committee.

The Stock Incentive Plan provides that, upon a change in control, the Compensation Committee may, at its discretion, fully vest any granted but not yet earned awards under the Stock Incentive Plan, or provide that any such granted but not yet earned awards will be honored or assumed, or new rights substituted by the new employer on a substantially similar basis and on terms and conditions substantially comparable to those of the Stock Incentive Plan.

The Company expects to continue to grant awards on or about December 31 of each year to eligible participants as part of an overall plan of equity compensation. Restricted stock units vest and become distributable to participants in accordance with the following schedule:

•10% on the first vesting date, which is on or about May 9 of each year; and

•an additional 15% on each of the following six anniversaries of the first vesting, assuming continued employment with the Company and compliance with non-competition and other applicable covenants.

Awards granted to external directors vest, and are distributed, over a five‑year period (20% per year) commencing one year after the date of grant. A total of 24,263restricted stock units have been granted to the external directors cumulatively since the plan’sinception.

29

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Stock Incentive Plan awards granted (excluding 21,009 shares issued pursuant to the ROI Unit Stock Plan described above) and the related fair values since the plan’s inception are presented in the table below:

			Fair Value at
			Date of Grant
	Units		($ millions)
Prior periods (since inception)	20,888,468		$	397
December 31, 2015	1,211,533			52
December 31, 2016	1,451,136			55
December 31, 2017	941,742	1/2		56
	24,492,879		$	560

(1) Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 18,335 additional restricted stock units during the three months ended March 31, 2018.

(2) Granted under the Company’s amended 2007 Stock Incentive Plan, which was approved by the Company’s stockholders at its 2018 Annual Meeting, held on April 19, 2018.  

Estimated future grants under the Stock Incentive Plan are accrued for ratably during each year (see Note 2). In accordance with the vesting schedule, outstanding awards vest and are distributed to participants yearly on or about May 9 of each year. At the end of each year, there are no vested awards that remain undistributed.

Compensation expense related to the Stock Incentive Plan recognized in thecondensedconsolidated statements of comprehensive income was$14 million, and$13 million for the three months endedMarch 31, 2018 and 2017, respectively. Estimated future compensation costs for unvested awards, net of credits for cancelled awards,  as ofMarch 31, 2018 are $34 million.

The following summarizes the Stock Incentive Plan and ROI Unit Stock Plan activities from December 31, 2017 through March 31, 2018:

	Stock		ROI Unit
	Incentive Plan		Stock Plan
	Units		Shares
Balance, December 31, 2017	6,468,973	1/2	3,849
Granted	—		—
Cancelled	(11,637)		—
Distributed	(1,532)		(3,849)
Balance, March 31, 2018	6,455,804		—

(1) Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 18,335 additional restricted stock units during the three months ended March 31, 2018.

(2) Includes 941,742 restricted stock units granted under the Company’s amended 2007 Stock Incentive Plan, which was approved by the Company’s stockholders at its 2018 Annual Meeting, held on April 19, 2018.

Awards previously granted but not yet earned under the stock plans are subject to the plans’ post-employment provisions in the event a participant ceases employment with the Company.  Through March 31, 2018, a total of 578,574restricted stock units have been distributed under these post‑employment provisions. These distributions are included in the table above.

11.Income Taxes

Income tax expense for the three months endedMarch 31, 2018 and 2017differs from the U.S. federal statutory rate primarily due to the taxation treatment of income attributable to noncontrolling interests in IBG LLC and the enactment of the Tax Act, as discussed below. These noncontrolling interests are subject to U.S. taxation as partnerships. Accordingly, the income attributable to these noncontrolling interests is reported in thecondensed consolidated statements of comprehensive income, but the related U.S. income tax expense attributable to these noncontrolling interests is not reported by the Company as it is the obligation of the individual members. Income tax expense is also affected by the differing effective tax rates in foreign, state and local jurisdictions where certain of the Company’s subsidiaries are subject to corporate taxation.

30

Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with the common stock offerings (see Note 4), differences in the valuation of financial assets and liabilities, and for other temporary differences arising from the deductibility of compensation and depreciation expenses in different time periods for accounting and income tax return purposes. 

The Tax Act, as previously described, makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate to 21%,  effective January 1, 2018; (2) requiring a one-time transition tax on certain undistributed earnings of foreign subsidiaries to be paid over eight years; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (6) creating the base erosion anti-abuse tax, a new minimum tax; (7) creating a new limitation on deductible interest expense; (8) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (9) repealing the Section 199 manufacturing deduction; and (10) full expensing of qualified property for tax return purposes.

The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accountingfor the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extendbeyond one year from the enactment of the Tax Act for entities to complete the accountingunder ASC Topic 740. In accordance with SAB 118, an entity must reflect the income tax effects ofthose aspects of the Tax Act for which the accounting under ASC Topic 740 is complete. To the extent that an entity’s accounting for certain income tax effects of the Tax Act is incomplete but it is able todetermine a reasonable estimate, the entity must record a provisional estimate on its financial statements. However, if  an entity cannot determine a provisional estimate to be included on its financial statements, the entity should continue to apply ASC Topic740 on the basis of the provisions of the tax laws that were in effectimmediately before the enactment of the Tax Act.

The Company’s accounting for the following elements of the Tax Act is incomplete. However, the Company has made reasonable estimates of certain effects and, therefore, recorded provisional adjustments as follows:

Reduction of U.S. federal corporate tax rate: The Tax Act reduces the corporate tax rate to 21%, effective January 1, 2018. For certain of the Company’s deferred tax assets and liabilities, the Company recognized a provisional net decrease of $115 million with a corresponding adjustment to deferred income tax expense (or deferred tax benefit) for the year ended December, 31, 2017. As of March 31, 2018, the Company has not made any adjustments to the provisional amount recorded as of December 31, 2017. While the Company has made a reasonable estimate of the impact of the reduction in corporate rate, it may be affected by other analyses related to the Tax Act, including, but not limited to, the calculation of deemed repatriation of deferred foreign income and the state tax effect of adjustments made to federal temporary differences. The Company is still analyzing certain aspects of the Tax Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts.

Deemed Repatriation Transition Tax: The Deemed Repatriation Transition Tax (“Transition Tax”) is a tax on previously untaxed accumulated and current earnings of certain foreign subsidiaries. To determine the amount of the Transition Tax, the Company must determine, in addition to other factors, the amount of post-1986 earnings of the relevant foreign subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. As of December 31, 2017, the Company recognized a provisional Transition Tax obligation of $62 million and for the three months ended March 31, 2018, has not made any adjustments to the provisional amount recorded. This amount may change when the calculation of post-1986 foreign earnings and profits previously deferred from U.S. federal taxation and the amounts held in cash or other specified assets are finalized. The Company does not expect any significant changes, but it is continuing to gather additional information to more precisely compute the amount of the Transition Tax.

The Tax Act creates a new requirement that global intangible low taxed income (“GILTI”)earned by controlled foreign corporations (“CFC”s) must be included currently in the gross income of the CFC’s U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC-tested income” over the deemed tangible income return, which is currently defined as the excess of (1) 10 percent of the aggregate of the U.S shareholder’s pro rata share of the qualified business asset investment in each CFC with respect to which it is a U.S shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income.Under U.S. GAAP, the Company is allowed to make an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company selected the period cost method.

As of and for the three months endedMarch 31, 2018 and 2017,  the Company had no unrecognized tax and no valuation allowances on deferred tax assets were required. The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. As of March 31, 2018, the Company is no longer subject to U.S. Federal and State income tax examinations for tax years prior to 2010, and to non-U.S. income tax examinations for tax years prior to 2008.

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

As ofMarch 31, 2018, accumulated earnings held by non‑U.S. subsidiaries totaled $1.1billion  (as ofDecember 31, $1.1billion). Of this amount, approximately $0.4billion  (as ofDecember 31, 2017 $0.3billion) is attributable to earnings of the Company’s foreign subsidiaries that are considered “pass‑through” entities for U.S. income tax purposes. Since the Company accounts for U.S. income taxes on these earnings on a current basis, no additional U.S. tax consequences would result from the repatriation of these earnings other than that which would be due arising from currency fluctuations between the time the earnings are reported for U.S. tax purposes and when they are remitted. With respect to certain of these subsidiaries’ accumulated earnings (approximately $0.2billion and $0.2billion as of March 31, 2018 and December 31, 2017, respectively), repatriation would result in additional foreign taxes in the form of dividend withholding tax imposed on the recipient of the distribution or dividend distribution tax imposed on the payor of the distribution. The Company has not provided for its proportionate share of these additional foreign taxes as it does not intend to repatriate these earnings in the foreseeable future. For the same reason, the Company has not provided deferred U.S. tax on cumulative translation adjustments associated with these earnings.

12.Commitments, Contingencies and Guarantees

Litigation

The Company is subject to certain pending and threatened legal actions which arise out of the normal course of business. Litigation is inherently unpredictable, particularly in proceedings where claimants seek substantial or indeterminate damages, or which are in their early stages. The Company has not been able to quantify the actual loss or range of loss related to such legal proceedings, the manner in which they will be resolved, the timing of final resolution or the ultimate settlement. Management believes that the resolution of these actions will not have a material effect, if any, on the Company’s business or financial condition, but may have a material impact on the results of operations for a given period.

The Company accounts for potential losses related to litigation in accordance with FASB ASC Topic 450, “Contingencies.” As of March 31, 2018 and 2017, reserves provided for potential losses related to litigation matters were not material.

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, Inc., IBG LLC, Holdings, and IB LLC. Thereafter, Trading Technologies dismissed IBG, Inc. and Holdings from the case, leaving only IBG LLC and IB LLC as defendants (“Defendants”). The operative 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 Litigation”). 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. Trading Technologies also filed patent infringement lawsuits against approximately a dozen other companies in the same court. The Litigation was consolidated with the other lawsuits filed by Trading Technologies.

The Defendants and/or certain codefendants filed petitions with theUnited States Patent and Trademark Office (“USPTO”) for Covered Business Method Review (“CBM Review”) on the asserted patents. The District Court granted the Defendants’ motion to stay the Litigation pending the CBM Reviews. The USPTO Patent Trial Appeal Board found ten of the twelve asserted patents to be not patentable andtwo patents to be patentable. The Defendants have filed appeals on the claims that were held to be patentable.

It is difficult to predict the outcome of the matter, however, 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 former customer and members of the purported class of IB LLC’s customers were harmed by alleged “flaws” in the computerized system used by the Company 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.

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

On February 19, 2016, the Company filed a motion to dismiss the class action complaint. On September 28, 2016, the Court issued an order granting the Company’s motion to dismiss and dismissing the complaint in its entirety, and without providing plaintiff leave to amend. On October 5, 2016, the Court entered judgment in the Company’s favor. On October 12, 2016, plaintiff filed motions for leave to file an amended complaint and to vacate or amend judgment. On November 14, 2016, plaintiff also filed a motion to disqualify the district judge. The Company opposed all three motions. In memoranda of decision dated August 29, 2017 and September 5, 2017, the Court denied the motions. On September 28, 2017, plaintiff appealed the order of dismissal and subsequent judgment to the United States Court of Appeals for the Second Circuit. On January 9, 2018, the plaintiff filed his appellate brief.  The Company filed its opposition brief on April 10, 2018. The Company believes that the appeal, like the original complaint, lacks merit. Further, even if the Court’s dismissal were to be overturned on appeal, 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 shall be fully pursued against the plaintiff.

Guarantees

Certain of the Operating Companies provide guarantees to securities and commodities clearing houses and exchanges which meet the accounting definition of a guarantee under FASB ASC Topic 460, “Guarantees.” Under standard membership agreements, clearing house and exchange members are required to guarantee collectively the performance of other members. Under the agreements, if a member becomes unable to satisfy its obligations, other members would be required to meet shortfalls. In the opinion of management, the Operating Companies’ liability under these arrangements is not quantifiable and could exceed the cash and securities they have posted as collateral. However, the potential for these Operating Companies to be required to make payments under these arrangements is remote. Accordingly, no contingent liability is carried in thecondensed consolidated statements of financial condition for these arrangements.

In connection with its retail brokerage business, IB LLC or other electronic brokerage Operating Companies perform securities and commodities execution, clearance and settlement on behalf of their customers for whom they commit to settle trades submitted by such customers with the respective clearing houses. If a customer fails to fulfill its settlement obligations, the respective Operating Company must fulfill those settlement obligations. No contingent liability is carried on thecondensed consolidated statements of financial condition for such customer obligations.

Other Commitments

Certain clearing houses, clearing banks and firms used by certain Operating Companies are given a security interest in certain assets of those Operating Companies held by those clearing organizations. These assets may be applied to satisfy the obligations of those Operating Companies to the respective clearing organizations.

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

13. Segment and Geographic Information

The Company has two operating business segments: electronic brokerage and market making. These segments are supported by the corporate segment, which provides centralized services and executes the Company’s currency diversification strategy.

The Company conducts its electronic brokerage business through certain Interactive Brokers subsidiaries, which provide electronic trade execution and clearing services to customers worldwide. The Company conducts its remaining market making business (see Note 2 – Discontinued Operations and Costs Associated with Exit or Disposal Cost) principally through its Timber Hill subsidiaries on some of the world’s leading exchanges and market centers, primarily in exchange‑traded equities, equity options and equity‑index options and futures.

Significant transactions and balances between the Operating Companies occur, primarily as a result of certain Operating Companies holding exchange or clearing organization memberships, which are utilized to provide execution and clearing services to affiliates. Charges for transactions between segments are designed to approximate full costs. Intra‑segment and intra‑region income and expenses and related balances have been eliminated in this segment and geographic information to reflect the external business conducted in each segment or geographic region. Corporate items include non‑allocated corporate income and expenses that are not attributed to segments for performance measurement, net gains and losses on positions held as part of the Company’s overall currency diversification strategy, corporate assets and eliminations.

Management believes that the following information by business segment provides a reasonable representation of each segment’s contribution to total net revenues and income before income taxes for the three months ended March 31, 2018, and 2017, and total assets as of March 31, 2018 and December 31, 2017:

	Three Months Ended March 31,
	2018		2017
	(in millions)
Net revenues
Electronic brokerage	$	465	$	314
Market making		21		8
Corporate		41		52
Total net revenues	$	527	$	374
Income before income taxes
Electronic brokerage	$	291	$	185
Market making		9		(22)
Corporate		40		50
Total income before income taxes	$	340	$	213

	March 31,		December 31,
	2018		2017
	(in millions)
Segment assets
Electronic brokerage	$	57,316	$	58,787
Market making		3,618		8,469
Corporate		(1,841)		(6,094)
Total assets	$	59,093	$	61,162

The Company operates its automated global business in the U.S. and international markets on more than 120 electronic exchanges and market centers. A significant portion of the Company’s net revenues are generated by subsidiaries operating outside the U.S. International operations are comprised of electronic brokerage and market making activities in 29 countries in Europe, Asia and the Americas (outside the U.S.). The following table presents total net revenues and income before income taxes by geographic area for the three months ended March 31, 2018 and 2017.The geographic analysis presented below is based on the location of the subsidiaries in which the transactions are recorded. This geographic information does not reflect the way the Company’s business is managed.

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

	Three Months Ended March 31,
	2018		2017
	(in millions)
Net revenues
United States	$	420	$	303
International		107		71
Total net revenues	$	527	$	374
Income before income taxes
United States	$	294	$	195
International		46		18
Total income before income taxes	$	340	$	213

14.Regulatory Requirements

As ofMarch 31, 2018, aggregate excess regulatory capital for all of the Operating Companies was$5.2billion.

IB LLC, TH LLC and IB Corp are subject to the Uniform Net Capital Rule (Rule 15c3‑1) under the Exchange Act, IB LLC is also subject to the Commodities and Futures Trading Commission’s minimum financial requirements (Regulation 1.17), and THE is subject to the Swiss Financial Market Supervisory Authority eligible equity requirement. IBA is subject to the Australian Securities Exchange liquid capital requirement, THLI is subject to the Financial Market Authority Liechtenstein eligible capital requirements, THC and IBC are subject to the Investment Industry Regulatory Organization of Canada risk adjusted capital requirement, IBUK is subject to the U.K. Financial Conduct Authority Capital Requirements Directive, IBHK is subject to the Hong Kong Securities Futures Commission liquid capital requirement, IBI is subject to the National Stock Exchange of India net capital requirements and IBSJ is subject to the Japanese Financial Supervisory Agency capital requirements. The following table summarizes capital, capital requirements and excess regulatory capital: 

	Net Capital/
	Eligible Equity		Requirement		Excess
	(in millions)
IB LLC	$	4,230	$	458	$	3,772
TH LLC		232		-		232
THE		640		98		542
Other regulated Operating Companies		796		130		666
	$	5,898	$	686	$	5,212

Regulatory capital requirements could restrict the Operating Companies from expanding their business and declaring dividends if their net capital does not meet regulatory requirements. Also, certain Operating Companies are subject to other regulatory restrictions and requirements.

As ofMarch 31, 2018,  all of the regulated Operating Companies were in compliance with their respective regulatory capital requirements.

15.Related Party Transactions

Receivable from affiliate, reported in other assets in thecondensed consolidated statement of financial condition, represents amounts advanced to Holdings and payable to affiliate represents amounts payable to Holdings under the Tax Receivable Agreement (see Note 4).

Included in receivables from and payables to customers in thecondensed consolidated statements of financial condition as ofMarch 31, 2018 and December 31, 2017 were accounts receivable from directors, officers and their affiliates of$350 million and $250 million and payables of$825 million and $648 million, respectively. The Company may extend credit to these related parties in connection with margin loans. Such loans are (i) made in the ordinary course of business, (ii) are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the

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Interactive Brokers Group, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

company, and (iii) do not involve more than the normal risk of collectability or present other unfavorable features.

16.Subsequent Events

As required by FASB ASC Topic 855, “Subsequent Events,” the Company has evaluated subsequent events for adjustment to or disclosure in itscondensed consolidated financial statements through the date thecondensed consolidated financial statements were issued.

Except as disclosed in Note 4, Note 10 and Note 12, no other recordable or disclosable events occurred.

*****

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes in Item 1, included elsewhere in this report. In addition to historical information, the following discussion also contains forward‑looking statements that include risks and uncertainties. Our actual results may differ materially from those anticipated in these forward‑looking statements as a result of certain factors, including those set forth under the heading “Risk Factors” in our Annual Report on Form 10‑K filed with the Securities Exchange Commission (“SEC”) on March 1, 2018 and elsewhere in this report.

Introduction

Interactive Brokers Group, Inc. (the “Company” or “IBG, Inc.”) is a holding company whose primary asset is its ownership of approximately 17.4% of the membership interests of IBG LLC. The remaining approximately 82.6% of IBG LLC membership interests are held by IBG Holdings LLC (“Holdings”), a holding company that is owned by our founder, Chairman and Chief Executive Officer, Mr. Thomas Peterffy and his affiliates, management and other employees of IBG LLC, and certain other members. The table below shows the amount of IBG LLC membership interests held by IBG, Inc. and Holdings as of March 31, 2018.

	IBG, Inc.	Holdings	Total
Ownership %	17.4%	82.6%	100.0%
Membership interests	71,481,136	340,229,444	411,710,580

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 condensed consolidated financial statements elsewhere in this report). We custody and service accounts for hedge and mutual funds, registered investment advisers, proprietary trading groups, introducing brokers and individual investors. We specialize in routing orders and executing and processing trades in securities, futures and foreign exchange instruments on more than 120 electronic exchanges and market centers around the world. Since our inception in 1977, we have focused on developing proprietary software to automate broker‑dealer functions. The proliferation of electronic exchanges over nearlythe last three decades has provided us with the opportunity to integrate our software with an increasing number of exchanges and market centers into one automatically functioning, computerized platform that requires minimal human intervention.

When we use the terms “we,” “us,” and “our,” we mean IBG, Inc. and its subsidiaries for the periods presented.

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.

Electronic Brokerage. We conduct our electronic brokerage business through certain Interactive Brokers (“IB”) subsidiaries. As an electronic broker, we execute, clear and settle trades globally for both institutional and individual customers. Capitalizing on our proprietary technology originally developed for our market making business, IB’s 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. We offer our customers access to all classes of tradable, primarily exchange‑listed products, including stocks, bonds, options, futures, forex and mutual funds traded on more than 120 exchanges and market centers in 30 countries and in 23 currencies seamlessly around the world. The emerging complexity of multiple market centers has provided us with the opportunity of building and continuously adapting our order routing software to secure excellent execution prices.

Our customer base is diverse with respect to geography and segments. Currently, more than half 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 69% of our customers’ equity is in institutional accounts such as hedge funds, financial advisors, proprietary trading desks and introducing brokers. Specialized products and services that we have developed are successfully attracting these accounts. For example, we offer prime brokerage services, including capital introduction and securities lending to hedge funds; our model portfolio technology and automated share allocation and rebalancing tools are particularly attractive to financial advisors; and our trading platform and low pricing attract introducing brokers.  

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We provide a host of analytical tools such as Investors’ MarketplaceSM, which allows wealth advisors to search for money managers and assign them to customer accounts based on their investment strategy. EmployeeTrackSM is widely used by compliance officers of financial institutions to streamline the process of tracking their employees’ brokerage activities. The Probability Lab®allows our customers to analyze option strategies under various market assumptions. Risk NavigatorSM is a real-time market risk management platform which allows our customers to measure risk exposure across multiple asset classes around the globe.Portfolio BuilderSM allows our customers to set up an investment strategy based on research and rankings from top research providers and fundamental data. IB Asset Management recruits registered financial advisors, vets them, analyzes their investment track records, groups them by their risk profile, and allows retail investors to assign their accounts to be traded by one or more advisors. In addition, our Greenwich Compliance affiliate offers direct expert registration and start-up compliance services, as well as answers to basic day-to-day compliance questions for experienced investors and traders looking to start their own investment advisor firms. Greenwich Compliance professionals have regulatory and industry experience, and they can help investment advisors trading on the IB platform meet their registration and compliance needs. OurInteractive Brokers Debit Mastercard® allows customers to spend and borrow directly against their account and to make purchases and ATM withdrawals anywhere Debit Mastercard® is accepted around the world. Our Insured Bank Deposit Sweep Program provides customers with up to $2,500,000 of FDIC insurance on their eligible cash balances in addition to the existing $250,000 SIPC coverage, for a maximum coverage of $2,750,000.

Market Making. On March 8, 2017 we announced our intention to discontinue our options market making activities globally.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. 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 activitiesin 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 after we discontinue our options market making activities.

We conduct our market making business primarily through our Timber Hill subsidiaries. As a market maker, in the few select markets in which we operate,we provide liquidity by offering competitively tight bid/offer spreads over a broad base of tradable, exchange‑listed products. 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. 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. 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.

The operating business segments are supported by our corporate segment which provides centralized services and executes our currency diversification strategy.

Financial Overview

First Quarter Results: Diluted earnings per share were $0.63 for the quarter ended March 31, 2018 (“current quarter”), compared to diluted earnings per share of$0.34 for the quarter ended March 31, 2017 (“prior year quarter”).The calculation of diluted earnings per share is detailed in Note 4 to the condensed consolidated financial statements, elsewhere in this report.

On a comprehensive basis, which includes other comprehensive income (“OCI”), diluted earnings per share were $0.65for the current quarter, compared to diluted earnings per share of $0.40 for the prior year quarter.

In connection with our currency diversification strategy, we determine our net worth in GLOBALs, a basket of 14 major currencies in which we hold our equity. As a result, as of March 31, 2018, approximately 31% of our equity was denominated in currencies other than the U.S. dollar. In the current quarter, our currency diversification strategy increased our comprehensive earnings by $46 million (compared to an increase of $73 million in the prior year quarter), as the U.S. dollar value of the GLOBAL increased by approximately 0.73%, compared to its value as of December 31, 2017. The effects of our currency diversification strategy are reported as (1) a component of other income in thecondensed consolidated statement of comprehensive income and (2) OCI in thecondensed consolidated statement of financial condition and thecondensed consolidated statement of comprehensive income. The full effect of the GLOBAL is captured in comprehensive income.

A discussion of our approach to managing foreign currency exposure is contained in Part I, Item 3 of this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures about Market Risk.”

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Consolidated:For the current quarter, our net revenues were $527 million and income before income taxes was $340 million, compared to net revenues of $374 million and income before income taxes of $213 million in the prior year quarter. The increase in income before income taxes in the current quarter was mainly driven by a 53% increase in net interest income and 43% increase in commissions, partially offset by a 20% increase in execution and clearing costs and a 13% increase in employee compensation and benefits. Our pre-tax profit margin was 65%, compared to 57% for the prior year quarter.

Electronic Brokerage: For the current quarter, income before income taxes in our electronic brokerage segment  increased $106 million, or 57%, compared to the prior year quarter, driven by higher net interest income, commissions, and other income, partially offset by higher execution and clearing, general and administrative, and employee compensation and benefits expenses.Net revenues increased 48%, mainly froma 56% increase in net interest income, driven by higher Federal Funds rates and higher average customer credit and margin loan balances; a 43% increase in commissions, primarily driven by higher options and futures contract and stock share volumes; and a 40% increase in other income led by increases in risk exposure fees and market data fees, compared to the prior year quarter. Pre-tax profit margin was63% for the current quarter, compared to59% for the prior year quarter. Customer accounts grew 27% and customer equity increased 33%fromthe prior year quarter.  For the current quarter, total Daily Average Revenue Trades (“DARTs”) for cleared and execution‑only customers  increased43%to 939 thousand, compared to 657 thousandfor the prior year quarter.

Market Making: For the current quarter, income before income taxes in our market making segment increased $31 million, to a gain of $9 million compared to the prior year quarter, during which we began to wind down operations in this segment.  The current quarter’s results reflect higher trading gains 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 year-end we had exited the majority of our market making activities outside the U.S.In addition, as a result of discontinuing our options market making activities, we expect that approximately $40 million in annual net expenses will be absorbed by the electronic brokerage segment. As of March 31, 2018, on a prospective basis, approximately 95% of the resources related to the $40 million in annual net expenses have been transferred to the electronic brokerage segment.

Under 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. The agreement provides Two Sigma Securities, LLC the opportunity to enter non-U.S. parts of this business and, while it does not preclude us from participating in those markets, the earn-out would be effective only in markets where we did not compete.

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Trading Volumes and Brokerage Statistics

The following tables present historical trading volumes and brokerage statistics for our business. However, volumes are not the only drivers in our business.

TRADE VOLUMES:

(in 000’s, except %)

					Brokerage
	Market		Brokerage		Non				Avg. Trades
	Making	%	Cleared	%	Cleared	%	Total	%	per U.S.
Period	Trades	Change	Trades	Change	Trades	Change	Trades	Change	Trading Day
2015	65,937		242,846		18,769		327,553		1,305
2016	64,038	(3%)	259,932	7%	16,515	(12%)	340,485	4%	1,354
2017	31,282	(51%)	265,501	2%	14,835	(10%)	311,618	(8%)	1,246
1Q2017	12,224		62,914		3,665		78,803		1,271
1Q2018	4,469	(63%)	89,621	42%	4,695	28%	98,785	25%	1,619
4Q2017	4,263		71,502		3,800		79,565		1,273
1Q2018	4,469	5%	89,621	25%	4,695	24%	98,785	24%	1,619

CONTRACT AND SHARE VOLUMES:

(in 000’s, except %)

TOTAL

	Options	%	Futures (1)	%	Stocks	%
Period	(contracts)	Change	(contracts)	Change	(shares)	Change
2015	634,388		140,668		172,742,520
2016	572,834	(10%)	143,287	2%	155,439,227	(10%)
2017	395,885	(31%)	124,123	(13%)	220,247,921	42%
1Q2017	121,155		30,366		53,300,920
1Q2018	115,438	(5%)	43,449	43%	68,380,398	28%
4Q2017	89,381		31,445		58,373,129
1Q2018	115,438	29%	43,449	38%	68,380,398	17%

MARKET MAKING

	Options	%	Futures (1)	%	Stocks	%
Period	(contracts)	Change	(contracts)	Change	(shares)	Change
2015	335,406		14,975		15,376,076
2016	307,377	(8%)	14,205	(5%)	13,082,887	(15%)
2017	102,025	(67%)	5,696	(60%)	7,139,622	(45%)
1Q2017	52,291		2,511		1,954,775
1Q2018	13,256	(75%)	935	(63%)	2,817,831	44%
4Q2017	11,228		1,002		1,750,178
1Q2018	13,256	18%	935	(7%)	2,817,831	61%

(1) Futures contract volume includes options on futures.

40

BROKERAGE TOTAL

	Options	%	Futures (1)	%	Stocks	%
Period	(contracts)	Change	(contracts)	Change	(shares)	Change
2015	298,982		125,693		157,366,444
2016	265,457	(11%)	129,082	3%	142,356,340	(10%)
2017	293,860	11%	118,427	(8%)	213,108,299	50%
1Q2017	68,864		27,855		51,346,145
1Q2018	102,182	48%	42,514	53%	65,562,567	28%
4Q2017	78,153		30,443		56,622,951
1Q2018	102,182	31%	42,514	40%	65,562,567	16%

BROKERAGE CLEARED

	Options	%	Futures (1)	%	Stocks	%
Period	(contracts)	Change	(contracts)	Change	(shares)	Change
2015	244,356		124,206		153,443,988
2016	227,413	(7%)	128,021	3%	138,523,932	(10%)
2017	253,304	11%	116,858	(9%)	209,435,662	51%
1Q2017	60,366		27,528		50,397,970
1Q2018	87,705	45%	41,742	52%	64,494,943	28%
4Q2017	66,232		30,041		55,714,749
1Q2018	87,705	32%	41,742	39%	64,494,943	16%

(1) Futures contract volume includes options on futures.

BROKERAGE STATISTICS:

(in 000’s, except % and where noted)

Year over Year	1Q2018		1Q2017		% Change
Total Accounts		517		406	27%
Customer Equity (in billions) (1)	$	129.2	$	96.8	33%
Cleared DARTs		876		609	44%
Total Customer DARTs		939		657	43%
Cleared Customers (in $'s, except DART per account)
Commission per DART	$	4.04	$	4.01	1%
DART per Avg. Account (Annualized)		439		385	14%
Net Revenue per Avg. Account (Annualized)	$	3,768	$	3,157	19%

Consecutive Quarters	1Q2018		4Q2017		% Change
Total Accounts		517		483	7%
Customer Equity (in billions) (1)	$	129.2	$	124.8	4%
Cleared DARTs		876		681	29%
Total Customer DARTs		939		730	29%
Cleared Customers (in $'s, except DART per account)
Commission per DART	$	4.04	$	3.92	3%
DART per Avg. Account (Annualized)		439		363	21%
Net Revenue per Avg. Account (Annualized)	$	3,768	$	3,318	14%

(1)   Excludes non‑customers.

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Business Environment

With market volatility, which had long been absent, returning in February and March, we maintained our position as one of the largest U.S. electronic brokers as measured by the number of customer revenue trades and increased our DARTs 43% from the prior year quarter. New customer account growth remained robust as total customer accounts increased 27% from the prior year quarter to 517 thousand. Institutional customers, such as hedge funds, mutual funds, introducing brokers, proprietary trading groups and financial advisors, comprised approximately 49% of total accounts and approximately 69% of total customer equity as of March 31, 2018. Our customer base is geographically diverse, with customers residing in over 200 countries and territories and over 50% of new customers come from outside the U.S. Average equity per account increased 5% from the prior year quarter to $250 thousand, as we continued to attract larger customers that seek our superior technology and low costs as well as our securities finance services, including margin lending and short sale support.

Electronic brokerage net interest income grew 56%, compared to the prior year quarter. The Federal Reserve’s five increases in the Federal Funds target rate since December 2016, together with higher average customer credit and margin loan balances, generated significantly more net interest income than in the prior year quarter. Our low margin lending rates are tied to benchmark rates, such as the Federal Funds rate in the U.S. In the current quarter, our customers paid 1.6% to 3.2% for their U.S. dollar margin loans with us. Average customer credit balances rose 11% due to an inflow of new accounts, and average customer margin loan balances increased 49% from the prior year quarter due to customers’ appetite for increased leverage, along with expanded prime broker financing.

Market making segment results increased in the current quarter on higher trading gains and lower non-interest expenses on the remaining operations.  

The following is a summary of the key profit drivers that affect our business and how they compared to the prior year quarter:

Global trading volumes. According to data received from exchanges worldwide, volumes in exchange‑listed equity‑based options increased by approximately 33% globally and in the U.S. for the current quarter, compared to the prior year quarter. During the current quarter we accounted for approximately 4.7% (6.5% in the prior year quarter) of the exchange‑listed equity‑based options volume traded worldwide (including options on ETFs and stock index products), and approximately 7.0% (9.3% in in the prior year quarter) of exchange‑listed equity‑based options volume traded in the U.S. This decrease was primarily due to exiting our options market making activities. It is important to note that this metric is not directly correlated with our profits. See tables on pages 40-41 of this Quarterly Report on Form 10-Q for additional details regarding our trade volumes, contract and share volumes and brokerage statistics.

Volatility. Based on the Chicago Board Options Exchange Volatility Index (“VIX®”), the average volatility increased to 17.2 in the current quarter, up 47% from the average of 11.7 in the prior year quarter and peaking at50.3 during February of 2018. Higher volatility improves our electronic brokerage performance becauseit generally results in higher trading volumes.  

Interest Rates. 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. As our margin balances are tied to benchmark rates, rising U.S. interest rates have enhanced the interest we receive on our U.S. dollar customer margin balances. Rising rates also increase the interest we earn on our segregated cash, the majority of which is invested in U.S. government securities and related instruments.  Higher rates also raise our interest expense, as we pass along more interest to our customers.  We believe our yields attract customers to our platform.

Currency fluctuations. As a global electronic broker 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 14 currencies we call the “GLOBAL” in order to diversify our risk and to align our hedging strategy with the currencies that we use in our business. Because we report our financial results in U.S. dollars, the change in the value of the GLOBAL versus the U.S. dollar affects our earnings. During the current quarter the value of the GLOBAL, as measured in U.S. dollars, increased 0.73% compared to its value as of December 31, 2017, which had a positive impact on our comprehensive earnings for the current quarter.

A discussion of our approach for managing foreign currency exposure is contained in Part I, Item 3 of this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures about Market Risk.”

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Certain Trends and Uncertainties

We believe that our current operations may be favorably or unfavorably impacted by the following trends that may affect our financial condition and results of operations:

•Our market making activities will continue to be impacted by the following trends until we complete its wind-down.

· Over the past several years, the effects of market structure changes, competition (in particular, from high frequency traders) and market conditions have, during certain periods, exerted downward pressure on bid/offer spreads realized by market makers.

· In recent years, in an effort to improve the quality of their executions as well as to increase efficiencies, market makers have increased the level of automation within their operations, which may allow them to compete more effectively with us.

· A driver of our market making profits is the relationship between actual and implied volatility in the equities markets. The cost of maintaining our conservative risk profile is based on implied volatility, while our profitability, in part, is based on actual volatility. Hence, our profitability is increased when actual volatility runs above implied volatility and it is decreased when actual volatility falls below implied volatility. Implied volatility tends to lag actual volatility.

•Retail broker‑dealer participation in the equity markets has fluctuated over the past few years due to investor sentiment, market conditions and a variety of other factors. Retail transaction volumes may not be sustainable and are not predictable.

•Scrutiny of equity and option market makers, hedge funds and soft dollar practices by regulatory and legislative authorities has increased. New legislation or modifications to existing regulations and rules could occur in the future.

· Additional consolidation among market centers may adversely affect the value of our SmartRoutingSM software.

•Benchmark interest rates have fluctuated over the past years due to economic conditions. Changes in interest rates may not be predictable.

See “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10‑K, filed with the SEC on March 1, 2018, and elsewhere in this report for a discussion of other risks that may affect our financial condition and results of operations.

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Results of Operations

The tables in the period comparisons below provide summaries of our consolidated results of operations. The period‑to‑period comparisons below of financial results are not necessarily indicative of future results.

	Three Months Ended March 31,
	2018		2017
	(in millions, except share and per share amounts)
Revenues
Commissions	$	220	$	154
Interest income		311		177
Trading gains		13		2
Other income		77		76
Total revenues		621		409
Interest expense		94		35
Total net revenues		527		374
Non-interest expenses
Execution and clearing		73		61
Employee compensation and benefits		70		62
Occupancy, depreciation and amortization		12		13
Communications		6		8
General and administrative		23		16
Customer bad debt		3		1
Total non-interest expenses		187		161
Income before income taxes		340		213
Income tax expense		21		18
Net income		319		195
Less net income attributable to noncontrolling interests		273		171
Net income available for common stockholders	$	46	$	24
Earnings per share
Basic	$	0.64	$	0.35
Diluted	$	0.63	$	0.34
Weighted average common shares outstanding
Basic		71,475,950		67,985,107
Diluted		72,512,462		69,157,614
Comprehensive income
Net income available for common stockholders	$	46	$	24
Other comprehensive income
Cumulative translation adjustment, before income taxes		1		4
Income taxes related to items of other comprehensive income		-		-
Other comprehensive income, net of tax		1		4
Comprehensive income available for common stockholders	$	47	$	28
Comprehensive income attributable to noncontrolling interests
Net income attributable to noncontrolling interests	$	273	$	171
Other comprehensive income - cumulative translation adjustment		7		19
Comprehensive income attributable to noncontrolling interests	$	280	$	190

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Three Months Ended March 31, 2018 (“current quarter”) compared to the Three Months Ended March 31, 2017 (“prior year quarter”)

Net Revenues

Total net revenues, for the current quarter,  increased$153 million, or 41%, compared to the prior year quarter, to $527 million. The increase in net revenues was primarily due to higher net interest income, commissions and trading gains. Trading volume is an important driver of revenues and costs for our businesses. During the current quarter, our electronic brokerage options and futures contract and stock share volumes increased 48%, 53% and 28%, respectively, compared to the prior year quarter.

Commissions

Commissions,for the current quarter, increased $66 million,  or 43%,  compared to the prior year quarter,to $220 million,driven by higher customer trading volumes in futures, options and stocks, continued customer account growth and higher average commission per customer order. Cleared customer options and futures contractand stock share volumesincreased45%, 52% and 28%, respectively, compared to the prior year quarter. Total DARTs for cleared and execution-only customers, for the current quarter,increased 43% to 939 thousand, compared to 657 thousand for the prior year quarter. DARTs for cleared customers, i.e., customers for whom we execute trades, as well as clear and carry positions, for the current quarter, increased44% to 876 thousand, compared to 609 thousand for the prior year quarter. Average commission per DART for cleared customers, for the current quarter,  increased by 1% to $4.04, compared to $4.01 for the prior year quarter, reflecting larger average order size in options and higher average commission per share in stocks.

Interest Income and Interest Expense

Net interest income (interest income less interest expense), for the current quarter, increased $75 million, or 53%,  compared to the prior year quarter, to $217 million. The increase in net interest income was driven by higher average customer credit and margin loan balances and higher benchmark interest rates.

Net interest income on customer balances, for the current quarter,increased $59million, compared to the prior year quarter, driven by a $4.8 billion increase in average customer credit balances, a portion of which were invested in interest-bearing U.S. government securities, a $9.6 billion increase in average customer margin loans, and a 73 basis point increase in the average Federal Funds effective rate to 1.43%, compared to the prior year quarter. As a result of the increases in the Federal Funds effective rate since December 2016, interest expense on customer credit balances denominated in U.S. dollars increased from the prior year quarter, in part, as we passed along more interest to our customers. The increase in benchmark rates also drove higher interest income earned on the investment of customer segregated cash and on margin lending to customers.

We earn income on securities loaned and borrowed to support customer long and short stock holdings in margin accounts. In addition, our Stock Yield Enhancement Program provides an opportunity for customers with fully-paid stock to allow us to lend it out. We pay customers a rebate on the cash collateral generally equal to 50% of the income we earn from lending the shares. We place cash collateral securing the loans in the customer’s account.

In the current quarter, average securities borrowed decreased24%, to $3.0 billion and average securities loaned increased 17%, to $4.3 billion, compared to the prior year quarter.  Securities borrowed and loaned balances were both impacted by reduced activity in the market making segment. Net interest earned from securities lending is affected by the level of demand for securities positions held by our customers andin our market making business. During the current quarter, net fees earned from securities lending transactionsincreased $14million, or 42%, compared to the prior year quarter.  The increase in net interest income from securities lending transactions was attributable to the electronic brokerage segment. It should be noted that securities lending transactions entered into to support customer activity may produce interest income (expense) that is offset by interest expense (income) related to customer balances.

The Company measures return on interest-earning assets using net interest margin (“NIM”). NIM is computed by dividing the annualized net interest income by the average interest-earning assets for the period. Interest-earning assets consist of cash and securities segregated for regulatory purposes (including U.S. government securities and securities purchased under agreements to resell), customer margin loans, securities borrowed,  other interest-earning assets (solely firm assets) and customer cash balances swept into FDIC insured banks as part of our Insured Bank Deposit Sweep Program. Interest-bearing liabilities consist of customer credit balances and securities loaned.

Yields are generally a reflection of benchmark interest rates in each currency in which the Company and its customers hold cash balances. Because a substantial portion of customer cash and margin loans are denominated in currencies other than the U.S. dollar,

45

changes in U.S. benchmark interest rates do not impact the total amount of segregated cash and securities, customer margin loans and customer credit balances. Furthermore, because interest is paid only on eligible cash credit balances (i.e., balances over $10 thousand or equivalent, including free credits in commodities accounts, in accounts with over $100 thousand in equity), changes in benchmark interest rates are not passed through to the total amount of customer credit balances. Finally, the Company’s policies with respect to currencies with negative interest rates impact the yields on segregated cash and customer credit balances as effective interest rates in those currencies fluctuate.

The following table presents net interest income information corresponding to interest-earning assets and interest-bearing liabilities for the three months ended March 31, 2018 and 2017:

	Three Months Ended March 31,
	2018		2017
	(in millions)
Average interest-earning assets
Segregated cash and securities	$	20,989	$	24,637
Customer margin loans		29,428		19,802
Securities borrowed		3,019		3,973
Other interest-earning assets		3,943		2,258
FDIC sweeps (1)		781		35
	$	58,160	$	50,705
Average interest-bearing liabilities
Customer credit balances	$	47,865	$	43,115
Securities loaned		4,341		3,695
	$	52,206	$	46,810
Net Interest income
Segregated cash and securities, net (2)	$	74	$	39
Customer margin loans (3)		139		75
Securities borrowed and loaned, net		47		33
Customer credit balances, net (2)/(3)		(49)		(9)
Other net interest income (4)		11		4
Net interest income	$	222	$	142
Net interest margin ("NIM")		1.55%		1.12%
Annualized Yields
Segregated cash and securities		1.43%		0.64%
Customer margin loans		1.92%		1.54%
Customer credit balances		0.42%		0.08%

(1) Represents the average amount of customer cash swept into FDIC-insured banks primarily as part of our Insured Bank Deposit Sweep Program. This item is not recorded in the Company's consolidated statement of financial condition. Income derived from program deposits is reported in other net interest income in the table above.

(2) During the current quarter, we have recategorized components of net interest income related to currencies with negative interest rates and as such, prior period amounts have been adjusted to conform to the current period presentation. For the quarter ended March 31, 2017, $4 million has been recategorized from net interest income on “segregated cash and securities, net” to “customer credit balances, net”. For the quarters ended June 30, 2017, September 30, 2017 and December 31, 2017 the amounts recategorized were $4 million, $4 million and $5 million, respectively.

(3) Interest income and interest expense on customer margin loans and customer credit balances, respectively, are calculated on daily cash balances within each customer’s account on a net basis, which may result in an offset of balances across multiple account segments (e.g., between securities and commodities segments).   

(4) Includes income from financial instruments which has the same characteristics as interest, but is reported in other income in the Company’s condensed consolidated statements of comprehensive income.

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Trading Gains

Trading gains, for the current quarter, increased$11 million, or 550%, compared to the prior year quarter, to $13 million,  on the remaining market making operations.  Reflecting the wind-down ofour options market making activities, our market making operations executed4.5 million trades compared to 12.2 million trades executed in the prior year quarter.  In addition, market making options andfutures contract volumes decreased 75% and 63%, respectively, while stock share volumes increased 44%, compared to the prior year quarter, mainly due to low-priced stocks traded in Hong Kong.  

Included in trading gains are net dividends. Dividend income and expense arise from holding market making positions over dates on which dividends are paid to shareholders of record. When a stock pays a dividend, its market price is generally adjusted downward to reflect the value paid, which will not be received by those who purchase stock on or after the ex-dividend date. Hence, the apparent gains and losses due to these price changes, reflecting the value of dividends paid to shareholders, must be taken together with the dividends paid and received, respectively, to accurately reflect the results of our market making activities.

Other Income

Other income, for the current quarter,  increased $1 million, or 1%, compared to the prior year quarter, to $77 million, mainly driven by a  $3 millionincrease in risk exposure fee income and smaller increases related to net gains from other investments, market data feeincome, consulting fee income,order flow income,and  FDIC sweep fee income,  partially offset by an $11 million decrease in gains from our currency diversification strategy(a $38 million gain for the current quarter, compared to a gain of $49 million in the prior year quarter) and by a $3 million net mark-to-market loss on our U.S. government securities portfolio in the current quarter, compared to $1 million net mark-to-market loss in the prior year quarter. Despite an increase in average medium term interest rates during the current quarter, the net mark-to-market loss on our U.S. government securities portfolio was only $3 million, reflecting a reduction in the size and average duration of the portfolio. In general, mark-to-market gains and losses on U.S. government securities are expected to reverse when, as intended, these securities are held to maturity. A discussion of our approach to managing foreign currency exposure is contained in Part I, Item 3 of this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures about Market Risk.

Non‑Interest Expenses

Non-interest expenses, for the current quarter, increased $26 million, or 16%,  compared to the prior year quarter, to $187 million,  mainly due to a $12 million increase in execution and clearing expenses, an $8 million increase in employee compensation and benefits, a $7 million increase in general and administrative expenses, and a $2 million increase in customer bad debt, partially offset by a $2 million decrease in communication expense and a $1 million decrease in occupancy expenses compared to the prior year quarter. As a percentage of total net revenues, non-interest expenses were 35% for the current quarterand 43%for the prior year quarter.

Execution and Clearing

Execution and clearing expenses, for the current quarter, increased $12 million, or 20%, compared to the prior year quarter, to $73 million,driven by higher electronic brokerage segment trade volumes, where customer options and futures contract and stock share volumes increased 48%, 53% and 28%, respectively. This was partially offset by the wind-down of our market making operations, which resulted in substantially lower options and futures contract volume.

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Employee Compensation and Benefits

Employee compensation and benefits expenses, for the current quarter, increased $8 million, or 13%, compared to the prior year quarter, to$70 million, mainly due to increases in employee incentive compensation accruals in the current quarter, compared to the prior year quarter, and a 3% increase in the number of employees to 1,252, for the current quarter, compared to 1,211 for the prior year quarter. Within the operating business segments, we continued to add staff in customer service, legal and compliance, and software development to support electronic brokerage and reduce staff in market making. As we continue to grow, our focus on automation has allowed us to maintain a relatively small staff. As a percentage of total net revenues, employee compensation and benefits expenses were 13% for the current quarter and 17% for the prior year quarter.

General and Administrative

General and administrative expenses, for the current quarter, increased $7 million, or 44%,  compared to the prior year quarter, to $23 million, mainly due to higher professional services fees and expenses related to legal and regulatory matters.As a percentage of total net revenues, general and administrative expenseswere4% for both the current quarter and the prior year quarter.

Customer Bad Debt

Customer bad debt expense, for the current quarter,increased $2 millioncompared to the prior year quarter, to $3 million.

Income Tax Expense

Income tax expense, for the current quarter, increased $3 million, or 17%, to $21 million, compared to the prior year quarter, primarily due to higher taxable income in the current quarter, partially offset by the effects of theTax Cuts and Jobs Act (the “Tax Act”) which reduced the corporate income tax rate from 35% to 21%. See Note 11 to the condensed consolidated financial statements, in Part 1, included elsewhere in this report.

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The following table presents information about our income tax expense for the three months ended March 31, 2018 and 2017.

	Three Months Ended March 31,
	2018		2017
	(in millions, except %)
Consolidated
Consolidated income before income taxes	$	340	$	213
IBG, Inc. stand-alone income before income taxes		-		-
Operating Companies income before income taxes	$	340	$	213
Operating Companies
Income before income taxes	$	340	$	213
Income tax expense		10		8
Net income available to members	$	330	$	205
IBG, Inc.
Average ownership percentage in IBG LLC		17.4%		16.6%
Net income available to IBG, Inc. from Operating Companies	$	57	$	34
IBG, Inc. stand-alone income before income taxes		-		-
Income before income taxes		57		34
Income tax expense		11		10
Net income available to common stockholders	$	46	$	24
Consolidated income tax expense
Income tax expense attributable to Operating Companies	$	10	$	8
Income tax expense attributable IBG, Inc.		11		10
Consolidated income tax expense	$	21	$	18

Our operating results, for the current quarter, excluding the effects of our currency diversification strategy and the net mark-to-market gains and losses from our U.S. government securities portfolio, compared to the prior year quarter, were as follows: net revenues were $492 million, up 51%; income before income taxes was $305 million, up 85%; and pre-tax profit margin increased to 62% for the current quarter, from 51% for the prior year quarter.

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Business Segments

The following table sets forth the net revenues, non-interest expenses and income before income taxes for our business segments:

		Three Months Ended March 31,
		2018		2017
		(in millions)
Electronic Brokerage	Net revenues	$	465	$	314
	Non-interest expenses		174		129
	Income before income taxes	$	291	$	185
	Pre-tax profit margin		63%		59%
Market Making	Net revenues	$	21	$	8
	Non-interest expenses		12		30
	Income (loss) before income taxes	$	9	$	(22)
	Pre-tax profit (loss) margin		43%		(275%)
Corporate(1)	Net revenues	$	41	$	52
	Non-interest expenses		1		2
	Income before income taxes	$	40	$	50
Total	Net revenues	$	527	$	374
	Non-interest expenses		187		161
	Income before income taxes	$	340	$	213
	Pre-tax profit margin		65%		57%

(1) The corporate segment includes corporate related activities, inter-segment eliminations, and gains and losses on positions held as part of our overall currency diversification strategy.

The following sections discuss the results of our operations by business segment, excluding a discussion of corporate segment income and expense. In the following tables, revenues and expenses directly associated with each business segment are included in determining income before income taxes. Due to the integrated nature of the business segments, estimates and judgments have been made in allocating certain revenue and expense items. Transactions between business segments generally result from one subsidiary facilitating the business of another subsidiary through the use of its existing trading memberships and clearing arrangements. In such cases, certain revenue and expense items are eliminated to accurately reflect the external business conducted in each business segment. Rates on transactions between business segments are designed to approximate full costs. In addition to execution and clearing expenses, which are the main cost driver for both the market making and the electronic brokerage segments, each business segment’s operating expenses include: (i) employee compensation and benefits expenses that are incurred directly in support of each business segment, (ii) general and administrative expenses, which include directly incurred expenses for property leases, professional fees, travel and entertainment, communications and information services, equipment, and (iii) indirect support costs (including compensation and other related operating expenses) for administrative services provided by corporate segment subsidiaries. Such administrative services include, but are not limited to, computer software development and support, accounting, tax, legal and facilities management.

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Electronic Brokerage

The following table sets forth the results of our electronic brokerage operations for the indicated periods:

	Three Months Ended March 31,
	2018		2017
	(in millions)
Revenues
Commissions	$	220	$	154
Interest income		306		157
Other income		35		25
Total revenues		561		336
Interest expense		96		22
Total net revenues		465		314
Non-interest expenses
Execution and clearing		68		49
Employee compensation and benefits		33		29
Occupancy, depreciation and amortization		5		4
Communications		4		4
General and administrative		61		42
Customer bad debt		3		1
Total non-interest expenses		174		129
Income before income taxes	$	291	$	185

Three Months Ended March 31,  2018 (“current quarter”) compared to the Three Months Ended March 31,  2017 (“prior year quarter”)

Electronic brokerage total net revenues, for the current quarter,  increased$151 million, or 48%,  compared to the prior year quarter, to $465 million, due to higher net interest income, commissions and other income.  

Commissions, for the current quarter,  increased$66 million, or 43%, compared to the prior year quarter, to $220 million, driven by higher customer trading volumes in options, futures and stocks, continued customer account growth, and higher average commission per customer order. Cleared customer options and futures contractand stock share volumesincreased45%, 52% and28%,respectively, compared to the prior year quarter. Total DARTs for cleared and execution-only customers, for the current quarter,  increased43%to 939 thousand, compared to 657 thousand for the prior year quarter. DARTs for cleared customers, i.e., customers for whom we execute trades, as well as clear and carry positions, for the current quarter,  increased44% to 876 thousand, compared to 609 thousandfor the prior year quarter. Average commission per DART for cleared customers, for the current quarter,  increased1% to $4.04, compared to $4.01 for the prior year quarter, reflecting larger average order sizes in options and higher average commission per share in stocks.

Net interest income, for the current quarter,  increased$75 million, or 56%, compared to the prior year quarter, to $210 million, driven by a $4.8 billion increase in average customer credit balances, a portion of which were invested in interest-bearing U.S. government securities, a $9.6 billion increase in average customer margin loans, and a 73 basis point increase in the average Federal Funds effective rate to 1.43%. As a result of increases in the Federal Funds effective rate since December 2016, interest expense on customer credit balances increased from the prior year quarter, in part, as we passed along more interest to our customers. The increase in benchmark rates also drove higher interest income earned on investment of customer segregated cash and on margin lending to customers.

Other income, for the current quarter,  increased$10 million, or 40%, compared to the prior year quarter, to $35 million, mainly driven by a $3 million increase in risk exposure fee income and smaller increases related to net gains from other investments, market data fee income, order flow income, and FDIC sweep fee income, partially offset by a $3  million net mark-to-market loss on our U.S. government securities portfolio in the current quarter, compared to a $1 million net mark-to-market loss in the prior year quarter. Despite an increase in average medium term interest rates during the current year the net mark-to-market loss on our U.S. government

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securities portfolio was only $3  million, reflecting a reduction in the size and average duration of the portfolio. In general, mark-to-market gains and losses on U.S. government securities are expected to reverse when, as intended, these securities are held to maturity.

Non-interest expenses, for the current quarter,  increased$45 million, or 35%,  compared to the prior year quarter, to $174 million. Within non-interest expenses, execution and clearing expenses increased$19 million, or 39%, driven by higher customer trading volumes in options, futures and stocks, which increased 48%, 53% and 28%, respectively, compared to the prior year quarter.  A 15% increase in the number of employees providing services to the electronic brokerage segment led to increased employee compensation and benefits expenses of $4 million, or 14%, and also to an increase in general and administrative expenses of $19 million, where the latter reflects a redeployment of staff from market making to electronic brokerage activities, which accounted for $11 million of this increase. In addition, general and administrative expenses for the current quarter include higher professional services fees and expenses related to legal and regulatory matters, compared to the prior year quarter. As a percentage of total net revenues, non-interest expenses were 37% forthe current quarter and 41% for the prior year quarter.

Income before income taxes, for the current quarter,  increased $106 million, or 57%,  compared to the prior year quarter, to $291 million. As a percentage of total net revenues for the electronic brokerage segment, income before income taxes was 63% forthe current quarter and 59% for the prior year quarter.

Electronic brokerage operating results, for the current quarter, excluding the netmark-to-market gains and losses from our U.S. government securities portfolio, compared to the prior year quarter,were as follows: net revenues were $468 million, up 49%; income before income taxes was $294 million, up58%; and pre-tax profit margin increased to 63% for the current quarterfrom 59% for the prior year quarter.

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Market Making

The following table sets forth the results of our market making operations for the indicated periods:

	Three Months Ended March 31,
	2018		2017
	(in millions)
Revenues
Trading gains	$	13	$	2
Interest income		14		21
Other income		2		-
Total revenues		29		23
Interest expense		8		15
Total net revenues		21		8
Non-interest expenses
Execution and clearing		5		13
Employee compensation and benefits		3		6
Occupancy, depreciation and amortization		-		1
Communications		-		2
General and administrative		4		8
Total non-interest expenses		12		30
Income (loss) before income taxes	$	9	$	(22)

Three Months Ended March 31,  2018(“current quarter”) compared to the Three Months Ended March 31,  2017 (“prior year quarter”)

As previously described, in early 2017 we started the process of winding down our options market making operations and the market making results described below were impacted by such pull-back.

Market making total net revenues, for the current quarter, increased $13 million, or 163%, compared to the prior year quarter, to $21 million, primarily due to higher trading gains.

Trading gains, for the current quarter, increased $11 million, or 550% compared to the prior year quarter, to $13 million, reflecting favorable conditions in the few select markets in which we continue to operate.Net interest income was $6 million for both the current quarter and prior year quarter.

Other income, for the current quarter, increased $2 million, compared to the prior year quarter, to $2 million,primarily due to consulting fee income related to the reimbursement of costs incurred during the transition of the U.S options market making operations to Two Sigma Securities, LLC.

Non-interest expenses, for the current quarter, decreased $18 million, or 60%, compared to the prior year quarter, to $12 million. Within non-interest expenses, execution and clearing fees decreased $8 million, or 62%, on lower trading volumes in options and futures. Employee compensation and benefits expenses decreased $3 million, or 50%, andgeneral and administrative expenses decreased $4 million, or 50%, as we wind down our options market making operations. As a percentage of total net revenues, non-interest expenses were 57% for the current quarter and 375% for the prior year quarter. Income before income taxes, for the current quarter, increased $31 million, compared to the prior year quarter, to $9 million.

Liquidity and Capital Resources

We maintain a highly liquid balance sheet. The majority of our assets consist of investments of customer funds, collateralized receivables arising from customer‑related and proprietary securities transactions, and exchange‑listed marketable securities,  which are marked‑to‑market daily. Collateralized receivables consist primarily of customer margin loans, securities borrowed, and, to a lesser extent, receivables from clearing houses for settlement of securities transactions, and securities purchased under agreements to resell. As ofMarch 31,  2018, total assets were $59.1 billion of which approximately $58.8 billion, or 99.5% were considered liquid.

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Daily monitoring of liquidity needs and available collateral levels is undertaken to help ensure that an appropriate liquidity cushion, in the form of unpledged collateral, is maintained at all times. Our ability to quickly reduce funding needs by balance sheet contraction without adversely affecting our core businesses and to pledge additional collateral in support of secured borrowings is continuously evaluated to ascertain the adequacy of our capital base.

We actively manage our excess liquidity and we maintain significant borrowing facilities through the securities lending markets and with banks. As a general practice, we maintain sufficient levels of cash on hand to provide us with a buffer should we need immediately available funds for any reason.Based on our current level of operations, we believe our cash flows from operations, available cash and available borrowings will be adequate to meet our future liquidity needs for more than the next twelve months.

Liability balances, as of March 31, 2018, in connection with our payables to customers and securities loaned were lower than their respective average monthly balances during the current quarter and short-term borrowings were higher than the average monthly balance during the current quarter.  

Cash and cash equivalents held by our non‑U.S. operating companies as ofMarch 31,  2018 were $500 million ($590 million as of December 31, 2017). These funds are primarily intended to finance each individual operating company’s local operations, and thus would not be available to fund U.S. domestic operations unless repatriated through payment of dividends to IBG LLC. As of March 31, 2018, we had no intention to repatriate further amounts from non‑U.S. operating companies, except from the subsidiaries being liquidated due to the wind-down of our options market making operations.  With the enactment of the Tax Act, we recognized a $62 million liability for the one-time transition tax on deemed repatriation of earnings of some of our foreign subsidiaries for the year ended December 31, 2017. As a result, in the event dividends were to be paid to the Company in the future by a non‑U.S. operating company, the Company would not be required to accrue and pay income taxes on such dividends, except for foreign taxes in the form of dividend withholding tax, if any, imposed on the recipient of the distribution or dividend distribution tax imposed on the payor of the distribution. 

Historically, our consolidated equity has consisted primarily of accumulated retained earnings, which to date have been sufficient to fund our operations and growth. Our consolidated equity increased12% to $6.7 billionas ofMarch 31,2018 from $6.0 billion as ofMarch 31,  2017. This increase is attributable to total comprehensive income, partially offset by distributions and dividends paid during the last four quarters.

Cash Flows

The following table sets forth our cash flows from operating activities, investing activities and financing activities for the periods indicated:

	Three Months Ended March 31,
	2018		2017
	(in millions)
Net cash provided by operating activities	$	1,201	$	779
Net cash used in investing activities		(8)		(6)
Net cash used in financing activities		(64)		(77)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		8		23
Increase in cash, cash equivalents, and restricted cash	$	1,137	$	719

Our cash flows from operating activities are largely a reflectionof the changes in customer credit and margin loan balances in our electronic brokerage business, and of the size and composition of trading positions held by our market making subsidiaries. Our cash flows from investing activities are primarily related to other investments, capitalized internal software development, purchases and sales of memberships at exchanges where we trade, and strategic investments where such investments may enable us to offer better execution alternatives to our current and prospective customers, or where we can influence exchanges to provide competing products at better prices using sophisticated technology. Our cash flows from financing activities are comprised of short‑term borrowings and capital transactions. Short‑term borrowings from banks are part of our daily cash management in support of operating activities. Capital transactions consist primarily of quarterly dividends paid to common stockholders and related distributions paid to Holdings.

Three Months Ended March 31,2018: Our cash, cash equivalents, and restricted cashincreased by $1,137 million to $9.4billionfor the three months ended March 31, 2018. We raised $1,201 million in net cash from operating activities. We used net cash of $72 million in our investing and financing activities, primarilyfordistributions to noncontrolling interests and dividends paid to our common stockholders. Investing activities mainly consisted of purchases of property, equipment and intangible assets.

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Three Months Ended March 31, 2017:Our cash, cash equivalents, and restricted cashincreased by $719 million to $8.3billionfor the three months ended March 31, 2017. We raised$779 million in net cash from operating activities. We used net cash of $83 million in our investing and financing activities, primarilyor repayment of short-term borrowing, distributions to noncontrolling interests and dividends paid to our common stockholders.

Regulatory Capital Requirements

Our principal operating companies are subject to separate regulation and capital requirements in the U.S. and other jurisdictions.IB LLC and TH LLC are registered U.S. broker‑dealers and their primary regulators include the SEC,  the Chicago Board Options Exchange, andFinancial Industry Regulatory Authority (“FINRA”).  Additionally, IB LLC is a registered futures commission merchant regulated by the Commodity Futures Trading Commission (“CFTC”) and the Chicago Mercantile Exchange. IB LLC is also a registered U.S. forex dealer member regulated by the National Futures Association (“NFA”). THE is registered to do business in Switzerland as a securities dealer and is regulated by the Swiss Financial Market Supervisory Authority. Our various other operating companies are similarly regulated. See the notes to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information regarding our regulated operating companies.

As ofMarch 31,  2018, aggregate excess regulatory capital for all of the operating companies was$5.2billion, and all of the operating companies were in compliance with their respective regulatory capital requirements.

	Net Capital/
	Eligible Equity		Requirement		Excess
	(in millions)
IB LLC	$	4,230	$	458	$	3,772
TH LLC		232		-		232
THE		640		98		542
Other regulated Operating Companies		796		130		666
	$	5,898	$	686	$	5,212

Capital Expenditures

Our capital expenditures are comprised of compensation costs of our software engineering staff for development of software for internal use and expenditures for computer, networking and communications hardware. These expenditure items are reported as property, equipment, and intangible assets. Capital expenditures for property, equipment, and intangible assets were approximately $8 millionand $6 million for the three months ended March 31,  2018 and 2017, respectively. In the future, we plan to meet capital expenditure needs,  with cash from operations and cash on hand, as we continue our focus on technology infrastructure initiatives to further enhance our competitive position. In response to changing economic conditions, we believe we have the flexibility to modify our capital expenditures by adjusting them (either upward or downward) to match our actual performance. If we pursue any strategic acquisitions, we may incur additional capital expenditures.

Seasonality

Our businesses are subject to seasonal fluctuations, reflecting varying numbers of market participants at times during the year, varying numbers of trading days from quarter‑to‑quarter, and declines in trading activity due to holidays. Typical seasonal trends may be superseded by market or world events, which can have a significant impact on prices and trading volume.

Inflation

Although we cannot accurately anticipate the effects of inflation on our operations, we believe that, for the three most recent years, inflation has not had a material impact on our results of operations and will not likely have a material impact in the foreseeable future.

Investments in U.S. Government Securities

We invest in U.S. government securities for the purpose of satisfying U.S. regulatory requirements. As a broker-dealer, unlike banks, we are required to mark these investments to market even though we intend to hold them to maturity. Sudden increases in interest rates will cause mark-to-market losses on these securities, which are recovered if we hold them to maturity, as currently intended. The impact of changes in interest rates is further described in Part I, Item 3 of this Quarterly Report on Form 10-Q entitled “Quantitative and Qualitative Disclosures about Market Risk.”

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Strategic Investments and Acquisitions

We regularly evaluate potential strategic investments and acquisitions. We hold strategic investments in electronic trading exchanges including: BOX Options Exchange, LLC and OneChicago LLC. In addition, on September 20, 2017, we announced our agreement to make a strategic investment in Tiger Brokers, an online stock brokerage established for Chinese retail and institutional clients.

We intend to continue making acquisitions on an opportunistic basis, generally only when the acquisition candidate will, in our opinion, enable us to acquire either technology or customers faster than we could develop them on our own.

As ofMarch 31,  2018, there were no other definitive agreements with respect to any material acquisition.

Certain Information Concerning Off‑Balance‑Sheet Arrangements

We may be exposed to a risk of loss not reflected in our condensed consolidated financial statements for futures products, which represent our obligations to settle at contracted prices, and which may require us to repurchase or sell in the market at prevailing prices. Accordingly, these transactions result in off‑balance sheet risk, as our cost to liquidate such futures contracts may exceed the amounts reported in ourcondensedconsolidated statements of financial condition.

Critical Accounting Policies

Principles of Consolidation, including Noncontrolling Interests

Thecondensedconsolidated financial statements include the accounts of IBG, Inc. and its majority and wholly owned subsidiaries. As sole managing member of IBG LLC, we exert control over the Group’s operations. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) ASC Topic 810, “Consolidation,”we consolidate the Group’s consolidated financial statements and record as noncontrolling interest the interests in the Group that we do not own.

We are the sole managing member of IBG LLC and, as such, operate and control all of the business and affairs of IBG LLC and its subsidiaries and as such, consolidate IBG LLC’s financial results into our financial statements. We hold approximately 17.4% ownership interest in IBG LLC. Holdings is owned by the original members of IBG LLC and holds approximately 82.6% ownership interest in IBG LLC. Our current share of IBG LLC’s net income is approximately 17.4%.

Our policy is to consolidate all other entities in which we own more than 50% unless we do not have control. All inter‑company balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in thecondensedconsolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Therefore, actual results could differ materially from those estimates. Such estimates include the allowance for doubtful accounts, valuation of certain investments, compensation accruals, current and deferred income taxes,costs associated with exit or disposal activities, and contingency reserves.

Valuation of Financial Instruments

Due to the nature of our operations, substantially all of our financial instrument assets, comprised of financial instruments owned, securities purchased under agreements to resell, securities borrowed, receivable from customers, and receivables from brokers, dealers and clearing organizations are carried at fair value based on published market prices and are marked to market daily, or are assets which are short‑term in nature and are reported at amounts that approximate fair value. Similarly, all of our financial instrument liabilities that arise from financial instruments sold but not yet purchased, securities sold under agreements to repurchase, securities loaned, payables to customers, and payables to brokers, dealers and clearing organizations are carried at fair value based on published market prices and are marked to market daily, or are liabilities which are short-term in nature and are reported at amounts that approximate fair value. Our long and short positions are mainly valued at the last consolidated trade price at the close of regular trading hours, in their respective markets. Given that we manage a globally integrated market making portfolio, we may have offsetting positions in securities and commodities that trade on different exchanges that close at different times of the trading day. As a result, there may be large and anomalous swings in the value of our positions daily and, accordingly, in our earnings in any period. This is especially true on the last business day of each calendar quarter or year, although such swings tend to come back into equilibrium on the first business day of the succeeding calendar quarter or year.

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Earnings per Share

Earnings per share (“EPS”) are computed in accordance with FASB ASC Topic 260,“Earnings per Share.” Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of the basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under our stock-based compensation plans, with no adjustments to net income available for common stockholders for dilutive potential common shares.

Stock‑Based Compensation

We follow FASB ASC Topic 718, “Compensation - Stock Compensation” (“ASC Topic 718”), to account for our stock‑based compensation plans. ASC Topic 718 requires all share‑based payments to employees to be recognized in thecondensed consolidated financial statements using a fair value‑based method. Grants, which are denominated in U.S. dollars, are communicated to employees in the year of grant, thereby establishing the fair value of each grant. The fair value of awards granted to employees are generally expensed as follows: 50% in the year of grant in recognition of the plans’post-employment provisions (as described below) and the remaining 50% over the related vesting period utilizing the “graded vesting” method permitted under ASC Topic 718. In the case of “retirement eligible” employees (those employees older than 59), 100% of awards are expensed when granted.

Awards granted under the stock‑based compensation plans are subject to the plans’ post-employment provisions in the event an employee ceases employment with us. The plans provide that employees who discontinue employment with us without cause and continue to meet the terms of the plans’ post‑employment provisions will be eligible to earn 50% of previously granted, but not yet earned awards, unless the employee is over the age of 59, in which case the employee would be eligible to receive 100% of previously granted, but not yet earned awards.

Contingencies

Our policy is to estimate and accrue for potential losses that may arise out of litigation and regulatory proceedings, to the extent that such losses are probable and can be estimated, in accordance with FASB ASC Topic 450, “Contingencies.”  Significant judgment is required in making these estimates and our final liabilities may ultimately be materially different. Our total liability accrued with respect to litigation and regulatory proceedings is determined on a case‑by‑case basis and represents an estimate of probable losses based on, among other factors, the progress of each case, our experience with and industry experience with similar cases and the opinions and views of internal and external legal counsel. Given the inherent difficulty of predicting the outcome of our litigation and regulatory matters, particularly in cases or proceedings in which substantial or indeterminate damages or fines are sought, or where cases or proceedings are in the early stages, we cannot estimate losses or ranges of losses for cases or proceedings where there is only a reasonable possibility that a loss may be incurred.

We have been from time to time subject to certain pending and legal actions which arise out of the normal course of business. Litigation is inherently unpredictable, particularly in proceedings where claimants seek substantial or indeterminate damages, or which are in their early stages. We cannot predict with certainty the actual loss or range of loss related to such legal proceedings, the manner in which they will be resolved, the timing of final resolution or the ultimate settlement. Consequently, we cannot estimate losses or ranges of losses related to such legal matters, even in instances where it is reasonably possible that a future loss will be incurred. As of March 31,  2018, we, along with certain of our subsidiaries, have been named parties to legal actions, which we and/or such subsidiaries intend to defend vigorously. Although the results of legal actions cannot be predicted with certainty, it is the opinion of management that the resolution of these actions is not expected to have a material adverse effect, if any, on our business or financial condition, but may have a material impact on the results of operations for a given period. As of March 31,  2018 and December 31, 2017, reserves provided for potential losses related to litigation matters were not material.

Income Taxes

We account for income taxes in accordance with FASB ASC Topic 740, “Income Taxes” (“ASC Topic 740”).Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits are based on enacted tax laws and reflect management’s best assessment of estimated future taxes to be paid. We are subject to income taxes in both the U.S. and numerous foreign jurisdictions. Determining income tax expense requires significant judgments and estimates.

Deferred income tax assets and liabilities arise from temporary differences between the tax and financial statement recognition of the underlying assets and liabilities. In evaluating our ability to recover our deferred tax assets within the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax‑planning strategies, and results of recent operations. In projecting future taxable income, historical results

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are adjusted for changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax‑planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, three years of cumulative operating income (loss) are considered. Deferred income taxes have not been provided for U.S. tax liabilities or for additional foreign taxes on the unremitted earnings of foreign subsidiaries that have been indefinitely reinvested.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. The enactment of the Tax Act on December 22, 2017 significantly revised 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 to the condensed consolidated financial statements elsewhere in this report. We record tax liabilities in accordance with ASC Topic 740 and adjust these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in payments that are different from the current estimates of these tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information becomes available.

We recognize that a tax benefit from an uncertain tax position may be recognized only when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. A tax position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement.

We recognize interest related to income tax matters as interest income or interest expense and penalties related to income tax matters as income tax expense.

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Recently Issued Accounting Pronouncements

Following is a summary of recently issued FASB Accounting Standards Updates (“ASUs”) that have affected or may affect ourcondensed consolidated financial statements:

	Affects	Status
ASU 2016-02	Leases (Topic 842):  Requires the recognition of a right-of-use asset and a lease liability for leases previously classified as operating lease in the statements of financial condition.	Effective for fiscal years beginning after December 15, 2018.
ASU 2016-13	Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.	Effective for fiscal years beginning after December 15, 2019.
ASU 2017-04	Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.	Effective for fiscal years beginning after December 15, 2019.
ASU 2017-08	Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20):  Amending the amortization period for certain purchased callable debt securities held at a premium.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2017-11	Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815): changing the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2017-12	Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2018-02	Income Statement – Reporting Comprehensive Income (Topic 220):  Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.	Effective for fiscal years and first interim periods beginning after December 15, 2018.
ASU 2018-03	Technical Correction and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.	Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years beginning after June 15, 2018.

Adoption of those ASUs that became effective during 2017 and 2018, prior to the issuance of the Company’scondensed consolidated financial statements, had no material effect on these financial statements, except for as described in the notes to condensed consolidated financial statements in Item 1 elsewhere in this document.

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks. Our exposures to market risks arise from assumptions built into our pricing models, equity price risk, foreign currency exchange rate fluctuations related to our international operations, changes in interest rates which impact our variable‑rate debt obligations, if any, and risks relating to the extension of margin credit to our customers.

Market risk refers to the risk that a change in the level of one or more market prices, rates, indices, implied volatilities (the price volatility of the underlying instrument imputed from option prices), correlations or other market factors, such as market liquidity, will result in losses for a position or portfolio. Generally, we incur trading‑related market risk as a result of activities in the market making segment, where the substantial majority of our Value‑at‑Risk (“VaR”) for market risk exposures is generated. In addition, we incur non‑trading‑related market risk primarily from investment activities and from foreign currency exposure held in the equity of our foreign affiliates, i.e., our non‑U.S. brokerage affiliates and information technology affiliates, and held to meet target balances in our currency diversification strategy.

We use various risk management tools in managing our market risk, which are embedded in our real‑time market making systems. We employ certain hedging and risk management techniques to protect us from a severe market dislocation. Our risk management policies are developed and implemented by our Chairman and our steering committee, which is comprised of senior executives of our various companies. Our strategy 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 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. Our model automatically rebalances our positions throughout each trading day to manage risk exposures on our options and futures positions and the underlying securities, and will price the increased risk that a position would add to the overall portfolio into the bid and offer prices we post. Under risk management policies implemented and monitored primarily through our computer systems, reports to management, including risk profiles, profit and loss analysis and trading performance, are prepared on a real‑time basis as well as daily and periodical bases. Although our market making is 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. Our assets and liabilities are marked‑to‑market daily for financial reporting purposes and re‑valued continuously throughout the trading day for risk management and asset/liability management purposes.

We use a covariant VaR methodology to measure, monitor and review the market risk of our market making portfolios, with the exception of fixed income products, and our currency exposures. The risk of fixed income products, which comprise primarily U.S. government securities, is measured using a stress test.

Pricing Model Exposure

As described above, our proprietary pricing model, which continuously evaluates and monitors the risks inherent in our portfolio, assimilates external market data and reevaluates the outstanding quotes in our entire portfolio many times per second. Certain aspects of the model rely on historical prices of securities. If the behavior of price movements of individual securities diverges substantially from what their historical behavior would predict, we might incur trading losses. We attempt to limit such risks by diversifying our portfolio across many different options, futures and underlying securities and avoiding concentrations of positions based on the same underlying security. Historically, our losses from these events have been immaterial in comparison to our annual trading profits.

Foreign Currency Exposure

As a result of our international activities and accumulated earnings in our foreign subsidiaries, our income and net worth is exposed to fluctuations in foreign exchange rates. For example,our European operations and some of our Asian operations are conducted by our Swiss subsidiary, THE. THE is regulated by the Swiss Financial Market Supervisory Authority as a securities dealer and its financial statements are presented in Swiss francs. Accordingly, THE is exposed to certain foreign exchange risks as described below:

· THE buys and sells securities denominated in various currencies and carries bank balances and borrows and lends such currencies in its regular course of business. At the end of each accounting period, THE’s assets and liabilities are revalued into Swiss francs for presentation in its financial statements. The resulting foreign currency gains or losses are reported in THE’s income statement and, as translated into U.S. dollars for U.S. GAAP purposes, in our condensed consolidated statement of comprehensive income, as a component of other income.

· THE’s financial statements are presented in Swiss francs (i.e., its functional currency) as noted above. At the end of each accounting period, THE’s 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 condensed consolidated statement of financial condition and condensed consolidated statement of comprehensive income. OCI is also produced by our other non‑U.S. subsidiaries.

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Historically, we have taken the approach of not hedging the above exposures, based on the notion that the cost of constantly hedging over the years would amount to more than the random impact of rate changes on our non‑U.S. dollar balances. For instance, an increase in the value of the Swiss franc would be unfavorable to the earnings of THE but would be counterbalanced to some extent by the fact that the translation gain or loss into U.S. dollars is likely to move in the opposite direction.

Our risk management systems incorporate cash forex to hedge our currency exposure at little or no cost throughout each day on a continuous basis. 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 held and reported in the corporate segment. In connection with the development of our currency diversification strategy, we determined to base our net worth in GLOBALs, a basket of currencies.

Because we conduct business in many countries and many currencies and because we consider ourselves a global enterprise based in a diversified basket of currencies rather than a U.S. dollar based company, we actively manage our global currency exposure by maintaining our equity in GLOBALs. The U.S. dollar value of the GLOBAL increased from $ $ 0.961to$  $ 0.985, or 2.51%,  as of March 31,2018 compared to March 31, 2017.As of March 31,  2018, approximately 31% of our equity was denominated in currencies other than the U.S. dollar.

The table below shows a comparison of the U.S. dollar equivalent of the GLOBAL as ofMarch 31,  2018 and 2017.

			As of 3/31/2017									As of 3/31/2018
				GLOBAL in		% of	Net Equity			New			GLOBAL in		% of	Net Equity			CHANGE in
Currency	Composition	FX Rate		USD Equiv.		Comp.	(in USD millions)			Composition	FX Rate		USD Equiv.		Comp.	(in USD millions)			% of Comp.
USD	0.45		1.0000		0.450	46.8%		$	2,813	0.68		1.0000		0.680	69.0%		$	4,627		22.2%
EUR	0.17		1.0655		0.181	18.8%			1,132	0.09		1.2324		0.111	11.3%			755		-7.6%
JPY	8.00		0.0090		0.072	7.5%			449	4.41		0.0094		0.041	4.2%			282		-3.3%
GBP	0.03		1.2550		0.038	3.9%			235	0.02		1.4018		0.028	2.8%			191		-1.1%
HKD	0.26		0.1287		0.033	3.5%			209	0.14		0.1274		0.018	1.8%			121		-1.7%
INR	2.00		0.0154		0.031	3.2%			193	1.10		0.0154		0.017	1.7%			115		-1.5%
CHF	0.03		0.9971		0.030	3.1%			187	0.02		1.0481		0.021	2.1%			143		-1.0%
CAD	0.04		0.7508		0.030	3.1%			188	0.02		0.7755		0.016	1.6%			106		-1.6%
CNH	0.19		0.1455		0.028	2.9%			173	0.10		0.1597		0.016	1.6%			109		-1.3%
AUD	0.03		0.7629		0.023	2.4%			143	0.02		0.7682		0.015	1.6%			104		-0.8%
MXN	0.30		0.0534		0.016	1.7%			100	0.17		0.0551		0.009	0.9%			64		-0.7%
SEK	0.09		0.1115		0.010	1.0%			63	0.05		0.1199		0.006	0.6%			41		-0.4%
SGD	0.01		0.7157		0.007	0.7%			45	0.00										-0.7%
NOK	0.06		0.1163		0.007	0.7%			44	0.03		0.1274		0.004	0.4%			26		-0.3%
DKK	0.04		0.1432		0.006	0.6%			36	0.02		0.1653		0.003	0.3%			22		-0.3%
					0.961	100.0%		$	6,010					0.985	100.0%		$	6,706		0.0%

Changes in the Composition of the “GLOBAL”

In light of our decision to discontinue our options market making activities globally, effective as of the close of business on March 31, 2017, we removed the Singapore dollar (SGD) and realigned the relative weights of the U.S. dollar (USD) versus the other currency components to better reflect our businesses going forward. The current composition contains 14 currencies, one fewer than the prior composition.

61

The effects of our currency diversification strategy appear in two places in the condensed consolidated financial statements: (1) as a component of other income in the condensed consolidated statement of comprehensive income and (2) as OCI in the condensed consolidated statement of financial condition and the condensed consolidated statement of comprehensive income. The full effect of the GLOBAL is captured inthe condensed consolidated statement of comprehensive income.

Reported results on a comprehensive basis reflect the U.S. GAAP convention that requires the reporting of currency translation results contained in OCI as part of reportable earnings.

Interest Rate Risk

We had no variable‑rate debt outstanding as ofMarch 31,  2018.  

We pay our electronic brokerage customers interest based on benchmark overnight interest rates in various currencies, on balances above $10 thousand, or equivalent, and on accounts holding more than $100 thousand (or equivalent) net asset value. In a normal rate environment, we typically invest a portion of these funds in U.S. government securities with maturities of up to two years. If interest rates were to increase rapidly and substantially, our net interest income would not increase proportionally with the interest rates for the portion of the funds invested in the U.S. government securities with fixed yields. 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 March 31, 2018, and assuming reinvestment of maturing instruments in instruments of short-term duration,  an increase of 0.25% over current U.S. dollarinterest rate levels would increase our net interest income by approximately $9 million over the first year and $15 million on an annualized basis, assuming the full effect of reinvestment at higher rates. Our interest rate sensitivity estimate contains separate assumptions for U.S. dollar rates from other currencies’ rates and itisolates the effects of a rate increase on reinvestments. We do not approximate mark-to-market impact from interest rate changes; if U.S. government securities whose prices were to fall under these scenarios were held to maturity, as intended, then the reduction in other income would be temporary, as the securities would mature at par value.

We also face the potential for reduced net interest income from customer deposits due to interest rate spread compression in a low rate environment. Based on customer balances and investments outstanding as of March 31, 2018, and assuming reinvestment of maturing instruments in instruments of short-term duration, a decrease in U.S. dollar interest rates of 0.25% would decrease our net interest income by approximately $6 million over the first year and $15 million on an annualized basis, assuming the full effect of reinvestment at lower rates.

We also face interest rate risk due to positions carried in our market making business 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. The amount of such risk cannot be quantified, however, the reduction of market making positions has substantially reduced this exposure.

Dividend Risk

We face dividend risk in our market making business 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. Projected future dividends are an important component of pricing equity options and other derivatives, and incorrect projections may lead to trading losses. The amount of such risk cannot be quantified.

Margin Loans

We extend margin loans to our customers, which are subject to various regulatory requirements. Margin loansare collateralized by cash and securities in the customers’ accounts. The risks associated with margin credit increase during periods of fast market movements or in cases where collateral is concentrated and market movements occur. During such times, customers who utilize margin loans and who have collateralized their obligations with securities may find that the securities have a rapidly depreciating value and may not be sufficient to cover their obligations in the event of a liquidation. We are also exposed to credit risk when our customers execute transactions, such as short sales of options and equities that can expose them to risk beyond their invested capital.

We expect this kind of exposure to increase with the growth of our overall business. Because we indemnify and hold harmless our clearing firms from certain liabilities or claims, the use of margin loansand short sales may expose us to significant off‑balance‑sheet risk in the event that collateral requirements are not sufficient to fully cover losses that customers may incur and those customers fail to satisfy their obligations. As of March 31,  2018, we had $29.5 billion in margin loansextended to our customers. The amount of risk to which we are exposed from the margin loans we extend to our customers and from short sale transactions by our customers is

62

unlimited and not quantifiable as the risk is dependent upon analysis of a potential significant and undeterminable rise or fall in stock prices. Our account level margin requirements meet or exceed those required by Regulation T of the Board of Governors of the Federal Reserve and FINRA portfolio margin rules, as applicable. As a matter of practice, we enforce real‑time margin compliance monitoring and liquidate customers’ positions if their equity falls below required margin requirements.

We have a comprehensive policy implemented in accordance with regulatory standards to assess and monitor the suitability of investors to engage in various trading activities. To mitigate our risk, we also continuously monitor customer accounts to detect excessive concentration, large orders or positions, patterns of day trading and other activities that indicate increased risk to us.

Our credit exposure is to a great extent mitigated by our policy of automatically evaluating each account throughout the trading day and closing out positions automatically for accounts that are found to be under‑margined. While this methodology is effective in most situations, it may not be effective in situations where no liquid market exists for the relevant securities or commodities or where, for any reason, automatic liquidation for certain accounts has been disabled.

Value‑at‑Risk

We estimate VaR using an historical approach, which uses the historical daily price returns of underlying assets as well as estimates of the end of day implied volatility for options. 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%.

Our VaR model generally takes into account exposures to equity and commodity price risk and foreign exchange rates.

We use VaR as one of a range of risk management tools. Among their benefits, VaR models permit estimation of a portfolio’s aggregate market risk exposure, incorporating a range of varied market risks and portfolio assets. One key element of the VaR model is that it reflects risk reduction due to portfolio diversification or hedging activities. However, VaR has various strengths and limitations, which include, but are not limited to: use of historical changes in market risk factors, which may not be accurate predictors of future market conditions, and may not fully incorporate the risk of extreme market events that are outsized relative to observed historical market behavior or that reflect the historical distribution of results beyond the confidence interval; and reporting of losses in a single day, which does not reflect the risk of positions that cannot be liquidated or hedged in one day. A small proportion of market risk generated by trading positions is not included in VaR. The modeling of the risk characteristics of some positions relies on approximations that, under certain circumstances, could produce significantly different results from those produced using more precise measures. VaR is most appropriate as a risk measure for trading positions in liquid financial markets and will understate the risk associated with severe events, such as periods of extreme illiquidity.

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

Since the reported VaR statistics are estimates based on historical data, VaR should not be viewed as predictive of our future revenues or financial performance or of our ability to monitor and manage risk. There can be no assurance that our actual losses on a particular day will not exceed the indicated VaR or that such losses will not occur more than one time in 100 trading days. VaR does not predict the magnitude of losses which, should they occur, may be significantly greater than the VaR amount.

Stress Test

We estimate the market risk of our fixed income portfolio using a risk analysis model provided by a leading external vendor. For corporate bonds, this stress test is configured to calculate the change in value of each fixed income security in the portfolio over one day in seven scenarios, each of which represents a parallel shift of the U.S. Treasury yield curve. The scenarios are shifts of +/−100, +/−200 and +/−300 basis points. For U.S. government securities, the stress test is configured to calculate the change in value of each fixed income security in the portfolio over one day in three scenarios, each of which represents a parallel shift of the U.S. Treasury yield curve. The scenarios are shifts of +/−25 basis points.

63

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective, in all material respects, to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. 

In addition, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the period covered by this report quarter that has materially affected, or is likely to materially affect, our internal control over financial reporting.

64

PART II OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS  

There have been no material changes to the legal proceedings disclosed under Part 1, Item 3 of our Annual Report on Form 10-K filed with the SEC on March 1, 2018 except as updated by this Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 below and in Note 12 to the unaudited condensed consolidated financial statements.

Pending Regulatory Inquiries

Our businesses are heavily regulated by state, federal and foreign regulatory agencies as well as numerous exchanges and self‑regulatory organizations. Most of our companies are regulated under some or all of the following: state securities laws, U.S. and foreign securities, commodities and financial services laws and the rules of the more than 120 exchanges, market centers and self‑regulatory organizations of which one or more of our companies may be members. In the current era of dramatically heightened regulatory scrutiny of financial institutions, we have incurred sharply increased compliance costs, along with the industry as a whole. Increased regulation also creates increased barriers to entry.  We have built and continue to build human and automated infrastructure to handle increased regulatory scrutiny, which provides us with a possible advantage over potential newcomers to the business.

We receive thousands of regulatory inquiries each year in addition to being subject to frequent regulatory examinations. The great majority of these inquiries do not lead to fines or any further action against us. Most often, regulators do not inform us as to when and if an inquiry has been concluded. We are currently the subject of 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, procedures for trading and handling low-priced securities, procedures for accounts introduced by financial advisors and other referrers, technology development practices, business continuity planning and other topics of recent regulatory interest.  The Company has procedures for evaluating whether potential regulatory fines are probable, estimable and material and for updating its contingency reserves and disclosures accordingly.  In the current climate, we expect to pay significant and increasing regulatory fines on various topics on an ongoing basis, as other regulated financial services businesses do. The amount of any fines, and when and if they will be incurred, typically is impossible to predict given the nature of the regulatory process.

ITEM 1A.  RISK FACTORS 

There have been no material changes to the risk factors disclosed in under Part 1, Item 1A of our Annual Report on Form 10-K filed with the SEC on March 1, 2018.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

ITEM 5.  OTHER INFORMATION

None

65

ITEM 6.Exhibits

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of Interactive Brokers Group, Inc. (filed as Exhibit 3.1 to Amendment No. 2 to the Registration Statement on Form S‑1 filed by the Company on April 4, 2007).**
3.2	Amended bylaws of Interactive Brokers Group, Inc. (filed as Exhibit 3.1 to the Form 8-K filed by the Company on February 24, 2016).**
10.1	Amended and Restated Operating Agreement of IBG LLC (filed as Exhibit 10.1 to the Quarterly Report on Form 10‑Q for the Quarterly Period Ended March 31, 2007 filed by the Company on June 15, 2007).**
10.2	Form of Limited Liability Company Operating Agreement of IBG Holdings LLC (filed as Exhibit 10.5 to Amendment No. 1 to the Registration Statement on Form S‑1 filed by the Company on February 12, 2007).**
10.3	Exchange Agreement by and among Interactive Brokers Group, Inc., IBG Holdings LLC, IBG LLC and the Members of IBG LLC (filed as Exhibit 10.3 to the Quarterly Report on Form 10‑Q for the Quarterly Period Ended September 30, 2009 filed by the Company on November 11, 2009).**
10.4	Tax Receivable Agreement by and between Interactive Brokers Group, Inc. and IBG Holdings LLC (filed as Exhibit 10.3 to the Quarterly Report on Form 10‑Q for the Quarterly Period Ended March 31, 2007 filed by the Company on June 15, 2007).**
10.5	Amended Interactive Brokers Group, Inc. 2007 Stock Incentive Plan. (filed as Exhibit 10.5 to Form 10-K for the Year Ended December 31, 2014 filed by the Company on March 2, 2015)**+
10.6	Interactive Brokers Group, Inc. 2007 ROI Unit Stock Plan. (filed as Exhibit 10.9 to Amendment No. 2 to the Registration Statement on Form S‑1 filed by the Company on April 4, 2007).**+
10.7	Interactive Brokers Group, Inc. Amendment to the Exchange Agreement (filed as Exhibit 10.1 to the Form 8‑K filed by the Company on June 6, 2012).**+
10.8	Second Amendment to Exchange Agreement by and among Interactive Brokers Group, Inc., IBG Holdings LLC, IBG (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the Quarterly Period Ended September 31, 2015 filed by the Company on November 9, 2015).**
10.9	First Amendment to Limited Liability Company Agreement of IBG Holdings LLC (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q for the Quarterly Period Ended September 31, 2015 filed by the Company on November 9, 2015).**
11.1	Statement Re; Computation of Earnings per Common Share (the calculation of per share earnings is disclosed in Part I, Item 1, Note 4 to the Condensed Consolidated Financial Statements “Equity and Earnings per Share” and is omitted in accordance with Item 601 Section (b)(11) of Regulation S‑K).
31.1	Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
31.2	Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
32.1	Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
32.2	Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
101.INS	XBRL Instance Document*
101.SCH	XBRL Extension Schema*
101.CAL	XBRL Extension Calculation Linkbase*
101.DEF	XBRL Extension Definition Linkbase*
101.LAB	XBRL Extension Label Linkbase*
101.PRE	XBRL Extension Presentation Linkbase*

**Previously filed; incorporated herein by reference.

+These exhibits relate to management contracts or compensatory plans or arrangements.

*     Attached as Exhibit 101 to this Annual Report on Form 10‑K for the annual period ended December 31, 2016, are the following materials formatted in XBRL (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 Statement of Changes in Stockholders’ Equity and (v) Notes to the Consolidated Financial Statements tagged in detail levels 1‑4.

66

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INTERACTIVE BROKERS GROUP, INC.
/s/ Paul J. Brody
Name:	Paul J. Brody
Title:	Chief Financial Officer, Treasurer and Secretary
(Signing both in his capacity as a duly authorized officer and as principal financial officer of the registrant)

Date: May 9, 2018

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Thomas Peterffy, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31,  2018of Interactive Brokers Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	By:	/s/ Thomas Peterffy
	Name:	Thomas Peterffy
	Title:	Chairman and Chief Executive Officer
Date:  May 9,  2018

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Paul J. Brody, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31,  2018of Interactive Brokers Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	By:	/s/ Paul J. Brody
	Name:	Paul J. Brody
	Title:	Chief Financial Officer, Treasurer and Secretary
Date: May 9,  2018

EX-32.1

EXHIBIT 32.1

CERTIFICATION

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Interactive Brokers Group, Inc. (the “Company”) hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,  2018(the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	By:	/s/ Thomas Peterffy
	Name:	Thomas Peterffy
	Title:	Chairman and Chief Executive Officer
Date: May 9,  2018

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-32.2

EXHIBIT 32.2

CERTIFICATION

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Interactive Brokers Group, Inc. (the “Company”) hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,  2018(the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	By:	/s/ Paul J. Brody
	Name:	Paul J. Brody
	Title:	Chief Financial Officer, Treasurer and Secretary
Date: May 9,  2018

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Documentation and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 07, 2018
Entity Registrant Name	Interactive Brokers Group, Inc.
Entity Central Index Key	0001381197
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Fiscal Year Focus	2018
Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Common Class A
Common Stock Shares Outstanding		71,481,133
Common Class B
Common Stock Shares Outstanding		100

XML

Condensed Consolidated Statements of Financial Condition - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Assets
Cash and cash equivalents	$ 1,901	$ 1,732
Cash - segregated for regulatory purposes	7,515	6,547
Securities - segregated for regulatory purposes	12,753	13,685
Securities borrowed	2,968	2,957
Securities purchased under agreements to resell	677	2,035
Financial instruments owned, at fair value:
Financial instruments owned	1,801	1,950
Financial instruments owned and pledged as collateral	614	1,204
Total financial instruments owned, at fair value	2,415	3,154
Receivables:
Customers, less allowance for doubtful accounts of $43 and $40 as of March 31, 2018 and December 31, 2017	29,464	29,821
Receivables from brokers, dealers and clearing organizations	1,002	823
Interest receivable	99	116
Total receivables	30,565	30,760
Other assets	299	292
Total assets	59,093	61,162
Liabilities and equity
Short-term borrowings	19	15
Securities loaned	4,171	4,444
Securities sold under agreements to repurchase		1,316
Financial instruments sold, not yet purchased, at fair value	242	767
Payables:
Payables to customers	47,423	47,548
Payables to brokers, dealers and clearing organizations	170	283
Payable to affiliate	187	187
Accounts payable, accrued expenses and other liabilities	148	147
Interest payable	27	22
Total payables	47,955	48,187
Total liabilities	52,387	54,729
Stockholders' equity:
Additional paid-in capital	834	832
Retained earnings	290	251
Accumulated other comprehensive income, net of income taxes of $1 and $1 as of March 31, 2018 and December 31, 2017	10	9
Treasury stock, at cost, 129,448 and 133,294 shares as of March 31, 2018 and December 31, 2017	(3)	(3)
Total stockholders' equity	1,132	1,090
Noncontrolling interests	5,574	5,343
Total equity	6,706	6,433
Total liabilities and stockholders' equity	59,093	61,162
Common Class A
Stockholders' equity:
Common stock	1	1
Common Class B
Stockholders' equity:
Common stock

XML

Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Allowance for doubtful accounts	$ 43	$ 40
Accumulated Other Comprehensive Income, Tax	$ 1	$ 1
Treasury stock shares	129,448	133,294
Common Class A
Common stock, par value	$ 0.01	$ 0.01
Shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	71,610,581	71,609,049
Common stock, shares outstanding	71,481,133	71,475,755
Common Class B
Shares authorized	100	100
Common stock, shares issued	100	100
Common stock, shares outstanding	100	100

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenues:
Commissions	$ 220	$ 154
Interest income	311	177
Trading gains	13	2
Other income	77	76
Total revenues	621	409
Interest expense	94	35
Total net revenues	527	374
Non-interest expenses:
Execution and clearing	73	61
Employee compensation and benefits	70	62
Occupancy, depreciation and amortization	12	13
Communications	6	8
General and administrative	23	16
Customer bad debt	3	1
Total non-interest expenses	187	161
Income before income taxes	340	213
Income tax expense	21	18
Net income	319	195
Less net income attributable to noncontrolling interests	273	171
Net income available for common stockholders	$ 46	$ 24
Earnings per share:
Basic	$ 0.64	$ 0.35
Diluted	$ 0.63	$ 0.34
Weighted average common shares outstanding:
Weighted Average Number of Shares Outstanding, Basic	71,475,950	67,985,107
Weighted Average Number of Shares Outstanding, Diluted	72,512,462	69,157,614
Comprehensive income:
Net income available for common stockholders	$ 46	$ 24
Other comprehensive income:
Cumulative translation adjustment, before income taxes	1	4
Other comprehensive income, net of tax	1	4
Comprehensive income available for common stockholders	47	28
Comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests	273	171
Other comprehensive income - cumulative translation adjustment	7	19
Comprehensive income attributable to noncontrolling interests	$ 280	$ 190

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net income	$ 319	$ 195
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Deferred income taxes	4	5
Depreciation and amortization	7	6
Employee stock plan compensation	14	13
Unrealized (gain) loss on other investments, net	(2)
Bad debt expense	3	1
Impairment loss	1
Change in operating assets and liabilities:
Securities - segregated for regulatory purposes	932	295
Securities borrowed	(11)	(294)
Securities purchased under agreements to resell	1,358	(1)
Financial instruments owned, at fair value	742	1,014
Receivables from customers	354	(1,865)
Other receivables	(162)	(17)
Other assets	(12)	(2)
Securities loaned	(273)	(326)
Securities sold under agreement to repurchase	(1,316)
Financial instruments sold but not yet purchased, at fair value	(525)	(779)
Payable to customers	(125)	2,570
Other payables	(107)	(36)
Net cash provided by operating activities	1,201	779
Cash flows from investing activities:
Purchase of property and equipment	(8)	(6)
Net cash used in investing activities	(8)	(6)
Cash flows from financing activities:
Short-term borrowings, net	4	(36)
Dividends paid to stockholders	(7)	(7)
Distributions to noncontrolling interests	(61)	(34)
Net cash used in financing activities	(64)	(77)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	8	23
Net increase in cash, cash equivalents, and restricted cash	1,137	719
Cash, cash equivalents, and restricted cash at beginning of period	8,279	7,549
Cash, cash equivalents, and restricted cash at end of period	9,416	8,268
Cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at end of period	8,279	7,549
Supplemental disclosures of cash flow information:
Cash paid for interest	89	30
Cash paid for taxes, net	$ 13	$ 7

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Condensed Consolidated Statements of Changes in Equity - USD ($) $ in Millions	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Total Stockholders' Equity [Member]	Non-controlling Interests [Member]	Total
Balance at Dec. 31, 2016	$ 1	$ 775	$ (3)	$ 203	$ (2)	$ 974	$ 4,846	$ 5,820
Common stock, shares issued at Dec. 31, 2016	68,119,412
Common Stock distributed pursuant to stock incentive plans (in shares)	1,962
Compensation for stock grants vesting in the future		2				2	11	13
Dividends paid to stockholders				(7)		(7)		(7)
Distributions from IBG LLC to noncontrolling interests							(34)	(34)
Comprehensive Income				24	4	28	190	218
Balance at Mar. 31, 2017	$ 1	777	(3)	220	2	997	5,013	6,010
Common stock, shares issued at Mar. 31, 2017	68,121,374
Balance at Dec. 31, 2017	$ 1	832	(3)	251	9	1,090	5,343	6,433
Common stock, shares issued at Dec. 31, 2017	71,609,049
Common Stock distributed pursuant to stock incentive plans (in shares)	1,532
Compensation for stock grants vesting in the future		2				2	12	14
Dividends paid to stockholders				(7)		(7)		(7)
Distributions from IBG LLC to noncontrolling interests							(61)	(61)
Comprehensive Income				46	1	47	280	327
Balance at Mar. 31, 2018	$ 1	$ 834	$ (3)	$ 290	$ 10	$ 1,132	$ 5,574	$ 6,706
Common stock, shares issued at Mar. 31, 2018	71,610,581

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Organization Of Business

3 Months Ended

Mar. 31, 2018

Organization Of Business [Abstract]

Organization Of Business

1.   Organization of Business

Interactive Brokers Group, Inc. (“IBG, Inc.”) is a Delaware holding company whose primary asset is its ownership of approximately 17.4% of the membership interests of IBG LLC, which, in turn, owns operating subsidiaries (collectively, “IBG LLC”). IBG, Inc. together with IBG LLC and its consolidated subsidiaries (collectively, “the Company”), is an automated global electronic broker specializing in executing and clearing trades in securities, futures, foreign exchange instruments, bonds and mutual funds on more than 120 electronic exchanges and market centers around the world and offering custody, prime brokerage, securities and margin lending services to customers. In the United States of America (“U.S.”), the Company conducts its business primarily from its headquarters in Greenwich, Connecticut and from Chicago, Illinois. Abroad, the Company conducts its business through offices located in Canada, the United Kingdom, Switzerland, Liechtenstein, India, China (Hong Kong and Shanghai), Japan, and Australia. As of March 31, 2018, the Company had 1,252 employees worldwide.

IBG LLC is a Connecticut limited liability company that conducts its business through its operating subsidiaries (collectively, the “Operating Companies”): Interactive Brokers LLC (“IB LLC”); Interactive Brokers (U.K.) Limited and its subsidiary, Interactive Brokers (U.K.) Nominee Limited (collectively, “IBUK”); Interactive Brokers (India) Private Limited (“IBI”); Timber Hill LLC (“TH LLC”); Timber Hill Australia Pty Limited (“THA”); Timber Hill Canada Company (“THC”); Interactive Brokers Financial Products S.A. (“IBFP”); Interactive Brokers Software Services (India) Private Limited (“IBSSI”);IB Global Investments LLC (“IBGIL”); IB Exchange Corp. (“IBEC”) and its subsidiaries; Interactive Brokers Canada Inc. (“IBC”); Interactive Brokers Securities Japan, Inc. (“IBSJ”); Interactive Brokers Hong Kong Limited (“IBHK”);Interactive Brokers Australia Pty Limited and its subsidiary, Interactive Brokers Australia Nominees Pty Limited (collectively, “IBA”); IB Business Services (Shanghai) Company Limited (“IBBSS”); Timber Hill Europe AG and its subsidiary, Timber Hill (Liechtenstein) AG (collectively, “THE”);  Interactive Brokers Hungary KFT (“IBH”); Interactive Brokers Software Services Estonia OU (“IBEST”); Interactive Brokers Software Services Russia (“IBRUS”);Interactive Brokers Corp. (“IB Corp”), Covestor, Inc. and its subsidiary, Covestor Limited (collectively, “Covestor”), and Greenwich Advisor Compliance Services Corp. (“Greenwich Compliance”).

The Company operates in two business segments: electronic brokerage and market making, both supported by corporate. The Company conducts its electronic brokerage business through certain Interactive Brokers subsidiaries, which provide electronic execution and clearing services to customers worldwide. The Company conducts its market making business principally through its Timber Hill subsidiaries and it 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.

Certain of the Operating Companies are members of various securities and commodities exchanges in North America, Europe and the Asia/Pacific region and are subject to regulatory capital and other requirements (see Note 14). IB LLC, IBC, IBUK, IBSJ, IBHK, IBI and IBA carry securities accounts for customers or perform custodial functions relating to customer securities.

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Significant Accounting Policies

3 Months Ended

Mar. 31, 2018

Significant Accounting Policies [Abstract]

Significant Accounting Policies

2.   Significant Accounting Policies

Basis of Presentation

These condensedconsolidated financial statements are presented in U.S. dollars and have been preparedin accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) andpursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10‑Q.

These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2017 Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on March 1, 2018. The condensed consolidated financial information as of December 31, 2017 has been derived from the audited consolidated financial statements not included herein.

These condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the periods presented. The operating results for interim periods are not necessarily indicative of the operating results for the entire year.

Principles of Consolidation, including Noncontrolling Interests

These condensed consolidated financial statements include the accounts of IBG, Inc. and its majority and wholly owned subsidiaries. As sole managing member of IBG LLC, IBG, Inc. exerts control over IBG LLC’s operations. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” the Company consolidates IBG LLC’s financial statements and records the interests in IBG LLC that it does not own as noncontrolling interests.

The Company’s policy is to consolidate all other entities in which it owns more than 50% unless it does not have control. All inter‑company balances and transactions have been eliminated.

Condensed Consolidated Statements of Cash Flows and Financial Condition Presentation Changes

On January 1, 2018, the Company adopted FASB Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash” (“ASU 2016-18”). This accounting update requires an entity to include in its cash and cash equivalents amounts that are deemed to be restricted cash and to present a reconciliation of such amounts in the statement of cash flows. Restricted cash represents cash and cash equivalents that are subject to withdrawal or usage restrictions. For purposes of the condensed consolidated statements of cash flows, cash, cash equivalents, and restricted cash consist of “cash and cash equivalents” and “cash – segregated for regulatory purposes.”

ASU 2016-18 also requires prior periods to be retrospectively adjusted to conform to the current period presentation. Upon adoption, the Company recorded an increase of $988 million in net cash provided by operating activities, for the three months ended March 31, 2017 to reflect the reclassification of changes in restricted cash balances from the operating section to the cash, cash equivalent, and restricted cash balances within the condensed consolidated statements of cash flows.

In addition, the Company reclassified restricted cash amounts previously included within “cash and securities – segregated for regulatory purposes” into a separate line item, “cash – segregated for regulatory purposes,” in the condensed consolidated statements of financial condition to be consistent with the presentation of restricted cash in the condensed consolidated statements of cash flows under ASU 2016-18. Previously reported amounts in the condensed consolidated statements of financial condition and notes to the condensed consolidated financial statements have been adjusted to conform to the current presentation.

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. The Company also exited the majority of its market making activities outside of the U.S. by December 31, 2017 and expects to report discontinued operations when 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 and $3 million of cash expenditures primarily related to severance costs for employee terminations.

During the three months ended March 31, 2018, the Company did not incur any additional restructuring costs. During the three months ended March 31, 2017, the Company recorded restructuring costs of approximately $1 million for severance resulting from obligations related to employment terminations, included in employee compensation and benefits in the condensed consolidated statements of comprehensive income.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these condensed consolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Therefore, actual results could differ materially from those estimates. Such estimates include the allowance for doubtful accounts, valuation of certain investments, compensation accruals, current and deferred income taxes, costs associated with exit or disposal activities, and contingency reserves.

Fair Value

Substantially all of the Company’s assets and liabilities, including financial instruments are carried at fair value based on published market prices and are marked to market, or are assets and liabilities which are short‑term in nature and are carried at amounts that approximate fair value.

The Company applies the fair value hierarchy in accordance with FASB ASC Topic 820, “Fair Value Measurement” (“ASC Topic 820”), to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are:

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2	Quoted prices for similar assets in an active market, quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.
Level 3	Prices or valuations that require inputs that are both significant to fair value measurement and unobservable.

Financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are generally classified as Level 1 of the fair value hierarchy. The Company’s Level 1 financial instruments, which are valued using quoted market prices as published by exchanges and clearing houses or otherwise broadly distributed in active markets, include active listed stocks, options, warrants and discount certificates, and U.S. and foreign government securities. The Company does not adjust quoted prices for financial instruments classified as Level 1 of the fair value hierarchy, even in the event that the Company may hold a large position whereby a purchase or sale could reasonably impact quoted prices.

Currency forward contracts are valued using broadly distributed bank and broker prices, and are classified as Level 2 of the fair value hierarchy since inputs to their valuation can be generally corroborated by market data. Other securities that are not traded in active markets are also classified as Level 2 of the fair value hierarchy. Level 3 financial instruments are comprised of securities that have been delisted or otherwise are no longer tradable in active markets and have been valued by the Company based on internal estimates.

Earnings per Share

Earnings per share (“EPS”) is computed in accordance with FASB ASC Topic 260, “Earnings per Share.” Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of the basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s stock-based compensation plans, with no adjustments to net income available for common stockholders for dilutive potential common shares.

Stock‑Based Compensation

The Company follows FASB ASC Topic 718, “Compensation - Stock Compensation” (“ASC Topic 718”), to account for its stock‑based compensation plans. ASC Topic 718 requires all share‑based payments to employees to be recognized in the condensed consolidated financial statements using a fair value‑based method. Grants, which are denominated in U.S. dollars, are communicated to employees in the year of grant, thereby establishing the fair value of each grant. The fair value of awards granted to employees are generally expensed as follows: 50% in the year of grant in recognition of the plans’ post-employment provisions (as described below) and the remaining 50% over the related vesting period utilizing the “graded vesting” method permitted under ASC Topic 718. In the case of “retirement eligible” employees (those employees older than 59), 100% of awards are expensed when granted.

Awards granted under stock‑based compensation plans are subject to the plans’ post-employment provisions in the event an employee ceases employment with the Company. The plans provide that employees who discontinue employment with the Company without cause and continue to meet the terms of the plans’ post‑employment provisions will be eligible to earn 50% of previously granted but not yet earned awards, unless the employee is over the age of 59, in which case the employee would be eligible to receive 100% of previously granted but not yet earned awards.

Cash and Cash Equivalents

Cash and cash equivalents consist of deposits with banks and all highly liquid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes or to meet margin requirements at clearing houses.

Cash and Securities - Segregated for Regulatory Purposes

As a result of customer activities, certain Operating Companies are obligated by rules mandated by their primary regulators to segregate or set aside cash or qualified securities to satisfy such regulations, which have been promulgated to protect customer assets. Securities segregated for regulatory purposes consisted of U.S. government securities of $4.5 billion and $4.5 billion as of March 31, 2018 and December 31, 2017, respectively, and securities purchased under agreements to resell in the amount of$8.3 billion and $9.2 billion as of March 31, 2018 and December 31, 2017, respectively, which amounts approximate fair value.

Securities Borrowed and Securities Loaned

Securities borrowed and securities loaned are recorded at the amount of the cash collateral advanced or received. Securities borrowed transactions require the Company to provide counterparties with collateral, which may be in the form of cash, letters of credit or other securities. With respect to securities loaned, the Company receives collateral, which may be in the form of cash or other securities in an amount generally in excess of the fair value of the securities loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as permitted contractually. It is the Company’s policy to net, in the condensed consolidated statements of financial condition, securities borrowed and securities loaned entered into with the same counterparty that meet the offsetting requirements prescribed in FASB ASC Topic 210-20, “Balance Sheet – Offsetting” (“ASC Topic 210-20”).

Securities lending fees received and paid by the Company are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income.

Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase

Securities purchased under agreements to resell and securities sold under agreements to repurchase, which are reported as collateralized financing transactions, are recorded at contract value, which approximates fair value. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. It is the Company’s policy to net, in the condensed consolidated statements of financial condition, securities purchased under agreements to resell transactions and securities sold under agreements to repurchase transactions entered into with the same counterparty that meet the offsetting requirements prescribed in ASC Topic 210-20.

Financial Instruments Owned and Financial Instruments Sold, But Not Yet Purchased, at Fair Value

Financial instrument transactions are accounted for on a trade date basis. Financial instruments owned and financial instruments sold, but not yet purchased are stated at fair value based upon quoted market prices, or if not available, are valued by the Company based on internal estimates (see Fair Value above). The Company’s financial instruments pledged to counterparties where the counterparty has the right, by contract or custom, to sell or repledge the financial instruments are reported as financial instruments owned and pledged as collateral in the condensed consolidated statements of financial condition.

Customer Receivables and Payables

Customer securities transactions are recorded on a settlement date basis and customer commodities transactions are recorded on a trade date basis. Receivables from and payables to customers include amounts due on cash and margin transactions, including futures contracts transacted on behalf of customers. Securities owned by customers, including those that collateralize margin loans or other similar transactions, are not reported in the condensed consolidated statements of financial condition. Amounts receivable from customers that are determined by management to be uncollectible are recorded as customer bad debt expense in the condensed consolidated statements of comprehensive income.

Receivables from and Payables to Brokers, Dealers and Clearing Organizations

Receivables from and payables to brokers, dealers and clearing organizations include net receivables and payables from unsettled trades, including amounts related to futures and options on futures contracts executed on behalf of customers, amounts receivable for securities not delivered by the Company to the purchaser by the settlement date (“fails to deliver”) and cash deposits. Payables to brokers, dealers and clearing organizations also include amounts payable for securities not received by the Company from a seller by the settlement date (“fails to receive”).

Investments

The Company makes certain strategic investments related to its business and accounts for these investments (a) under the equity method of accounting as required under FASB ASC Topic 323, “Investments - Equity Method and Joint Ventures” or (b) at fair value or, if the investment in equity securities does not have a readily determinable fair value, at historical cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer in accordance with FASB ASC Topic 321, “Investments in Equity Securities.”

Investments accounted for under the equity method, including where the investee is a limited partnership or limited liability company, are recorded at the fair value amount of the Company’s initial investment and are adjusted each period for the Company’s share of the investee’s income or loss. The Company’s share of the income or losses from equity method investments is included in other income in the condensed consolidated statements of comprehensive income. The recorded amounts of the Company’s equity method investments,$23 million as of March 31,  2018 ($23 million as of December 31, 2017), which are included in other assets in the condensed consolidated statements of financial condition, increase or decrease accordingly. Contributions paid to and distributions received from equity method investees are recorded as additions or reductions, respectively, to the respective investment balance.

Investments in equity securities that do not qualify for equity method accounting are recorded at historical cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The recorded amounts of the Company’s investments in such equity securities, $5 million as of March 31, 2018 ($5 million as of December 31, 2017) are included in other assets in the condensed consolidated statements of financial condition. Dividends received from these investments are included in other income in the condensed consolidated statements of comprehensive income when such dividends are received.

The Company also holds exchange memberships and investments in equity securities of certain exchanges, as required to qualify as a clearing member. Such investments,$5 million as of March 31, 2018 ($6 million as of December 31, 2017), are recorded at cost less impairment, and are included in other assets in the condensed consolidated statements of financial condition. Dividends received from these investments are included in other income in the condensed consolidated statements of comprehensive income when such dividends are received.

A judgmental aspect of accounting for investments is evaluating whether a decline in the value of an investment has occurred. The evaluation of an impairment is dependent on specific quantitative and qualitative factors and circumstances surrounding an investment, including recurring operating losses, credit defaults and subsequent rounds of financing. The Company’s equity investments do not have readily determinable market values. All investments are reviewed for changes in circumstances or occurrence of events that suggest the Company’s investment may not be recoverable. An impairment loss, if any, is recognized in the period the determination is made.

Property, Equipment, and Intangible Assets

Property, equipment, and intangible assets, which are included in other assets in the condensed consolidated statements of financial condition, consist of leasehold improvements, computer equipment, software developed for the Company’s internal use, office furniture, equipment and acquired technology.  

Property and equipment are recorded at historical cost, less accumulated depreciation and amortization. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation and amortization are computed using the straight‑line method. Equipment is depreciated over the estimated useful lives of the assets, while leasehold improvements are amortized over the lesser of the estimated economic useful life of the asset or the term of the lease. Computer equipment is depreciated over three to five years and office furniture and equipment are depreciated over five to seven years. Intangible assets with a finite life are amortized on a straight line basis over their estimated useful lives of three years, and tested for recoverability whenever events indicate that the carrying amounts may not be recoverable. Qualifying costs for internally developed software are capitalized and amortized over the expected useful life of the developed software, not to exceed three years. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the condensed consolidated statements of financial condition and any resulting gain or loss is recorded in other income in the condensed consolidated statements of comprehensive income. Fully depreciated (or amortized) assets are retired on an annual basis.

Comprehensive Income and Foreign Currency Translation

The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to FASB ASC Topic 220, “Comprehensive Income.”

Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The Company’s OCI is comprised of gains and losses resulting from translating foreign currency financial statements of non-U.S. subsidiaries, net of related income taxes, where applicable. In general, the practice and intention of the Company is to reinvest the earnings of its non‑U.S. subsidiaries in those operations, therefore tax is usually not accrued on OCI.

The Company’s non‑U.S. domiciled subsidiaries have a functional currency that is other than the U.S. dollar. Such subsidiaries’ assets and liabilities are translated into U.S. dollars at period‑end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary’s functional currency to the U.S. dollar (as described above) are reported net of tax, where applicable, in accumulated OCI in the condensed consolidated statements of financial condition.

Revenue Recognition

Commissions

Commissions earned for executing and/or clearing transactions are accrued on a trade date basis and are reported as commissions in the condensed consolidated statements of comprehensive income. See Note 8 for further information on revenue from contracts with customers.

Interest Income and Expense

The Company earns interest income and incurs interest expense primarily in connection with its electronic brokerage customer business and its securities lending activities, which are recorded on an accrual basis and are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income.

Trading Gains

Trading gains and losses are recorded on trade date and are reported on a net basis. Trading gains and losses are comprised of changes in the fair value of financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value (i.e., unrealized gains and losses) and realized gains and losses related to the Company’s market making business segment. Included in trading gains are net gains and losses on stocks, U.S. and foreign government securities, options, futures, foreign exchange and other derivative instruments. Dividends are integral to the valuation of stocks and interest is integral to the valuation of fixed income instruments. Accordingly, both dividends and interest income and expense attributable to financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are reported on a net basis in trading gains in the condensed consolidated statements of comprehensive income.

Foreign Currency Gains and Losses

Foreign currency balances are assets and liabilities in currencies other than the Company’s functional currency. At every reporting date, the Company revalues its foreign currency balances to its functional currency at the spot exchange rate and records the associated foreign currency gains and losses. These foreign currency gains and losses are reported in the condensed consolidated statements of comprehensive income, as follows: (a) foreign currency gains and losses related to the Company’s currency diversification strategy are reported in other income; (b) foreign currency gains and losses related to the market making core-business activities are reported in trading gains; (c) foreign currency gains and losses arising from currency swap transactions in the electronic brokerage business are reported in interest income; and (d) all other foreign currency gains and losses are reported in other income.

Rebates

Rebates consist of volume discounts, credits or payments received from exchanges or other market centers related to the placement and/or removal of liquidity from the order flow in the marketplace and are recorded on an accrual basis. Rebates are recorded net within execution and clearing expenses in the condensed consolidated statements of comprehensive income. Rebates received for trades executed on behalf of customers that elect tiered pricing are passed, in whole or part, to these customers; and such pass-through amounts are recorded net within commissions in the condensed consolidated statements of comprehensive income.

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC Topic 740, “Income Taxes” (“ASC Topic 740”). The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits are based on enacted tax laws (see Note 11) and reflect management’s best assessment of estimated future taxes to be paid. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Determining income tax expense requires significant judgments and estimates.

Deferred income tax assets and liabilities arise from temporary differences between the tax and financial statements recognition of underlying assets and liabilities. In evaluating the ability to recover deferred tax assets within the jurisdictions from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax‑planning strategies, and results of recent operations. In projecting future taxable income, historical results are adjusted for changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax‑planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, three years of cumulative operating income (loss) are considered. Deferred income taxes have not been provided for U.S. tax liabilities or for additional foreign taxes on the unremitted earnings of foreign subsidiaries that have been indefinitely reinvested.

The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company’s global operations. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. 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).

The Company records tax liabilities in accordance with ASC Topic 740 and adjusts these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in payments that are different from the current estimates of these tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information becomes available.

The Company recognizes a tax benefit from an uncertain tax position only when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. A tax position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement.

The Company recognizes interest related to income tax matters as interest income or interest expense and penalties related to income tax matters as income tax expense in the condensed consolidated statements of comprehensive income.

Recently Issued Accounting Pronouncements

Following is a summary of recently issued FASB Accounting Standards Updates (“ASUs”) that have affected or may affect the Company’s condensed consolidated financial statements:  

	Affects	Status
ASU 2016-02	Leases (Topic 842):  Requires the recognition of a right-of-use asset and a lease liability for leases previously classified as operating lease in the statements of financial condition.	Effective for fiscal years beginning after December 15, 2018.
ASU 2016-13	Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.	Effective for fiscal years beginning after December 15, 2019.
ASU 2017-04	Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.	Effective for fiscal years beginning after December 15, 2019.
ASU 2017-08	Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20):  Amending the amortization period for certain purchased callable debt securities held at a premium.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2017-11	Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815): changing the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2017-12	Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2018-02	Income Statement – Reporting Comprehensive Income (Topic 220):  Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.	Effective for fiscal years and first interim periods beginning after December 15, 2018.
ASU 2018-03	Technical Correction and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.	Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years beginning after June 15, 2018.

Adoption of those ASUs that became effective during 2017 and 2018, prior to the issuance of the Company’s condensed consolidated financial statements, had no material effect on these financial statements, except for as described in the notes to these financial statements.  

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Trading Activities And Related Risks

3 Months Ended

Mar. 31, 2018

Trading Activities And Related Risks [Abstract]

Trading Activities And Related Risks

3.Trading Activities and Related Risks

The Company’s trading activities include providing securities brokerage and market making services. Trading activities expose the Company to market and credit risks. These risks are managed in accordance with established risk management policies and procedures. To accomplish this, management has established a risk management process that includes:

•a regular review of the risk management process by executive management as part of its oversight role;

•defined risk management policies and procedures supported by a rigorous analytic framework; and

•articulated risk tolerance levels as defined by executive management that are regularly reviewed to ensure that the Company’s risk‑taking is consistent with its business strategy, capital structure, and current and anticipated market conditions.

Market Risk

The Company is exposed to various market risks. Exposures to market risks arise from equity price risk, foreign currency exchange rate fluctuations and changes in interest rates. The Company seeks to mitigate market risk associated with trading inventories by employing hedging strategies that correlate rate, price and spread movements of trading inventories and related financing and hedging activities. The Company uses a combination of cash instruments and exchange traded derivatives to hedge its market exposures. The Company does not apply hedge accounting. The following discussion describes the types of market risk faced:

Equity Price Risk

Equity price risk arises from the possibility that equity security prices will fluctuate, affecting the value of equity securities and other instruments that derive their value from a particular stock, a defined basket of stocks, or a stock index. The Company is subject to equity price risk primarily in financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value. The Company attempts to limit such risks by continuously reevaluating prices and by diversifying its portfolio across many different options, futures and underlying securities and avoiding concentrations of positions based on the same underlying security.

Currency Risk

Currency risk arises from the possibility that fluctuations in foreign exchange rates will impact the value of financial instruments. The Company manages this risk using spot (i.e., cash) currency transactions, currency futures contracts and currency forward contracts. 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. The Company actively manages its currency exposure using a currency diversification strategy that is based on a defined basket of 14 currencies internally referred to as the “GLOBAL.” These strategies minimize the fluctuation of the Company’s net worth as expressed in GLOBALs, thereby diversifying its risk in alignment with these global currencies, weighted by the Company’s view of their importance. As the Company’s financial results are reported in U.S. dollars, the change in the value of the GLOBAL as expressed in U.S. dollars affects the Company’s earnings. The impact of this currency diversification strategy in the Company’s earnings is included in other income in the condensed consolidated statements of comprehensive income. In light of the Company’s decision to discontinue its options market making activities globally, the Company removed the Singapore dollar (SGD) and realigned the relative weight of the U.S. dollar (USD) versus the other currency components to better reflect its businesses going forward. The new composition went into effect as of the close of business on March 31, 2017. 

Interest Rate Risk

Interest rate risk arises from the possibility that changes in interest rates will affect the value of financial instruments. The Company is exposed to interest rate risk on cash and margin balances, positions carried in equity and fixed income securities, options, futures and on its borrowings. These risks are managed through investment policies and by entering into interest rate futures contracts.

Credit Risk

The Company is exposed to risk of loss if an individual, counterparty or issuer fails to perform its obligations under contractual terms (“default risk”). Both cash instruments and derivatives expose the Company to default risk. The Company has established policies and procedures for mitigating credit risk on principal transactions, including reviewing and establishing limits for credit exposure, maintaining collateral, and continually assessing the creditworthiness of counterparties.

The Company’s credit risk is limited in that substantially all of the contracts entered into are settled directly at securities and commodities clearing houses and a small portion is settled through member firms and banks with substantial financial and operational resources. The Company seeks to control the risks associated with its customer margin activities by requiring customers to maintain collateral in compliance with regulatory and internal guidelines.

In the normal course of business, the Company executes, settles, and finances various customer securities transactions. Execution of these transactions includes the purchase and sale of securities which exposes the Company to default risk arising from the potential that customers or counterparties may fail to satisfy their obligations. In these situations, the Company may be required to purchase or sell financial instruments at unfavorable market prices to satisfy obligations to customers or counterparties. Liabilities to other brokers and dealers related to unsettled transactions (i.e., securities fails to receive) are recorded at the amount for which the securities were purchased, and are paid upon receipt of the securities from other brokers or dealers. In the case of aged securities fails to receive, the Company may purchase the underlying security in the market and seek reimbursement for any losses from the counterparty.

For cash management purposes, the Company enters into short‑term securities purchased under agreements to resell and securities sold under agreements to repurchase transactions (“repos”) in addition to securities borrowing and lending arrangements, all of which may result in credit exposure in the event the counterparty to a transaction is unable to fulfill its contractual obligations. Repos are collateralized by securities with a market value in excess of the obligation under the contract. Similarly, securities lending agreements are collateralized by deposits of cash or securities. The Company attempts to minimize credit risk associated with these activities by monitoring collateral values on a daily basis and requiring additional collateral to be deposited with or returned to the Company as permitted under contractual provisions.

Concentrations of Credit Risk

The Company’s exposure to credit risk associated with its trading and other activities is measured on an individual counterparty basis, as well as by groups of counterparties that share similar attributes. Concentrations of credit risk can be affected by changes in political, industry, or economic factors. To reduce the potential for risk concentration, credit limits are established and exposure is monitored in light of changing counterparty and market conditions. As of March 31, 2018, the Company did not have any material concentrations of credit risk outside the ordinary course of business.

Off‑Balance Sheet Risks

The Company may be exposed to a risk of loss not reflected in the condensed consolidated financial statements to settle futures and certain over‑the‑counter contracts at contracted prices, which may require repurchase or sale of the underlying products in the market at prevailing prices. Accordingly, these transactions result in off‑balance sheet risk as the Company’s cost to liquidate such contracts may exceed the amounts reported in the Company’s condensed consolidated statements of financial condition.

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Equity And Earnings Per Share

3 Months Ended

Mar. 31, 2018

Equity And Earnings Per Share [Abstract]

Equity And Earnings Per Share

4.Equity and Earnings per Share

In connection with IBG, Inc.’s initial public offering of Class A common stock (“IPO”) in May 2007, it purchased 10.0% of the membership interests in IBG LLC from IBG Holdings LLC (“Holdings”), became the sole managing member of IBG LLC and began to consolidate IBG LLC’s financial results into its financial statements. Holdings owns all of IBG, Inc.’s Class B common stock, which has voting rights in proportion to its ownership interests in IBG LLC.  The table below shows the amount of IBG LLC membership interests held by IBG, Inc. and Holdings as of March 31, 2018.

	IBG, Inc.	Holdings	Total
Ownership %	17.4%	82.6%	100.0%
Membership interests	71,481,136	340,229,444	411,710,580

These condensed consolidated financial statements reflect the results of operations and financial position of IBG, Inc., including consolidation of its investment in IBG LLC and its subsidiaries. The noncontrolling interests in IBG LLC attributable to Holdings are reported as a component of total equity in the condensed consolidated statements of financial condition.

Recapitalization and Post‑IPO Capital Structure

Immediately prior to and immediately following the consummation of the IPO, IBG, Inc., Holdings, IBG LLC and the members of IBG LLC consummated a series of transactions collectively referred to herein as the “Recapitalization.” In connection with the Recapitalization, IBG, Inc., Holdings and the historical members of IBG LLC entered into an exchange agreement, dated as of May 3, 2007 (the “Exchange Agreement”), pursuant to which the historical members of IBG LLC received membership interests in Holdings in exchange for their membership interests in IBG LLC. Additionally, IBG, Inc. became the sole managing member of IBG LLC.

In connection with the consummation of the IPO, Holdings used the net proceeds to redeem 10.0% of members’ interests in Holdings in proportion to their interests. Immediately following the Recapitalization and IPO, Holdings owned approximately 90% of IBG LLC and 100% of IBG, Inc.’s Class B common stock, which has voting power in IBG, Inc. in proportion to Holdings’ ownership of IBG LLC.

Since consummation of the IPO and Recapitalization, IBG, Inc.’s equity capital structure has been comprised of Class A and Class B common stock. All shares of common stock have a par value of $0.01 per share and have identical rights to earnings and dividends and in liquidation. As ofMarch 31, 2018 and December 31, 2017,  1,000,000,000 shares of Class A common stock were authorized, of which 71,610,581 and 71,609,049 shares have been issued; and 71,481,133 and 71,475,755 shares were outstanding, respectively. Class B common stock is comprised of 100 authorized shares, of which 100 shares were issued and outstanding as of March 31, 2018 and December 31, 2017, respectively. In addition, 10,000 shares of preferred stock have been authorized, of which no shares are issued or outstanding as of March 31, 2018 and December 31, 2017, respectively.

As a result of a federal income tax election made by IBG LLC applicable to the acquisition of IBG LLC member interests by IBG, Inc., the income tax basis of the assets of IBG LLC acquired by IBG, Inc. have been adjusted based on the amount paid for such interests. Deferred tax assets were recorded as of the IPO date and in connection with subsequent redemptions of Holdings member interests in exchange for common stock. These deferred tax assets are included in other assets in the Company’s condensed consolidated statements of financial condition and are being amortized as additional deferred income tax expense over 15 years from the IPO date and from the additional redemption dates, respectively, as allowable under current tax law. As of March 31, 2018 and December 31, 2017, the unamortized balance of these deferred tax assets was $142 million and $146 million, respectively.

IBG, Inc. also entered into an agreement (the “Tax Receivable Agreement”) with Holdings to pay Holdings (for the benefit of the former members of IBG LLC) 85% of the tax savings that IBG, Inc. actually realizes as the result of tax basis increases. These payables to Holdings are reported as payable to affiliate in the Company’s condensed consolidated statements of financial condition. The remaining 15% is accounted for as a permanent increase to additional paid‑in capital in the Company’s condensed consolidated statements of financial condition.  

The cumulative amounts of deferred tax assets, payables to Holdings and additional paid‑in capital arising from stock offerings from the date of the IPO throughMarch 31, 2018 were $483 million, $410 million, and $73 million, respectively. Amounts payable under the Tax Receivable Agreement are payable to Holdings annually following the filing of IBG, Inc.’s federal income tax return. The Company has paid Holdings a cumulative total of$131 million through March 31, 2018 pursuant to the terms of the Tax Receivable Agreement.

The Exchange Agreement, as amended, provides for future redemptions of member interests and for the purchase of member interests in IBG LLC by IBG, Inc. from Holdings, which could result in IBG, Inc. acquiring the remaining member interests in IBG LLC that it does not own. On an annual basis, members of Holdings are able to request redemption of their interests.

At the time of IBG, Inc.’s IPO in 2007, three hundred sixty (360) million shares of authorized common stock were reserved for future sales and redemptions. From 2008 through 2010, Holdings redeemed 5,013,259 IBG LLC interests with a total value of $114 million, which redemptions were funded using cash on hand at IBG LLC. Upon cash redemption these IBG LLC interests were retired. From 2011 through 2017, IBG, Inc. issued 13,858,355 shares of common stock (with a fair value of $410 million) directly to Holdings in exchange for an equivalent number of member interests in IBG LLC.

As a consequence of these redemption transactions, and distribution of shares to employees (see Note 10), IBG, Inc.’s interest in IBG LLC has increased to approximately 17.4%, with Holdings owning the remaining 82.6% as of March 31, 2018.  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 approximately89.2%as ofMarch 31, 2018.

Earnings per Share

Basic earnings per share is calculated utilizing net income available for common stockholders divided by the weighted average number of shares of Class A and Class B common stock outstanding for that period.

	Three Months Ended March 31,
	2018		2017
	(in millions, except share or per share amounts)
Basic earnings per share
Net income available for common stockholders	$	46	$	24
Weighted average shares of common stock outstanding
Class A		71,475,850		67,985,007
Class B		100		100
		71,475,950		67,985,107
Basic earnings per share	$	0.64	$	0.35

Diluted earnings per share are calculated utilizing the Company’s basic net income available for common stockholders divided by diluted weighted average shares outstanding with no adjustments to net income available to common stockholders for potentially dilutive common shares.

	Three Months Ended March 31,
	2018		2017
	(in millions, except share or per share amounts)
Diluted earnings per share
Net income available for common stockholders	$	46	$	24
Weighted average shares of common stock outstanding
Class A
Issued and outstanding		71,475,850		67,985,007
Potentially dilutive common shares
Issuable pursuant to employee stock incentive plans		1,036,512		1,172,507
Class B		100		100
		72,512,462		69,157,614
Diluted earnings per share	$	0.63	$	0.34

Member Distributions and Stockholder Dividends

During the three months ended March 31, 2018,  IBG LLC made distributions totaling$74 million,  to its members, of which IBG, Inc.’s proportionate share was $13 million. For the three months ended March 31, 2018, the Company paid quarterlycash dividends of $0.10 per share of common stock, totaling$7 million.  

OnApril 17, 2018, the Company declared a cash dividend of $0.10 per common share, payable on June 14, 2018 to stockholders of record as of June 1, 2018.

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Comprehensive Income

3 Months Ended

Mar. 31, 2018

Comprehensive Income Detail [Abstract]

Comprehensive Income

5.   Comprehensive Income

The following table presents comprehensive income and earnings per share on comprehensive income:

	Three Months Ended March 31,
	2018		2017
	(in millions, except share or per share amounts)
Comprehensive income available for common stockholders	$	47	$	28
Earnings per share on comprehensive income
Basic	$	0.66	$	0.41
Diluted	$	0.65	$	0.40
Weighted average common shares outstanding
Basic		71,475,950		67,985,107
Diluted		72,512,462		69,157,614

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Financial Assets And Financial Liabilities

3 Months Ended

Mar. 31, 2018

Financial Assets And Financial Liabilities [Abstract]

Financial Assets And Financial Liabilities

6.   Financial Assets and Financial Liabilities

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables set forth, by level within the fair value hierarchy (see Note 2), financial assets and liabilities, measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017. As required by ASC Topic 820, financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the respective fair value measurement.

	Financial Assets At Fair Value as of March 31, 2018
	Level 1		Level 2		Level 3		Total
	(in millions)
Securities segregated for regulatory purposes	$	4,472	$	—	$	—	$	4,472
Financial instruments owned, at fair value
Stocks		1,604		—		1		1,605
Options		731		—		—		731
Warrants and discount certificates		2		—		—		2
U.S. and foreign government securities		72		—		—		72
Corporate and municipal bonds		—		1		3		4
Currency forward contracts		—		1		—		1
Total financial instruments owned, at fair value		2,409		2		4		2,415
Total financial assets at fair value	$	6,881	$	2	$	4	$	6,887

	Financial Liabilities At Fair Value as of March 31, 2018
	Level 1		Level 2		Level 3		Total
	(in millions)
Financial instruments sold, but not yet purchased, at fair value
Stocks	$	181	$	—	$	—	$	181
Options		56		—		—		56
Currency forward contracts		—		5		—		5
Total financial instruments sold, but not yet purchased, at fair value		237		5		—		242
Total financial liabilities at fair value	$	237	$	5	$	—	$	242

	Financial Assets At Fair Value as of December 31, 2017
	Level 1		Level 2		Level 3		Total
	(in millions)
Securities segregated for regulatory purposes	$	4,519	$	—	$	—	$	4,519
Financial instruments owned, at fair value
Stocks		2,000		—		1		2,001
Options		1,052		—		—		1,052
Warrants and discount certificates		5		—		—		5
U.S. and foreign government securities		60		—		—		60
Corporate and municipal bonds		—		1		3		4
Currency forward contracts		—		32		—		32
Total financial instruments owned, at fair value		3,117		33		4		3,154
Total financial assets at fair value	$	7,636	$	33	$	4	$	7,673

	Financial Liabilities At Fair Value as of December 31, 2017
	Level 1		Level 2		Level 3		Total
	(in millions)
Financial instruments sold, but not yet purchased, at fair value
Stocks	$	302	$	—	$	—	$	302
Options		464		—		—		464
Currency forward contracts		—		1		—		1
Total financial instruments sold, but not yet purchased, at fair value		766		1		—		767
Total financial liabilities at fair value	$	766	$	1	$	—	$	767

Transfers between Level 1 and Level 2

Transfers of financial assets and financial liabilities at fair value to or from Levels 1 and 2 arise where the market for a specific financial instrument has become active or inactive during the period. The fair values transferred are ascribed as if the financial assets or financial liabilities had been transferred as of the end of the period.During the three months ended March 31, 2018 and 2017, there were no transfers between levels for financial assets and liabilities, at fair value.

Level 3 Financial Assets and Financial Liabilities

The Company’s Level 3 financial assets are comprised of delisted and illiquid securities reported within financial instruments owned, at fair value in the condensed consolidated statements of financial condition. During the three months ended March 31, 2018, financial assets included $1 million in stocks and $3 million in corporate and municipal bonds, which were not traded in active markets and were valued by the Company based on internal estimates. During the three months ended March 31, 2017, there were no transfers between levels for financial assets and liabilities, at fair value.

Trading Gains from Market Making Transactions

Trading gains and losses from market making transactions reported in the condensed consolidated statements of comprehensive income, by major product type, are comprised of:

	Three Months Ended March 31,
	2018		2017
	(in millions)
Equities	$	13	$	3
Fixed income		—		—
Foreign exchange		—		(1)
Total trading gains, net	$	13	$	2

These transactions are related to the Company’s financial instruments owned and financial instruments sold, but not yet purchased, at fair value and include both derivative and non‑derivative financial instruments, including exchange traded options and futures. These gains and losses also include market making related dividend and fixed income trading related interest income and expense.

The gains(losses) in the table above are not representative of the integrated trading strategies applied by the Company, which utilizes financial instruments across various product types. Gains and losses in one product type frequently offset gains and losses in other product types.

Financial Assets and Liabilities Not Measured at Fair Value

The following tables represent the carrying value, fair value, and fair value hierarchy category of certain financial assets and liabilities that are not recorded at fair value in the Company'scondensedconsolidated statements of financial condition. The following table excludes certain financial instruments such as equity investments and all non-financial assets and liabilities:

	March 31, 2018
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
	(in millions)
Financial assets, not measured at fair value
Cash and cash equivalents	$	1,901	$	1,901	$	1,901	$	-	$	-
Cash - segregated for regulatory purposes		7,515		7,515		7,515		-		-
Securities - segregated for regulatory purposes		8,281		8,281		-		8,281		-
Securities borrowed		2,968		2,968		-		2,968		-
Securities purchased under agreements to resell		677		677		-		677		-
Receivables from customer		29,464		29,464		-		29,464		-
Receivables from broker, dealers, and clearing organizations		1,002		1,002		-		1,002		-
Interest receivable		99		99		-		99		-
Other assets		5		6		-		6		-
Total financial assets, not measured at fair value	$	51,912	$	51,913	$	9,416	$	42,497	$	-

Financial liabilities, not measured at fair value
Short-term borrowings	$	19	$	19	$	-	$	19	$	-
Securities loaned		4,171		4,171		-		4,171		-
Securities sold under agreements to repurchase		-		-		-		-		-
Payables to customer		47,423		47,423		-		47,423		-
Payables to brokers, dealers and clearing organizations		170		170		-		170		-
Interest payable		27		27		-		27		-
Total financial liabilities, not measured at fair value	$	51,810	$	51,810	$	-	$	51,810	$	-

	December 31, 2017
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
	(in millions)
Financial assets, not measured at fair value
Cash and cash equivalents	$	1,732	$	1,732	$	1,732	$	-	$	-
Cash - segregated for regulatory purposes		6,547		6,547		6,547		-		-
Securities - segregated for regulatory purposes		9,166		9,166		-		9,166		-
Securities borrowed		2,957		2,957		-		2,957		-
Securities purchased under agreements to resell		2,035		2,035		-		2,035		-
Receivables from customer		29,821		29,821		-		29,821		-
Receivables from broker, dealers, and clearing organizations		823		823		-		823		-
Interest receivable		116		116		-		116		-
Other assets		6		6		-		6		-
Total financial assets, not measured at fair value	$	53,203	$	53,203	$	8,279	$	44,924	$	-

Financial liabilities, not measured at fair value
Short-term borrowings	$	15	$	15	$	-	$	15	$	-
Securities loaned		4,444		4,444		-		4,444		-
Securities sold under agreements to repurchase		1,316		1,316		-		1,316		-
Payables to customer		47,548		47,548		-		47,548		-
Payables to brokers, dealers and clearing organizations		283		283		-		283		-
Interest payable		22		22		-		22		-
Total financial liabilities, not measured at fair value	$	53,628	$	53,628	$	-	$	53,628	$	-

Netting of Financial Assets and Financial Liabilities

It is the Company’s policy to net securities borrowed and securities loaned, and securities purchased under agreements to resell and securities sold under agreements to repurchase that meet the offsetting requirements prescribed in ASC Topic 210-20. In the tables below, the amounts of financial instruments that are not offset in thecondensedconsolidated statements of financial condition, but could be netted against cash or financial instruments with specific counterparties under master netting agreements, according to the terms of the agreements, including clearing houses (exchange traded options, warrants and discount certificates) or over the counter currency forward contract counterparties, are presented to provide financial statement readers with the Company’s net payable or receivable with counterparties for these financial instruments.

The following tables set forth the netting of financial assets and of financial liabilities as of March 31, 2018 and December 31, 2017:

	March 31, 2018
	Gross			Amounts			Net Amounts		Amounts Not Offset
	Amounts			Offset in the			Presented in		in the Condensed
	of Financial			Condensed			the Condensed		Consolidated Statement
	Assets and			Consolidated			Consolidated		of Financial Condition
	Liabilities			Statement of			Statement of		Cash or Financial
	Recognized			Financial Condition		2	Financial Condition		Instruments		Net Amount
	(in millions)
Offsetting of Financial Assets
Securities segregated for regulatory purposes - purchased under agreements to resell	$	8,281	1	$	—		$	8,281	$	(8,281)	$	—
Securities borrowed		2,968			—			2,968		(2,856)		112
Securities purchased under agreements to resell		677			—			677		(677)		—
Financial Instruments owned, at fair value
Options		731			—			731		(56)		675
Warrants and discount certificates		2			—			2		—		2
Currency forward contracts		1			—			1		—		1
Total	$	12,660		$	—		$	12,660	$	(11,870)	$	790

	(in millions)
Offsetting of Financial Liabilities
Securities loaned	$	4,171	$	—	$	4,171	$	(4,020)	$	151
Securities sold under agreements to repurchase		—		—		—		—		—
Financial instruments sold, but not yet purchased, at fair value
Options		56		—		56		(56)		—
Warrants and discount certificates		—		—		—		—		—
Currency forward contracts		5		—		5		—		5
Total	$	4,232	$	—	$	4,232	$	(4,076)	$	156

	December 31, 2017
		Gross		Amounts			Net Amounts		Amounts Not Offset
		Amounts		Offset in the			Presented in		in the Condensed
		of Financial		Condensed			the Condensed		Consolidated Statement
		Assets and		Consolidated			Consolidated		of Financial Condition
		Liabilities		Statement of			Statement of		Cash or Financial
		Recognized		Financial Condition		2	Financial Condition		Instruments		Net Amount
	(in millions)
Offsetting of Financial Assets
Securities segregated for regulatory purposes - purchased under agreements to resell	$	9,166	1	$	—		$	9,166	$	(9,166)	$	—
Securities borrowed		2,957			—			2,957		(2,822)		135
Securities purchased under agreements to resell		2,035			—			2,035		(2,035)		—
Financial Instruments owned, at fair value
Options		1,052			—			1,052		(451)		601
Warrants and discount certificates		5			—			5		—		5
Currency forward contracts		32			—			32		—		32
Total	$	15,247		$	—		$	15,247	$	(14,474)	$	773

	(in millions)
Offsetting of Financial Liabilities
Securities loaned	$	4,444	$	—	$	4,444	$	(4,201)	$	243
Securities sold under agreements to repurchase		1,316				1,316		(1,316)
Financial instruments sold, but not yet purchased, at fair value
Options		464		—		464		(451)		13
Warrants and discount certificates		—		—		—		—		—
Currency forward contracts		1		—		1		—		1
Total	$	6,225	$	—	$	6,225	$	(5,968)	$	257

(1) As of March 31,  2018 and December 31, 2017, the Company had $8.3 billion and $9.2 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in “securities - segregated for regulatory purposes” in thecondensed consolidated statements of financial condition.

(2) The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at March 31, 2018 and December 31,2017.

Secured Financing Transactions – Maturities and Collateral Pledged

The following tables present gross obligations for securities loaned transactions by remaining contractual maturity and class of collateral pledged as of March 31, 2018 and December 31, 2017:

	March 31, 2018
	Remaining Contractual Maturity
	Overnight		Less than		30 – 90		Over 90
	and Open		30 days		days		days		Total
	(in millions)
Securities loaned
Stocks	$	4,109	$	-	$	-	$	-	$	4,109
Corporate bonds		57		-		-		-		57
Foreign government securities		5		-		-		-		5
Total securities loaned	$	4,171	$	-	$	-	$	-	$	4,171

	December 31, 2017
	Remaining Contractual Maturity
	Overnight		Less than		30 – 90		Over 90
	and Open		30 days		days		days		Total
	(in millions)
Securities Loaned
Stocks	$	4,389	$	-	$	-	$	-	$	4,389
Corporate bonds		55		-		-		-		55
Total securities loaned		4,444		-		-		-		4,444
Securities sold under agreements to repurchase
U.S. government securities		1,316		-		-		-		1,316
Total	$	5,760	$	-	$	-	$	-	$	5,760

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Collateralized Transactions

3 Months Ended

Mar. 31, 2018

Disclosure Collateralized Transactions [Abstract]

Collateralized Transactions

7.Collateralized Transactions

The Company enters into securities borrowing and lending transactions and agreements to repurchase and resell securities to finance trading inventory, to obtain securities for settlement and to earn residual interest rate spreads. In addition, the Company’s customers pledge their securities owned to collateralize margin loans. Under these transactions, the Company either receives or provides collateral, including equity, corporate debt and U.S. government securities. Under typical agreements, the Company is permitted to sell or repledge securities received as collateral and use these securities to secure securities purchased under agreements to resell, enter into securities lending transactions or deliver these securities to counterparties to cover short positions.

The Company also engages in securities financing transactions with and for customers through margin lending. Customer receivables generated from margin lending activity are collateralized by customer‑owned securities held by the Company. Customers’ required margin levels and established credit limits are monitored continuously by risk management staff using automated systems. Pursuant to the Company’s policy and as enforced by such systems, customers are required to deposit additional collateral or reduce positions, when necessary to avoid automatic liquidation of their positions.

Margin loans are extended to customers on a demand basis and are not committed facilities. Factors considered in the acceptance or rejection of margin loans are the amount of the loan, the degree of leverage being employed in the customer account and an overall evaluation of the customer’s portfolio to ensure proper diversification or, in the case of concentrated positions, appropriate liquidity of the underlying collateral. Additionally, transactions relating to concentrated or restricted positions are limited or prohibited by raising the level of required margin collateral (to 100% in the extreme case). Underlying collateral for margin loans is evaluated with respect to the liquidity of the collateral positions, valuation of securities, volatility analysis and an evaluation of industry concentrations. Adherence to the Company’s collateral policies significantly limits the Company’s credit exposure to margin loans in the event of a customer’s default. Under margin lending agreements, the Company may request additional margin collateral from customers and may sell securities that have not been paid for or purchase securities sold but not delivered from customers, if necessary. As ofMarch 31, 2018 and December 31, 2017, approximately $29.5 billion and $29.8 billion, respectively, of customer margin loans were outstanding.

The following table summarizes the amounts related to collateralized transactions as of March 31, 2018 and December 31, 2017:

	March 31, 2018				December 31, 2017
	Permitted		Sold or		Permitted		Sold or
	to Repledge		Repledged		to Repledge		Repledged
	(in millions)
Securities lending transactions	$	23,556	$	3,346	$	23,662	$	3,041
Securities purchased under agreements to resell transactions (1)		8,976		8,976		11,231		11,231
Customer margin assets		29,412		7,520		30,236		9,013
	$	61,944	$	19,842	$	65,129	$	23,285

(1) As of March 31,  2018,  $8.3 billion or 92% (as of December 31, 2017,  $9.2 billion or 82%) of securities acquired through agreements to resell that are shown as repledged have been deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3.

In the normal course of business, the Company pledges qualified securities with clearing organizations to satisfy daily margin and clearing fund requirements. As of March 31, 2018 and December 31, 2017, the majority of the Company’s U.S. and foreign government securities owned were pledged to clearing organizations.

Financial instruments owned and pledged as collateral, including amounts pledged to affiliates, where the counterparty has the right to repledge, as of March 31, 2018 and December 31, 2017 are presented in the following table:

	March 31,		December 31,
	2018		2017
	(in millions)
Stocks	$	553	$	1,150
U.S. and foreign government securities		61		54
	$	614	$	1,204

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Revenue From Contracts With Customers

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenues From Contracts With Customers

8. Revenues from Contracts with Customers

Adoption

On January 1, 2018, the Company adopted ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASC Topic 606”) using the modified retrospective method (i.e., applied prospectively effective January 1, 2018 without revising prior periods), which had no impact on the Company’s opening retained earnings.

Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring the promised services to the customers. A service is transferred to a customer when, or as, the customer obtains control of that service. A performance obligation may be satisfied at a point in time or over time. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised service. Revenue from a performance obligation satisfied over time is recognized by measuring the Company’s progress in satisfying the performance obligation in a manner that depicts the transfer of the services to the customer. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration, if any.

The Company’s revenues from contracts with customers are recognized when the performance obligations are satisfied at an amount that reflects the consideration expected to be received in exchange for such services. The majority of the Company’s performance obligations are satisfied at a point in time and are typically collected from customers by debiting their brokerage account with the Company.

Nature of Services

The Company’s services under contracts with customers are mainly related to its electronic brokerage business. The Company’s main sources of revenues from contracts with customers are as follows:

- Commissions are charged to customers for order execution services and trade clearing and settlement services. The Company recognizes revenue at the time of execution of the order (i.e., trade date). Commissions are generally collected from cleared customers on trade date and from non-cleared customers monthly.

- Market data fees are charged to customers for market data services to which they subscribe, that are delivered by the Company. The Company recognizes revenue monthly and collects the fees monthly, in arrears.

- Risk exposure fees are charged to customers who carry positions with market risk that exceeds defined thresholds. The Company recognizes revenue and collects the fees daily.

- Payments for order flow are earned from various options exchanges based upon options trading volume originated by the Company that meets certain criteria. The Company recognizes revenue daily. Payments for order flow are collected monthly, in arrears.

- Minimum activity fees – are charged to customers that do not generate the required minimum monthly commission. The Company recognizes revenue monthly and collects the fees monthly, in arrears.

The Company’s electronic brokerage business also earns revenues from other services, including order cancelation or modification fees, position transfer fees, telecommunications fees, withdrawal fees, and bank sweep program fees, among others.

Disaggregation of Revenue

The following table sets forth revenue from contracts with customers by business segment, geographic location, and major types of services for the three months ended March 31, 2018, as follows:

	Three Months Ended March 31, 2018
	Electronic brokerage		Market making		Corporate		Total
	(in millions)
Geographic location 1
United States	$	182	$	2	$	-	$	184
International		72		-		-		72
	$	254	$	2	$	-	$	256
Major types of services
Commissions	$	220	$	-	$	-	$	220
Market data fees 2		11		-		-		11
Risk exposure fees 2		8		-		-		8
Payments for order flow 2		5		-		-		5
Minimum activity fees 2		5		-		-		5
Other 2		5		2		-		7
	$	254	$	2	$	-	$	256

(1) Based on the location of the subsidiaries in which the revenues are recorded.

(2) Included in other income on the condensed consolidated statements of comprehensive income.

Receivables and Contract Balances

Receivables arise when the Company has an unconditional right to receive payment under a contract with a customer and are derecognized when the cash is received. Receivables of $12 million, as of March 31, 2018, are reported in other assets in the condensed consolidated statements of financial condition.

Contract assets arise when the revenue associated with the contract is recognized prior to the Company’s unconditional right to receive payment under a contract with a customer (i.e., unbilled receivable) and are derecognized when either it becomes a receivable or the cash is received. Contract assets are reported in other assets in the condensed consolidated statements of financial condition. As of March 31, 2018, contract asset balances were not material.

Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized either when a milestone is met triggering the contractual right to bill the customer or when the performance obligation is satisfied. Contract liabilities are reported in accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition.As of March 31, 2018, contract liability balances were not material.

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Other Income

3 Months Ended

Mar. 31, 2018

Other Income [Abstract]

Other Income

9.Other Income

The components of other income for the three months ended March 31, 2018 and 2017 were:

	Three Months Ended March 31,
	2018		2017
	(in millions)
Market data fees1	$	11	$	9
Minimum activity fees1		5		5
Risk exposure fees1		8		5
Payments for order flow1		5		4
Gains on financial instruments, at fair value and other investments, net		2		2
Gains from currency diversification strategy, net		38		49
Other, net		8		2
	$	77	$	76

(1) See Note 8 for description of these revenues.

Gains on financial instruments, at fair value and other investments, net include (1) realized and unrealized gains and losses on financial instruments that (a) are held for purposes other than the Company’s market making activities, (b) are subject to restrictions, or (c) are accounted for under the equity method and (2) dividends on investments accounted at cost less impairment.

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Employee Incentive Plans

3 Months Ended

Mar. 31, 2018

Employee Incentive Plans [Abstract]

Employee Incentive Plans

10. Employee Incentive Plans

Defined Contribution Plan

The Company offers substantially all employees of U.S.-based Operating Companies who have met minimum service requirements the opportunity to participate in defined contribution retirement plans qualifying under the provisions of Section 401(k) of the Internal Revenue Code. The general purpose of this plan is to provide employees with an incentive to make regular savings in order to provide additional financial security during retirement. This plan provides for the Company to match 50% of the employees’ pre-tax contribution, up to a maximum of 10% of eligible earnings. The employee is vested in the matching contribution incrementally over six years of service. Included in employee compensation and benefits expenses in thecondensed consolidated statements of comprehensive income were $1 million of plan contributions for each of the three months ended March 31, 2018 and 2017.

2007 ROI Unit Stock Plan

In connection with the IPO, the Company adopted the IBG, Inc. 2007 ROI Unit Stock Plan (“ROI Unit Stock Plan”). An aggregate of 1,271,009 shares of restricted common stock (consisting of 1,250,000 shares issued under the ROI Unit Stock Plan and 21,009 shares under the 2007 Stock Incentive Plan, as described below), with a fair value at the date of grant of $38 million were issued to IBG LLC and held as treasury stock.

As of March 31, 2018, the Company has distributed all shares of restricted common stock under the ROI Unit Stock Plan.

2007 Stock Incentive Plan

In 2017, the Company amended the 2007 Stock Incentive Plan (the “Stock Incentive Plan”) to extend its term for a ten-year period through April 24, 2027, which was approved by the Company’s stockholders at its 2018 Annual Meeting, held on April 19, 2018. Under the Company’s Stock Incentive Plan, up to 30 million shares of the Company’s common stock may be issued to satisfy vested restricted stock units granted to directors, officers, employees, contractors and consultants of the Company. The purpose of the Stock Incentive Plan is to promote the Company’s long‑term financial success by attracting, retaining, and rewarding eligible participants.

As a result of the Company’s organizational structure, a description of which can be found in “Business – Our Organizational Structure” in Part I Item 1 of the Company’s Annual Report on Form 10-K, there is no dilutive effect upon ownership of common stockholders of issuing shares under the Stock Incentive Plan. The issuances do not dilute the book value of the ownership of common stockholders since the restricted stock units are granted at market value, and upon their vesting and the related issuance of shares of common stock, the ownership of IBG, Inc. in IBG LLC, increases proportionately to the shares issued. As a result of such proportionate increase in share ownership, the dilution upon issuance of common stock is borne by IBG LLC’s majority member (i.e., noncontrolling interest), Holdings, and not by IBG, Inc. or its commonstockholders.Additionally, dilution of earnings that may take place after issuance of common stock is reflected in EPS reported in the Company’s financial statements. The EPS dilution can be neither estimated nor projected, but historically it has not been material.

The Stock Incentive Plan is administered by the Compensation Committee of the Company’s Board of Directors. The Compensation Committee has discretionary authority to determine the eligibility to participate in the Stock Incentive Plan and establishes the terms and conditions of the awards, including the number of awards granted to each participant and all other terms and conditions applicable to such awards in individual grant agreements. Awards are expected to be made primarily through grants of restricted stock units. Stock Incentive Plan awards are subject to issuance over time. All previously granted but not yet earned awards may be cancelled by the Company upon theparticipant’s termination of employment or violation of certain applicable covenants prior to issuance, unless determined otherwise by the Compensation Committee.

The Stock Incentive Plan provides that, upon a change in control, the Compensation Committee may, at its discretion, fully vest any granted but not yet earned awards under the Stock Incentive Plan, or provide that any such granted but not yet earned awards will be honored or assumed, or new rights substituted by the new employer on a substantially similar basis and on terms and conditions substantially comparable to those of the Stock Incentive Plan.

The Company expects to continue to grant awards on or about December 31 of each year to eligible participants as part of an overall plan of equity compensation. Restricted stock units vest and become distributable to participants in accordance with the following schedule:

•10% on the first vesting date, which is on or about May 9 of each year; and

•an additional 15% on each of the following six anniversaries of the first vesting, assuming continued employment with the Company and compliance with non-competition and other applicable covenants.

Awards granted to external directors vest, and are distributed, over a five‑year period (20% per year) commencing one year after the date of grant. A total of 24,263restricted stock units have been granted to the external directors cumulatively since the plan’sinception.

Stock Incentive Plan awards granted (excluding 21,009 shares issued pursuant to the ROI Unit Stock Plan described above) and the related fair values since the plan’s inception are presented in the table below:

			Fair Value at
			Date of Grant
	Units		($ millions)
Prior periods (since inception)	20,888,468		$	397
December 31, 2015	1,211,533			52
December 31, 2016	1,451,136			55
December 31, 2017	941,742	1/2		56
	24,492,879		$	560

(1) Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 18,335 additional restricted stock units during the three months ended March 31, 2018.

(2) Granted under the Company’s amended 2007 Stock Incentive Plan, which was approved by the Company’s stockholders at its 2018 Annual Meeting, held on April 19, 2018.  

Estimated future grants under the Stock Incentive Plan are accrued for ratably during each year (see Note 2). In accordance with the vesting schedule, outstanding awards vest and are distributed to participants yearly on or about May 9 of each year. At the end of each year, there are no vested awards that remain undistributed.

Compensation expense related to the Stock Incentive Plan recognized in thecondensedconsolidated statements of comprehensive income was$14 million, and$13 million for the three months endedMarch 31, 2018 and 2017, respectively. Estimated future compensation costs for unvested awards, net of credits for cancelled awards,  as ofMarch 31, 2018 are $34 million.

The following summarizes the Stock Incentive Plan and ROI Unit Stock Plan activities from December 31, 2017 through March 31, 2018:

	Stock		ROI Unit
	Incentive Plan		Stock Plan
	Units		Shares
Balance, December 31, 2017	6,468,973	1/2	3,849
Granted	—		—
Cancelled	(11,637)		—
Distributed	(1,532)		(3,849)
Balance, March 31, 2018	6,455,804		—

(1) Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 18,335 additional restricted stock units during the three months ended March 31, 2018.

(2) Includes 941,742 restricted stock units granted under the Company’s amended 2007 Stock Incentive Plan, which was approved by the Company’s stockholders at its 2018 Annual Meeting, held on April 19, 2018.

Awards previously granted but not yet earned under the stock plans are subject to the plans’ post-employment provisions in the event a participant ceases employment with the Company.  Through March 31, 2018, a total of 578,574restricted stock units have been distributed under these post‑employment provisions. These distributions are included in the table above.

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Income Taxes

3 Months Ended

Mar. 31, 2018

Income Taxes [Abstract]

Income Taxes

11.Income Taxes

Income tax expense for the three months endedMarch 31, 2018 and 2017differs from the U.S. federal statutory rate primarily due to the taxation treatment of income attributable to noncontrolling interests in IBG LLC and the enactment of the Tax Act, as discussed below. These noncontrolling interests are subject to U.S. taxation as partnerships. Accordingly, the income attributable to these noncontrolling interests is reported in thecondensed consolidated statements of comprehensive income, but the related U.S. income tax expense attributable to these noncontrolling interests is not reported by the Company as it is the obligation of the individual members. Income tax expense is also affected by the differing effective tax rates in foreign, state and local jurisdictions where certain of the Company’s subsidiaries are subject to corporate taxation.

Deferred income taxes arise primarily due to the amortization of the deferred tax assets recognized in connection with the common stock offerings (see Note 4), differences in the valuation of financial assets and liabilities, and for other temporary differences arising from the deductibility of compensation and depreciation expenses in different time periods for accounting and income tax return purposes. 

The Tax Act, as previously described, makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate to 21%,  effective January 1, 2018; (2) requiring a one-time transition tax on certain undistributed earnings of foreign subsidiaries to be paid over eight years; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (6) creating the base erosion anti-abuse tax, a new minimum tax; (7) creating a new limitation on deductible interest expense; (8) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (9) repealing the Section 199 manufacturing deduction; and (10) full expensing of qualified property for tax return purposes.

The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accountingfor the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extendbeyond one year from the enactment of the Tax Act for entities to complete the accountingunder ASC Topic 740. In accordance with SAB 118, an entity must reflect the income tax effects ofthose aspects of the Tax Act for which the accounting under ASC Topic 740 is complete. To the extent that an entity’s accounting for certain income tax effects of the Tax Act is incomplete but it is able todetermine a reasonable estimate, the entity must record a provisional estimate on its financial statements. However, if  an entity cannot determine a provisional estimate to be included on its financial statements, the entity should continue to apply ASC Topic740 on the basis of the provisions of the tax laws that were in effectimmediately before the enactment of the Tax Act.

The Company’s accounting for the following elements of the Tax Act is incomplete. However, the Company has made reasonable estimates of certain effects and, therefore, recorded provisional adjustments as follows:

Reduction of U.S. federal corporate tax rate: The Tax Act reduces the corporate tax rate to 21%, effective January 1, 2018. For certain of the Company’s deferred tax assets and liabilities, the Company recognized a provisional net decrease of $115 million with a corresponding adjustment to deferred income tax expense (or deferred tax benefit) for the year ended December, 31, 2017. As of March 31, 2018, the Company has not made any adjustments to the provisional amount recorded as of December 31, 2017. While the Company has made a reasonable estimate of the impact of the reduction in corporate rate, it may be affected by other analyses related to the Tax Act, including, but not limited to, the calculation of deemed repatriation of deferred foreign income and the state tax effect of adjustments made to federal temporary differences. The Company is still analyzing certain aspects of the Tax Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts.

Deemed Repatriation Transition Tax: The Deemed Repatriation Transition Tax (“Transition Tax”) is a tax on previously untaxed accumulated and current earnings of certain foreign subsidiaries. To determine the amount of the Transition Tax, the Company must determine, in addition to other factors, the amount of post-1986 earnings of the relevant foreign subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. As of December 31, 2017, the Company recognized a provisional Transition Tax obligation of $62 million and for the three months ended March 31, 2018, has not made any adjustments to the provisional amount recorded. This amount may change when the calculation of post-1986 foreign earnings and profits previously deferred from U.S. federal taxation and the amounts held in cash or other specified assets are finalized. The Company does not expect any significant changes, but it is continuing to gather additional information to more precisely compute the amount of the Transition Tax.

The Tax Act creates a new requirement that global intangible low taxed income (“GILTI”)earned by controlled foreign corporations (“CFC”s) must be included currently in the gross income of the CFC’s U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC-tested income” over the deemed tangible income return, which is currently defined as the excess of (1) 10 percent of the aggregate of the U.S shareholder’s pro rata share of the qualified business asset investment in each CFC with respect to which it is a U.S shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income. Under U.S. GAAP, the Company is allowed to make an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company selected the period cost method.

As of and for the three months endedMarch 31, 2018 and 2017,  the Company had no unrecognized tax and no valuation allowances on deferred tax assets were required. The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. As of March 31, 2018, the Company is no longer subject to U.S. Federal and State income tax examinations for tax years prior to 2010, and to non-U.S. income tax examinations for tax years prior to 2008.

As ofMarch 31, 2018, accumulated earnings held by non‑U.S. subsidiaries totaled $1.1billion  (as ofDecember 31, $1.1billion). Of this amount, approximately $0.4billion  (as ofDecember 31, 2017 $0.3billion) is attributable to earnings of the Company’s foreign subsidiaries that are considered “pass‑through” entities for U.S. income tax purposes. Since the Company accounts for U.S. income taxes on these earnings on a current basis, no additional U.S. tax consequences would result from the repatriation of these earnings other than that which would be due arising from currency fluctuations between the time the earnings are reported for U.S. tax purposes and when they are remitted. With respect to certain of these subsidiaries’ accumulated earnings (approximately $0.2billion and $0.2billion as of March 31, 2018 and December 31, 2017, respectively), repatriation would result in additional foreign taxes in the form of dividend withholding tax imposed on the recipient of the distribution or dividend distribution tax imposed on the payor of the distribution. The Company has not provided for its proportionate share of these additional foreign taxes as it does not intend to repatriate these earnings in the foreseeable future. For the same reason, the Company has not provided deferred U.S. tax on cumulative translation adjustments associated with these earnings.

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Commitments, Contingencies And Guarantees

3 Months Ended

Mar. 31, 2018

Commitments, Contingencies And Guarantees [Abstract]

Commitments, Contingencies And Guarantees

12.Commitments, Contingencies and Guarantees

Litigation

The Company is subject to certain pending and threatened legal actions which arise out of the normal course of business. Litigation is inherently unpredictable, particularly in proceedings where claimants seek substantial or indeterminate damages, or which are in their early stages. The Company has not been able to quantify the actual loss or range of loss related to such legal proceedings, the manner in which they will be resolved, the timing of final resolution or the ultimate settlement. Management believes that the resolution of these actions will not have a material effect, if any, on the Company’s business or financial condition, but may have a material impact on the results of operations for a given period.

The Company accounts for potential losses related to litigation in accordance with FASB ASC Topic 450, “Contingencies.” As of March 31, 2018 and 2017, reserves provided for potential losses related to litigation matters were not material.

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, Inc., IBG LLC, Holdings, and IB LLC. Thereafter, Trading Technologies dismissed IBG, Inc. and Holdings from the case, leaving only IBG LLC and IB LLC as defendants (“Defendants”). The operative 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 Litigation”). 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. Trading Technologies also filed patent infringement lawsuits against approximately a dozen other companies in the same court. The Litigation was consolidated with the other lawsuits filed by Trading Technologies.

The Defendants and/or certain codefendants filed petitions with theUnited States Patent and Trademark Office (“USPTO”) for Covered Business Method Review (“CBM Review”) on the asserted patents. The District Court granted the Defendants’ motion to stay the Litigation pending the CBM Reviews. The USPTO Patent Trial Appeal Board found ten of the twelve asserted patents to be not patentable andtwo patents to be patentable. The Defendants have filed appeals on the claims that were held to be patentable.

It is difficult to predict the outcome of the matter, however, 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 former customer and members of the purported class of IB LLC’s customers were harmed by alleged “flaws” in the computerized system used by the Company 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 February 19, 2016, the Company filed a motion to dismiss the class action complaint. On September 28, 2016, the Court issued an order granting the Company’s motion to dismiss and dismissing the complaint in its entirety, and without providing plaintiff leave to amend. On October 5, 2016, the Court entered judgment in the Company’s favor. On October 12, 2016, plaintiff filed motions for leave to file an amended complaint and to vacate or amend judgment. On November 14, 2016, plaintiff also filed a motion to disqualify the district judge. The Company opposed all three motions. In memoranda of decision dated August 29, 2017 and September 5, 2017, the Court denied the motions. On September 28, 2017, plaintiff appealed the order of dismissal and subsequent judgment to the United States Court of Appeals for the Second Circuit. On January 9, 2018, the plaintiff filed his appellate brief.  The Company filed its opposition brief on April 10, 2018. The Company believes that the appeal, like the original complaint, lacks merit. Further, even if the Court’s dismissal were to be overturned on appeal, 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 shall be fully pursued against the plaintiff.

Guarantees

Certain of the Operating Companies provide guarantees to securities and commodities clearing houses and exchanges which meet the accounting definition of a guarantee under FASB ASC Topic 460, “Guarantees.” Under standard membership agreements, clearing house and exchange members are required to guarantee collectively the performance of other members. Under the agreements, if a member becomes unable to satisfy its obligations, other members would be required to meet shortfalls. In the opinion of management, the Operating Companies’ liability under these arrangements is not quantifiable and could exceed the cash and securities they have posted as collateral. However, the potential for these Operating Companies to be required to make payments under these arrangements is remote. Accordingly, no contingent liability is carried in thecondensed consolidated statements of financial condition for these arrangements.

In connection with its retail brokerage business, IB LLC or other electronic brokerage Operating Companies perform securities and commodities execution, clearance and settlement on behalf of their customers for whom they commit to settle trades submitted by such customers with the respective clearing houses. If a customer fails to fulfill its settlement obligations, the respective Operating Company must fulfill those settlement obligations. No contingent liability is carried on thecondensed consolidated statements of financial condition for such customer obligations.

Other Commitments

Certain clearing houses, clearing banks and firms used by certain Operating Companies are given a security interest in certain assets of those Operating Companies held by those clearing organizations. These assets may be applied to satisfy the obligations of those Operating Companies to the respective clearing organizations.

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Segment And Geographic Information

3 Months Ended

Mar. 31, 2018

Segment And Geographic Information [Abstract]

Segment And Geographic Information

13. Segment and Geographic Information

The Company has two operating business segments: electronic brokerage and market making. These segments are supported by the corporate segment, which provides centralized services and executes the Company’s currency diversification strategy.

The Company conducts its electronic brokerage business through certain Interactive Brokers subsidiaries, which provide electronic trade execution and clearing services to customers worldwide. The Company conducts its remaining market making business (see Note 2 – Discontinued Operations and Costs Associated with Exit or Disposal Cost) principally through its Timber Hill subsidiaries on some of the world’s leading exchanges and market centers, primarily in exchange‑traded equities, equity options and equity‑index options and futures.

Significant transactions and balances between the Operating Companies occur, primarily as a result of certain Operating Companies holding exchange or clearing organization memberships, which are utilized to provide execution and clearing services to affiliates. Charges for transactions between segments are designed to approximate full costs. Intra‑segment and intra‑region income and expenses and related balances have been eliminated in this segment and geographic information to reflect the external business conducted in each segment or geographic region. Corporate items include non‑allocated corporate income and expenses that are not attributed to segments for performance measurement, net gains and losses on positions held as part of the Company’s overall currency diversification strategy, corporate assets and eliminations.

Management believes that the following information by business segment provides a reasonable representation of each segment’s contribution to total net revenues and income before income taxes for the three months ended March 31, 2018, and 2017, and total assets as of March 31, 2018 and December 31, 2017:

	Three Months Ended March 31,
	2018		2017
	(in millions)
Net revenues
Electronic brokerage	$	465	$	314
Market making		21		8
Corporate		41		52
Total net revenues	$	527	$	374
Income before income taxes
Electronic brokerage	$	291	$	185
Market making		9		(22)
Corporate		40		50
Total income before income taxes	$	340	$	213

	March 31,		December 31,
	2018		2017
	(in millions)
Segment assets
Electronic brokerage	$	57,316	$	58,787
Market making		3,618		8,469
Corporate		(1,841)		(6,094)
Total assets	$	59,093	$	61,162

The Company operates its automated global business in the U.S. and international markets on more than 120 electronic exchanges and market centers. A significant portion of the Company’s net revenues are generated by subsidiaries operating outside the U.S. International operations are comprised of electronic brokerage and market making activities in 29 countries in Europe, Asia and the Americas (outside the U.S.). The following table presents total net revenues and income before income taxes by geographic area for the three months ended March 31, 2018 and 2017.The geographic analysis presented below is based on the location of the subsidiaries in which the transactions are recorded. This geographic information does not reflect the way the Company’s business is managed.

	Three Months Ended March 31,
	2018		2017
	(in millions)
Net revenues
United States	$	420	$	303
International		107		71
Total net revenues	$	527	$	374
Income before income taxes
United States	$	294	$	195
International		46		18
Total income before income taxes	$	340	$	213

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Regulatory Requirements

3 Months Ended

Mar. 31, 2018

Regulatory Requirements [Abstract]

Regulatory Requirements

14.Regulatory Requirements

As ofMarch 31, 2018, aggregate excess regulatory capital for all of the Operating Companies was$5.2billion.

IB LLC, TH LLC and IB Corp are subject to the Uniform Net Capital Rule (Rule 15c3‑1) under the Exchange Act, IB LLC is also subject to the Commodities and Futures Trading Commission’s minimum financial requirements (Regulation 1.17), and THE is subject to the Swiss Financial Market Supervisory Authority eligible equity requirement. IBA is subject to the Australian Securities Exchange liquid capital requirement, THLI is subject to the Financial Market Authority Liechtenstein eligible capital requirements, THC and IBC are subject to the Investment Industry Regulatory Organization of Canada risk adjusted capital requirement, IBUK is subject to the U.K. Financial Conduct Authority Capital Requirements Directive, IBHK is subject to the Hong Kong Securities Futures Commission liquid capital requirement, IBI is subject to the National Stock Exchange of India net capital requirements and IBSJ is subject to the Japanese Financial Supervisory Agency capital requirements. The following table summarizes capital, capital requirements and excess regulatory capital: 

	Net Capital/
	Eligible Equity		Requirement		Excess
	(in millions)
IB LLC	$	4,230	$	458	$	3,772
TH LLC		232		-		232
THE		640		98		542
Other regulated Operating Companies		796		130		666
	$	5,898	$	686	$	5,212

Regulatory capital requirements could restrict the Operating Companies from expanding their business and declaring dividends if their net capital does not meet regulatory requirements. Also, certain Operating Companies are subject to other regulatory restrictions and requirements.

As ofMarch 31, 2018,  all of the regulated Operating Companies were in compliance with their respective regulatory capital requirements.

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Related Party Transactions

3 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

15.Related Party Transactions

Receivable from affiliate, reported in other assets in thecondensed consolidated statement of financial condition, represents amounts advanced to Holdings and payable to affiliate represents amounts payable to Holdings under the Tax Receivable Agreement (see Note 4).

Included in receivables from and payables to customers in thecondensed consolidated statements of financial condition as ofMarch 31, 2018 and December 31, 2017 were accounts receivable from directors, officers and their affiliates of$350 million and $250 million and payables of$825 million and $648 million, respectively. The Company may extend credit to these related parties in connection with margin loans. Such loans are (i) made in the ordinary course of business, (ii) are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the company, and (iii) do not involve more than the normal risk of collectability or present other unfavorable features.

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Subsequent Events

3 Months Ended

Mar. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

16.Subsequent Events

As required by FASB ASC Topic 855, “Subsequent Events,” the Company has evaluated subsequent events for adjustment to or disclosure in itscondensed consolidated financial statements through the date thecondensed consolidated financial statements were issued.

Except as disclosed in Note 4, Note 10 and Note 12, no other recordable or disclosable events occurred.

*****

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

These condensedconsolidated financial statements are presented in U.S. dollars and have been preparedin accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) andpursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding financial reporting with respect to Form 10‑Q.

These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2017 Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on March 1, 2018. The condensed consolidated financial information as of December 31, 2017 has been derived from the audited consolidated financial statements not included herein.

These condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the periods presented. The operating results for interim periods are not necessarily indicative of the operating results for the entire year.

Principles Of Consolidation, Including Noncontrolling Interests

Principles of Consolidation, including Noncontrolling Interests

These condensed consolidated financial statements include the accounts of IBG, Inc. and its majority and wholly owned subsidiaries. As sole managing member of IBG LLC, IBG, Inc. exerts control over IBG LLC’s operations. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” the Company consolidates IBG LLC’s financial statements and records the interests in IBG LLC that it does not own as noncontrolling interests.

The Company’s policy is to consolidate all other entities in which it owns more than 50% unless it does not have control. All inter‑company balances and transactions have been eliminated.

Condensed Consolidated Statements of Cash Flows and Financial Condition Presentation Changes

Condensed Consolidated Statements of Cash Flows and Financial Condition Presentation Changes

On January 1, 2018, the Company adopted FASB Accounting Standards Update (“ASU”) No. 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash” (“ASU 2016-18”). This accounting update requires an entity to include in its cash and cash equivalents amounts that are deemed to be restricted cash and to present a reconciliation of such amounts in the statement of cash flows. Restricted cash represents cash and cash equivalents that are subject to withdrawal or usage restrictions. For purposes of the condensed consolidated statements of cash flows, cash, cash equivalents, and restricted cash consist of “cash and cash equivalents” and “cash – segregated for regulatory purposes.”

ASU 2016-18 also requires prior periods to be retrospectively adjusted to conform to the current period presentation. Upon adoption, the Company recorded an increase of $988 million in net cash provided by operating activities, for the three months ended March 31, 2017 to reflect the reclassification of changes in restricted cash balances from the operating section to the cash, cash equivalent, and restricted cash balances within the condensed consolidated statements of cash flows.

In addition, the Company reclassified restricted cash amounts previously included within “cash and securities – segregated for regulatory purposes” into a separate line item, “cash – segregated for regulatory purposes,” in the condensed consolidated statements of financial condition to be consistent with the presentation of restricted cash in the condensed consolidated statements of cash flows under ASU 2016-18. Previously reported amounts in the condensed consolidated statements of financial condition and notes to the condensed consolidated financial statements have been adjusted to conform to the current presentation.

Discontinued Operations And Costs Associated With Exit Or Disposal Activities

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. The Company also exited the majority of its market making activities outside of the U.S. by December 31, 2017 and expects to report discontinued operations when 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 and $3 million of cash expenditures primarily related to severance costs for employee terminations.

During the three months ended March 31, 2018, the Company did not incur any additional restructuring costs. During the three months ended March 31, 2017, the Company recorded restructuring costs of approximately $1 million for severance resulting from obligations related to employment terminations, included in employee compensation and benefits in the condensed consolidated statements of comprehensive income.

Use Of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these condensed consolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Therefore, actual results could differ materially from those estimates. Such estimates include the allowance for doubtful accounts, valuation of certain investments, compensation accruals, current and deferred income taxes, costs associated with exit or disposal activities, and contingency reserves.

Fair Value

Fair Value

Substantially all of the Company’s assets and liabilities, including financial instruments are carried at fair value based on published market prices and are marked to market, or are assets and liabilities which are short‑term in nature and are carried at amounts that approximate fair value.

The Company applies the fair value hierarchy in accordance with FASB ASC Topic 820, “Fair Value Measurement” (“ASC Topic 820”), to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are:

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2	Quoted prices for similar assets in an active market, quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.
Level 3	Prices or valuations that require inputs that are both significant to fair value measurement and unobservable.

Financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are generally classified as Level 1 of the fair value hierarchy. The Company’s Level 1 financial instruments, which are valued using quoted market prices as published by exchanges and clearing houses or otherwise broadly distributed in active markets, include active listed stocks, options, warrants and discount certificates, and U.S. and foreign government securities. The Company does not adjust quoted prices for financial instruments classified as Level 1 of the fair value hierarchy, even in the event that the Company may hold a large position whereby a purchase or sale could reasonably impact quoted prices.

Currency forward contracts are valued using broadly distributed bank and broker prices, and are classified as Level 2 of the fair value hierarchy since inputs to their valuation can be generally corroborated by market data. Other securities that are not traded in active markets are also classified as Level 2 of the fair value hierarchy. Level 3 financial instruments are comprised of securities that have been delisted or otherwise are no longer tradable in active markets and have been valued by the Company based on internal estimates.

Earnings Per Share

Earnings per Share

Earnings per share (“EPS”) is computed in accordance with FASB ASC Topic 260, “Earnings per Share.” Basic EPS is computed by dividing the net income available for common stockholders by the weighted average number of shares outstanding for that period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of the basic EPS and, in addition, reflects the dilutive effect of shares of common stock estimated to be distributed in the future under the Company’s stock-based compensation plans, with no adjustments to net income available for common stockholders for dilutive potential common shares.

Stock-Based Compensation

Stock‑Based Compensation

The Company follows FASB ASC Topic 718, “Compensation - Stock Compensation” (“ASC Topic 718”), to account for its stock‑based compensation plans. ASC Topic 718 requires all share‑based payments to employees to be recognized in the condensed consolidated financial statements using a fair value‑based method. Grants, which are denominated in U.S. dollars, are communicated to employees in the year of grant, thereby establishing the fair value of each grant. The fair value of awards granted to employees are generally expensed as follows: 50% in the year of grant in recognition of the plans’ post-employment provisions (as described below) and the remaining 50% over the related vesting period utilizing the “graded vesting” method permitted under ASC Topic 718. In the case of “retirement eligible” employees (those employees older than 59), 100% of awards are expensed when granted.

Awards granted under stock‑based compensation plans are subject to the plans’ post-employment provisions in the event an employee ceases employment with the Company. The plans provide that employees who discontinue employment with the Company without cause and continue to meet the terms of the plans’ post‑employment provisions will be eligible to earn 50% of previously granted but not yet earned awards, unless the employee is over the age of 59, in which case the employee would be eligible to receive 100% of previously granted but not yet earned awards.

Cash And Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist of deposits with banks and all highly liquid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes or to meet margin requirements at clearing houses.

Cash And Securities - Segregated For Regulatory Purposes

Cash and Securities - Segregated for Regulatory Purposes

As a result of customer activities, certain Operating Companies are obligated by rules mandated by their primary regulators to segregate or set aside cash or qualified securities to satisfy such regulations, which have been promulgated to protect customer assets. Securities segregated for regulatory purposes consisted of U.S. government securities of $4.5 billion and $4.5 billion as of March 31, 2018 and December 31, 2017, respectively, and securities purchased under agreements to resell in the amount of$8.3 billion and $9.2 billion as of March 31, 2018 and December 31, 2017, respectively, which amounts approximate fair value.

Securities Borrowed And Securities Loaned

Securities Borrowed and Securities Loaned

Securities borrowed and securities loaned are recorded at the amount of the cash collateral advanced or received. Securities borrowed transactions require the Company to provide counterparties with collateral, which may be in the form of cash, letters of credit or other securities. With respect to securities loaned, the Company receives collateral, which may be in the form of cash or other securities in an amount generally in excess of the fair value of the securities loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as permitted contractually. It is the Company’s policy to net, in the condensed consolidated statements of financial condition, securities borrowed and securities loaned entered into with the same counterparty that meet the offsetting requirements prescribed in FASB ASC Topic 210-20, “Balance Sheet – Offsetting” (“ASC Topic 210-20”).

Securities lending fees received and paid by the Company are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income.

Securities Purchased Under Agreements To Resell and Secruities Sold Under Agreements to Repurchase

Securities Purchased Under Agreements to Resell and Securities Sold Under Agreements to Repurchase

Securities purchased under agreements to resell and securities sold under agreements to repurchase, which are reported as collateralized financing transactions, are recorded at contract value, which approximates fair value. To ensure that the fair value of the underlying collateral remains sufficient, the collateral is valued daily with additional collateral obtained or excess collateral returned, as permitted under contractual provisions. It is the Company’s policy to net, in the condensed consolidated statements of financial condition, securities purchased under agreements to resell transactions and securities sold under agreements to repurchase transactions entered into with the same counterparty that meet the offsetting requirements prescribed in ASC Topic 210-20.

Financial Instruments Owned And Sold But Not Yet Purchased, at Fair Value

Financial Instruments Owned and Financial Instruments Sold, But Not Yet Purchased, at Fair Value

Financial instrument transactions are accounted for on a trade date basis. Financial instruments owned and financial instruments sold, but not yet purchased are stated at fair value based upon quoted market prices, or if not available, are valued by the Company based on internal estimates (see Fair Value above). The Company’s financial instruments pledged to counterparties where the counterparty has the right, by contract or custom, to sell or repledge the financial instruments are reported as financial instruments owned and pledged as collateral in the condensed consolidated statements of financial condition.

Customer Receivables And Payables

Customer Receivables and Payables

Customer securities transactions are recorded on a settlement date basis and customer commodities transactions are recorded on a trade date basis. Receivables from and payables to customers include amounts due on cash and margin transactions, including futures contracts transacted on behalf of customers. Securities owned by customers, including those that collateralize margin loans or other similar transactions, are not reported in the condensed consolidated statements of financial condition. Amounts receivable from customers that are determined by management to be uncollectible are recorded as customer bad debt expense in the condensed consolidated statements of comprehensive income.

Receivables From And Payables To Brokers, Dealers And Clearing Organizations

Receivables from and Payables to Brokers, Dealers and Clearing Organizations

Receivables from and payables to brokers, dealers and clearing organizations include net receivables and payables from unsettled trades, including amounts related to futures and options on futures contracts executed on behalf of customers, amounts receivable for securities not delivered by the Company to the purchaser by the settlement date (“fails to deliver”) and cash deposits. Payables to brokers, dealers and clearing organizations also include amounts payable for securities not received by the Company from a seller by the settlement date (“fails to receive”).

Investments

Investments

The Company makes certain strategic investments related to its business and accounts for these investments (a) under the equity method of accounting as required under FASB ASC Topic 323, “Investments - Equity Method and Joint Ventures” or (b) at fair value or, if the investment in equity securities does not have a readily determinable fair value, at historical cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer in accordance with FASB ASC Topic 321, “Investments in Equity Securities.”

Investments accounted for under the equity method, including where the investee is a limited partnership or limited liability company, are recorded at the fair value amount of the Company’s initial investment and are adjusted each period for the Company’s share of the investee’s income or loss. The Company’s share of the income or losses from equity method investments is included in other income in the condensed consolidated statements of comprehensive income. The recorded amounts of the Company’s equity method investments,$23 million as of March 31,  2018 ($23 million as of December 31, 2017), which are included in other assets in the condensed consolidated statements of financial condition, increase or decrease accordingly. Contributions paid to and distributions received from equity method investees are recorded as additions or reductions, respectively, to the respective investment balance.

Investments in equity securities that do not qualify for equity method accounting are recorded at historical cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The recorded amounts of the Company’s investments in such equity securities, $5 million as of March 31, 2018 ($5 million as of December 31, 2017) are included in other assets in the condensed consolidated statements of financial condition. Dividends received from these investments are included in other income in the condensed consolidated statements of comprehensive income when such dividends are received.

The Company also holds exchange memberships and investments in equity securities of certain exchanges, as required to qualify as a clearing member. Such investments,$5 million as of March 31, 2018 ($6 million as of December 31, 2017), are recorded at cost less impairment, and are included in other assets in the condensed consolidated statements of financial condition. Dividends received from these investments are included in other income in the condensed consolidated statements of comprehensive income when such dividends are received.

A judgmental aspect of accounting for investments is evaluating whether a decline in the value of an investment has occurred. The evaluation of an impairment is dependent on specific quantitative and qualitative factors and circumstances surrounding an investment, including recurring operating losses, credit defaults and subsequent rounds of financing. The Company’s equity investments do not have readily determinable market values. All investments are reviewed for changes in circumstances or occurrence of events that suggest the Company’s investment may not be recoverable. An impairment loss, if any, is recognized in the period the determination is made.

Property, Equipment, and Intangible Assets

Property, Equipment, and Intangible Assets

Property, equipment, and intangible assets, which are included in other assets in the condensed consolidated statements of financial condition, consist of leasehold improvements, computer equipment, software developed for the Company’s internal use, office furniture, equipment and acquired technology.  

Property and equipment are recorded at historical cost, less accumulated depreciation and amortization. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation and amortization are computed using the straight‑line method. Equipment is depreciated over the estimated useful lives of the assets, while leasehold improvements are amortized over the lesser of the estimated economic useful life of the asset or the term of the lease. Computer equipment is depreciated over three to five years and office furniture and equipment are depreciated over five to seven years. Intangible assets with a finite life are amortized on a straight line basis over their estimated useful lives of three years, and tested for recoverability whenever events indicate that the carrying amounts may not be recoverable. Qualifying costs for internally developed software are capitalized and amortized over the expected useful life of the developed software, not to exceed three years. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the condensed consolidated statements of financial condition and any resulting gain or loss is recorded in other income in the condensed consolidated statements of comprehensive income. Fully depreciated (or amortized) assets are retired on an annual basis.

Comprehensive Income And Foreign Currency Translation

Comprehensive Income and Foreign Currency Translation

The Company’s operating results are reported in the condensed consolidated statements of comprehensive income pursuant to FASB ASC Topic 220, “Comprehensive Income.”

Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The Company’s OCI is comprised of gains and losses resulting from translating foreign currency financial statements of non-U.S. subsidiaries, net of related income taxes, where applicable. In general, the practice and intention of the Company is to reinvest the earnings of its non‑U.S. subsidiaries in those operations, therefore tax is usually not accrued on OCI.

The Company’s non‑U.S. domiciled subsidiaries have a functional currency that is other than the U.S. dollar. Such subsidiaries’ assets and liabilities are translated into U.S. dollars at period‑end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary’s functional currency to the U.S. dollar (as described above) are reported net of tax, where applicable, in accumulated OCI in the condensed consolidated statements of financial condition.

Revenue Recognition

Revenue Recognition

Commissions

Commissions earned for executing and/or clearing transactions are accrued on a trade date basis and are reported as commissions in the condensed consolidated statements of comprehensive income. See Note 8 for further information on revenue from contracts with customers.

Interest Income and Expense

The Company earns interest income and incurs interest expense primarily in connection with its electronic brokerage customer business and its securities lending activities, which are recorded on an accrual basis and are included in interest income and interest expense, respectively, in the condensed consolidated statements of comprehensive income.

Trading Gains

Trading gains and losses are recorded on trade date and are reported on a net basis. Trading gains and losses are comprised of changes in the fair value of financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value (i.e., unrealized gains and losses) and realized gains and losses related to the Company’s market making business segment. Included in trading gains are net gains and losses on stocks, U.S. and foreign government securities, options, futures, foreign exchange and other derivative instruments. Dividends are integral to the valuation of stocks and interest is integral to the valuation of fixed income instruments. Accordingly, both dividends and interest income and expense attributable to financial instruments owned, at fair value and financial instruments sold, but not yet purchased, at fair value are reported on a net basis in trading gains in the condensed consolidated statements of comprehensive income.

Foreign Currency Gains and Losses

Foreign currency balances are assets and liabilities in currencies other than the Company’s functional currency. At every reporting date, the Company revalues its foreign currency balances to its functional currency at the spot exchange rate and records the associated foreign currency gains and losses. These foreign currency gains and losses are reported in the condensed consolidated statements of comprehensive income, as follows: (a) foreign currency gains and losses related to the Company’s currency diversification strategy are reported in other income; (b) foreign currency gains and losses related to the market making core-business activities are reported in trading gains; (c) foreign currency gains and losses arising from currency swap transactions in the electronic brokerage business are reported in interest income; and (d) all other foreign currency gains and losses are reported in other income.

Rebates

Rebates

Rebates consist of volume discounts, credits or payments received from exchanges or other market centers related to the placement and/or removal of liquidity from the order flow in the marketplace and are recorded on an accrual basis. Rebates are recorded net within execution and clearing expenses in the condensed consolidated statements of comprehensive income. Rebates received for trades executed on behalf of customers that elect tiered pricing are passed, in whole or part, to these customers; and such pass-through amounts are recorded net within commissions in the condensed consolidated statements of comprehensive income.

Income Taxes

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC Topic 740, “Income Taxes” (“ASC Topic 740”). The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits are based on enacted tax laws (see Note 11) and reflect management’s best assessment of estimated future taxes to be paid. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Determining income tax expense requires significant judgments and estimates.

Deferred income tax assets and liabilities arise from temporary differences between the tax and financial statements recognition of underlying assets and liabilities. In evaluating the ability to recover deferred tax assets within the jurisdictions from which they arise, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax‑planning strategies, and results of recent operations. In projecting future taxable income, historical results are adjusted for changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax‑planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, three years of cumulative operating income (loss) are considered. Deferred income taxes have not been provided for U.S. tax liabilities or for additional foreign taxes on the unremitted earnings of foreign subsidiaries that have been indefinitely reinvested.

The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company’s global operations. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. 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).

The Company records tax liabilities in accordance with ASC Topic 740 and adjusts these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in payments that are different from the current estimates of these tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information becomes available.

The Company recognizes a tax benefit from an uncertain tax position only when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. A tax position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement.

The Company recognizes interest related to income tax matters as interest income or interest expense and penalties related to income tax matters as income tax expense in the condensed consolidated statements of comprehensive income.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Following is a summary of recently issued FASB Accounting Standards Updates (“ASUs”) that have affected or may affect the Company’s condensed consolidated financial statements:  

	Affects	Status
ASU 2016-02	Leases (Topic 842):  Requires the recognition of a right-of-use asset and a lease liability for leases previously classified as operating lease in the statements of financial condition.	Effective for fiscal years beginning after December 15, 2018.
ASU 2016-13	Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.	Effective for fiscal years beginning after December 15, 2019.
ASU 2017-04	Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.	Effective for fiscal years beginning after December 15, 2019.
ASU 2017-08	Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20):  Amending the amortization period for certain purchased callable debt securities held at a premium.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2017-11	Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815): changing the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2017-12	Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.	Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.
ASU 2018-02	Income Statement – Reporting Comprehensive Income (Topic 220):  Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.	Effective for fiscal years and first interim periods beginning after December 15, 2018.
ASU 2018-03	Technical Correction and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.	Effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years beginning after June 15, 2018.

Adoption of those ASUs that became effective during 2017 and 2018, prior to the issuance of the Company’s condensed consolidated financial statements, had no material effect on these financial statements, except for as described in the notes to these financial statements

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Equity And Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2018

Equity And Earnings Per Share [Abstract]

IBG LLC Ownership of Member Interests

	IBG, Inc.	Holdings	Total
Ownership %	17.4%	82.6%	100.0%
Membership interests	71,481,136	340,229,444	411,710,580

Earnings Per Share Basic And Diluted

Basic earnings per share is calculated utilizing net income available for common stockholders divided by the weighted average number of shares of Class A and Class B common stock outstanding for that period.

	Three Months Ended March 31,
	2018		2017
	(in millions, except share or per share amounts)
Basic earnings per share
Net income available for common stockholders	$	46	$	24
Weighted average shares of common stock outstanding
Class A		71,475,850		67,985,007
Class B		100		100
		71,475,950		67,985,107
Basic earnings per share	$	0.64	$	0.35

Diluted earnings per share are calculated utilizing the Company’s basic net income available for common stockholders divided by diluted weighted average shares outstanding with no adjustments to net income available to common stockholders for potentially dilutive common shares.

	Three Months Ended March 31,
	2018		2017
	(in millions, except share or per share amounts)
Diluted earnings per share
Net income available for common stockholders	$	46	$	24
Weighted average shares of common stock outstanding
Class A
Issued and outstanding		71,475,850		67,985,007
Potentially dilutive common shares
Issuable pursuant to employee stock incentive plans		1,036,512		1,172,507
Class B		100		100
		72,512,462		69,157,614
Diluted earnings per share	$	0.63	$	0.34

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Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2018

Comprehensive Income Detail [Abstract]

Comprehensive Income Table

	Three Months Ended March 31,
	2018		2017
	(in millions, except share or per share amounts)
Comprehensive income available for common stockholders	$	47	$	28
Earnings per share on comprehensive income
Basic	$	0.66	$	0.41
Diluted	$	0.65	$	0.40
Weighted average common shares outstanding
Basic		71,475,950		67,985,107
Diluted		72,512,462		69,157,614

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Financial Assets And Financial Liabilities (Tables)

3 Months Ended

Mar. 31, 2018

Financial Assets And Financial Liabilities [Abstract]

Fair Value Table

	Financial Assets At Fair Value as of March 31, 2018
	Level 1		Level 2		Level 3		Total
	(in millions)
Securities segregated for regulatory purposes	$	4,472	$	—	$	—	$	4,472
Financial instruments owned, at fair value
Stocks		1,604		—		1		1,605
Options		731		—		—		731
Warrants and discount certificates		2		—		—		2
U.S. and foreign government securities		72		—		—		72
Corporate and municipal bonds		—		1		3		4
Currency forward contracts		—		1		—		1
Total financial instruments owned, at fair value		2,409		2		4		2,415
Total financial assets at fair value	$	6,881	$	2	$	4	$	6,887

	Financial Liabilities At Fair Value as of March 31, 2018
	Level 1		Level 2		Level 3		Total
	(in millions)
Financial instruments sold, but not yet purchased, at fair value
Stocks	$	181	$	—	$	—	$	181
Options		56		—		—		56
Currency forward contracts		—		5		—		5
Total financial instruments sold, but not yet purchased, at fair value		237		5		—		242
Total financial liabilities at fair value	$	237	$	5	$	—	$	242

	Financial Assets At Fair Value as of December 31, 2017
	Level 1		Level 2		Level 3		Total
	(in millions)
Securities segregated for regulatory purposes	$	4,519	$	—	$	—	$	4,519
Financial instruments owned, at fair value
Stocks		2,000		—		1		2,001
Options		1,052		—		—		1,052
Warrants and discount certificates		5		—		—		5
U.S. and foreign government securities		60		—		—		60
Corporate and municipal bonds		—		1		3		4
Currency forward contracts		—		32		—		32
Total financial instruments owned, at fair value		3,117		33		4		3,154
Total financial assets at fair value	$	7,636	$	33	$	4	$	7,673

	Financial Liabilities At Fair Value as of December 31, 2017
	Level 1		Level 2		Level 3		Total
	(in millions)
Financial instruments sold, but not yet purchased, at fair value
Stocks	$	302	$	—	$	—	$	302
Options		464		—		—		464
Currency forward contracts		—		1		—		1
Total financial instruments sold, but not yet purchased, at fair value		766		1		—		767
Total financial liabilities at fair value	$	766	$	1	$	—	$	767

Trading Gains From Market Making Transactions

	Three Months Ended March 31,
	2018		2017
	(in millions)
Equities	$	13	$	3
Fixed income		—		—
Foreign exchange		—		(1)
Total trading gains, net	$	13	$	2

Financial Assets and Liabilities Not Measured at Fair Value

	March 31, 2018
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
	(in millions)
Financial assets, not measured at fair value
Cash and cash equivalents	$	1,901	$	1,901	$	1,901	$	-	$	-
Cash - segregated for regulatory purposes		7,515		7,515		7,515		-		-
Securities - segregated for regulatory purposes		8,281		8,281		-		8,281		-
Securities borrowed		2,968		2,968		-		2,968		-
Securities purchased under agreements to resell		677		677		-		677		-
Receivables from customer		29,464		29,464		-		29,464		-
Receivables from broker, dealers, and clearing organizations		1,002		1,002		-		1,002		-
Interest receivable		99		99		-		99		-
Other assets		5		6		-		6		-
Total financial assets, not measured at fair value	$	51,912	$	51,913	$	9,416	$	42,497	$	-

Financial liabilities, not measured at fair value
Short-term borrowings	$	19	$	19	$	-	$	19	$	-
Securities loaned		4,171		4,171		-		4,171		-
Securities sold under agreements to repurchase		-		-		-		-		-
Payables to customer		47,423		47,423		-		47,423		-
Payables to brokers, dealers and clearing organizations		170		170		-		170		-
Interest payable		27		27		-		27		-
Total financial liabilities, not measured at fair value	$	51,810	$	51,810	$	-	$	51,810	$	-

	December 31, 2017
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
	(in millions)
Financial assets, not measured at fair value
Cash and cash equivalents	$	1,732	$	1,732	$	1,732	$	-	$	-
Cash - segregated for regulatory purposes		6,547		6,547		6,547		-		-
Securities - segregated for regulatory purposes		9,166		9,166		-		9,166		-
Securities borrowed		2,957		2,957		-		2,957		-
Securities purchased under agreements to resell		2,035		2,035		-		2,035		-
Receivables from customer		29,821		29,821		-		29,821		-
Receivables from broker, dealers, and clearing organizations		823		823		-		823		-
Interest receivable		116		116		-		116		-
Other assets		6		6		-		6		-
Total financial assets, not measured at fair value	$	53,203	$	53,203	$	8,279	$	44,924	$	-

Financial liabilities, not measured at fair value
Short-term borrowings	$	15	$	15	$	-	$	15	$	-
Securities loaned		4,444		4,444		-		4,444		-
Securities sold under agreements to repurchase		1,316		1,316		-		1,316		-
Payables to customer		47,548		47,548		-		47,548		-
Payables to brokers, dealers and clearing organizations		283		283		-		283		-
Interest payable		22		22		-		22		-
Total financial liabilities, not measured at fair value	$	53,628	$	53,628	$	-	$	53,628	$	-

Offsetting Assets

	March 31, 2018
	Gross			Amounts			Net Amounts		Amounts Not Offset
	Amounts			Offset in the			Presented in		in the Condensed
	of Financial			Condensed			the Condensed		Consolidated Statement
	Assets and			Consolidated			Consolidated		of Financial Condition
	Liabilities			Statement of			Statement of		Cash or Financial
	Recognized			Financial Condition		2	Financial Condition		Instruments		Net Amount
	(in millions)
Offsetting of Financial Assets
Securities segregated for regulatory purposes - purchased under agreements to resell	$	8,281	1	$	—		$	8,281	$	(8,281)	$	—
Securities borrowed		2,968			—			2,968		(2,856)		112
Securities purchased under agreements to resell		677			—			677		(677)		—
Financial Instruments owned, at fair value
Options		731			—			731		(56)		675
Warrants and discount certificates		2			—			2		—		2
Currency forward contracts		1			—			1		—		1
Total	$	12,660		$	—		$	12,660	$	(11,870)	$	790

	December 31, 2017
		Gross		Amounts			Net Amounts		Amounts Not Offset
		Amounts		Offset in the			Presented in		in the Condensed
		of Financial		Condensed			the Condensed		Consolidated Statement
		Assets and		Consolidated			Consolidated		of Financial Condition
		Liabilities		Statement of			Statement of		Cash or Financial
		Recognized		Financial Condition		2	Financial Condition		Instruments		Net Amount
	(in millions)
Offsetting of Financial Assets
Securities segregated for regulatory purposes - purchased under agreements to resell	$	9,166	1	$	—		$	9,166	$	(9,166)	$	—
Securities borrowed		2,957			—			2,957		(2,822)		135
Securities purchased under agreements to resell		2,035			—			2,035		(2,035)		—
Financial Instruments owned, at fair value
Options		1,052			—			1,052		(451)		601
Warrants and discount certificates		5			—			5		—		5
Currency forward contracts		32			—			32		—		32
Total	$	15,247		$	—		$	15,247	$	(14,474)	$	773

(1) As of March 31,  2018 and December 31, 2017, the Company had $8.3 billion and $9.2 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in “Cash and securities - segregated for regulatory purposes” in the consolidated statements of financial condition.

(2) The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at March 31, 2018 and December 31, 2017.

Offsetting Liabilities

	(in millions)
Offsetting of Financial Liabilities
Securities loaned	$	4,171	$	—	$	4,171	$	(4,020)	$	151
Securities sold under agreements to repurchase		—		—		—		—		—
Financial instruments sold, but not yet purchased, at fair value
Options		56		—		56		(56)		—
Warrants and discount certificates		—		—		—		—		—
Currency forward contracts		5		—		5		—		5
Total	$	4,232	$	—	$	4,232	$	(4,076)	$	156

	(in millions)
Offsetting of Financial Liabilities
Securities loaned	$	4,444	$	—	$	4,444	$	(4,201)	$	243
Securities sold under agreements to repurchase		1,316				1,316		(1,316)
Financial instruments sold, but not yet purchased, at fair value
Options		464		—		464		(451)		13
Warrants and discount certificates		—		—		—		—		—
Currency forward contracts		1		—		1		—		1
Total	$	6,225	$	—	$	6,225	$	(5,968)	$	257

(1) As of March 31,  2018 and December 31, 2017, the Company had $8.3 billion and $9.2 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in “Cash and securities - segregated for regulatory purposes” in the consolidated statements of financial condition.

(2) The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at March 31, 2018 and December 31, 2017.

Schedule of Securities Financing Transactions

	March 31, 2018
	Remaining Contractual Maturity
	Overnight		Less than		30 – 90		Over 90
	and Open		30 days		days		days		Total
	(in millions)
Securities loaned
Stocks	$	4,109	$	-	$	-	$	-	$	4,109
Corporate bonds		57		-		-		-		57
Foreign government securities		5		-		-		-		5
Total securities loaned	$	4,171	$	-	$	-	$	-	$	4,171

	December 31, 2017
	Remaining Contractual Maturity
	Overnight		Less than		30 – 90		Over 90
	and Open		30 days		days		days		Total
	(in millions)
Securities Loaned
Stocks	$	4,389	$	-	$	-	$	-	$	4,389
Corporate bonds		55		-		-		-		55
Total securities loaned		4,444		-		-		-		4,444
Securities sold under agreements to repurchase
U.S. government securities		1,316		-		-		-		1,316
Total	$	5,760	$	-	$	-	$	-	$	5,760

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Collateralized Transactions (Tables)

3 Months Ended

Mar. 31, 2018

Disclosure Collateralized Transactions [Abstract]

Amounts Related To Collateralized Transactions

	March 31, 2018				December 31, 2017
	Permitted		Sold or		Permitted		Sold or
	to Repledge		Repledged		to Repledge		Repledged
	(in millions)
Securities lending transactions	$	23,556	$	3,346	$	23,662	$	3,041
Securities purchased under agreements to resell transactions (1)		8,976		8,976		11,231		11,231
Customer margin assets		29,412		7,520		30,236		9,013
	$	61,944	$	19,842	$	65,129	$	23,285

(1) As of March 31,  2018,  $8.3 billion or 92% (as of December 31, 2017,  $9.2 billion or 82%) of securities acquired through agreements to resell that are shown as repledged have been deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3.

Financial Instruments Owned and Pledged as Collateral (table)

	March 31,		December 31,
	2018		2017
	(in millions)
Stocks	$	553	$	1,150
U.S. and foreign government securities		61		54
	$	614	$	1,204

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Revenue From Contracts With Customers (Tables)

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

	Three Months Ended March 31, 2018
	Electronic brokerage		Market making		Corporate		Total
	(in millions)
Geographic location 1
United States	$	182	$	2	$	-	$	184
International		72		-		-		72
	$	254	$	2	$	-	$	256
Major types of services
Commissions	$	220	$	-	$	-	$	220
Market data fees 2		11		-		-		11
Risk exposure fees 2		8		-		-		8
Payments for order flow 2		5		-		-		5
Minimum activity fees 2		5		-		-		5
Other 2		5		2		-		7
	$	254	$	2	$	-	$	256

(1) Based on the location of the subsidiaries in which the revenues are recorded.

(2) Included in other income on the condensed consolidated statements of comprehensive income.

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Other Income (Tables)

3 Months Ended

Mar. 31, 2018

Other Income [Abstract]

Schedule Of Components Of Other Income

	Three Months Ended March 31,
	2018		2017
	(in millions)
Market data fees1	$	11	$	9
Minimum activity fees1		5		5
Risk exposure fees1		8		5
Payments for order flow1		5		4
Gains on financial instruments, at fair value and other investments, net		2		2
Gains from currency diversification strategy, net		38		49
Other, net		8		2
	$	77	$	76

(1) See Note 8 for description of these revenues.

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Employee Incentive Plans (Tables)

3 Months Ended

Mar. 31, 2018

Employee Incentive Plans [Abstract]

Share Grants And Fair Value

			Fair Value at
			Date of Grant
	Units		($ millions)
Prior periods (since inception)	20,888,468		$	397
December 31, 2015	1,211,533			52
December 31, 2016	1,451,136			55
December 31, 2017	941,742	1/2		56
	24,492,879		$	560

(1) Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 18,335 additional restricted stock units during the three months ended March 31, 2018.

(2) Granted under the Company’s amended 2007 Stock Incentive Plan, which was approved by the Company’s stockholders at its 2018 Annual Meeting, held on April 19, 2018.  

2007 Stock Incentive Plan, ROI Summary

	Stock		ROI Unit
	Incentive Plan		Stock Plan
	Units		Shares
Balance, December 31, 2017	6,468,973	1/2	3,849
Granted	—		—
Cancelled	(11,637)		—
Distributed	(1,532)		(3,849)
Balance, March 31, 2018	6,455,804		—

(1) Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 18,335 additional restricted stock units during the three months ended March 31, 2018.

(2) Includes 941,742 restricted stock units granted under the Company’s amended 2007 Stock Incentive Plan, which was approved by the Company’s stockholders at its 2018 Annual Meeting, held on April 19, 2018.

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Segment And Geographic Information (Tables)

3 Months Ended

Mar. 31, 2018

Segment And Geographic Information [Abstract]

Segment Information

	Three Months Ended March 31,
	2018		2017
	(in millions)
Net revenues
Electronic brokerage	$	465	$	314
Market making		21		8
Corporate		41		52
Total net revenues	$	527	$	374
Income before income taxes
Electronic brokerage	$	291	$	185
Market making		9		(22)
Corporate		40		50
Total income before income taxes	$	340	$	213

	March 31,		December 31,
	2018		2017
	(in millions)
Segment assets
Electronic brokerage	$	57,316	$	58,787
Market making		3,618		8,469
Corporate		(1,841)		(6,094)
Total assets	$	59,093	$	61,162

Schedule Of Total Net Revenues And Income Before Income Taxes By Geographic Area

	Three Months Ended March 31,
	2018		2017
	(in millions)
Net revenues
United States	$	420	$	303
International		107		71
Total net revenues	$	527	$	374
Income before income taxes
United States	$	294	$	195
International		46		18
Total income before income taxes	$	340	$	213

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Regulatory Requirements (Tables)

3 Months Ended

Mar. 31, 2018

Regulatory Requirements [Abstract]

Summary Of Capital, Capital Requirements And Excess Capital

	Net Capital/
	Eligible Equity		Requirement		Excess
	(in millions)
IB LLC	$	4,230	$	458	$	3,772
TH LLC		232		-		232
THE		640		98		542
Other regulated Operating Companies		796		130		666
	$	5,898	$	686	$	5,212

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Organization Of Business (Details)	3 Months Ended
	Mar. 31, 2018 employee segment	May 03, 2007
Number of employees | employee	1,252
Number of operating segments | segment	2
IBG LLC [Member]
IBG Inc. ownership % of IBG LLC	17.40%	10.00%

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Significant Accounting Policies (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	May 03, 2007
Increase in net cash from by operating activities	$ 1,201,000,000	$ 779,000,000
SIP expense - Year of grant				50.00%
SIP expense - Remaining vesting period				50.00%
SIP expense - Employees over 59 in year of grant				100.00%
Percent of shares cancelled post employment				50.00%
Over 59 percent of shares eligible				100.00%
U.S. Treasury Securities	4,500,000,000		$ 4,500,000,000
Securities Purchased Under Agreement to Resell Segregated for Regulatory Purposes	8,300,000,000		9,200,000,000
Equity method investments	$ 23,000,000		23,000,000
Property and equipment useful lives, description	Computer equipment is depreciated over three to five years and office furniture and equipment are depreciated over five to seven years. Intangible assets with a finite life are amortized on a straight line basis over their estimated useful lives of three years, and tested for recoverability whenever events indicate that the carrying amounts may not be recoverable. Qualifying costs for internally developed software are capitalized and amortized over the expected useful life of the developed software, not to exceed three years.
Restructuring and Related Cost, Expected Cost			25,000,000
Restructuring and Related Cost, Incurred Cost	$ 0
Supplemental unemployment benefits severance benefits			3,000,000
Severance costs		1,000,000
Restructuring settlement and impairment provisions			$ 22,000,000
U.S. Statutory Tax Rate	21.00%		35.00%
Equity Securities [Member]
Investments at cost	$ 5,000,000		$ 5,000,000
Exchange Cleared [Member] | Equity Securities [Member]
Investments at cost	$ 5,000,000		$ 6,000,000
Accounting Standards Update 2016-18 [Member]
Increase in net cash from by operating activities		$ 988,000,000
Maximum [Member] | Computer Equipment [Member]
Property and equipment useful lives	5 years
Maximum [Member] | Office Furniture And Equipment [Member]
Property and equipment useful lives	7 years
Maximum [Member] | Internally Developed Software [Member]
Intangible assets useful lives	3 years
Maximum [Member] | Finite-Lived Intangible Assets [Member]
Intangible assets useful lives	3 years
Minimum [Member] | Computer Equipment [Member]
Property and equipment useful lives	3 years
Minimum [Member] | Office Furniture And Equipment [Member]
Property and equipment useful lives	5 years

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Equity And Earnings Per Share (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		36 Months Ended	84 Months Ended	131 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2010	Dec. 31, 2017	Mar. 31, 2018	May 03, 2007
Equity And Earnings Per Share [Line Items]
IBG Holdings ownership % of IBG LLC	82.60%				82.60%	90.00%
IBG Holdings Redemption of IBG LLC						10.00%
IBG Holdings LLC Ownership Percentage of Class B Common Stock						100.00%
Preferred stock shares authorized	10,000			10,000	10,000
Preferred stock shares issued	0			0	0
Preferred stock shares outstanding	0			0	0
Amortization period DTA (years)	15 years
Unamortized deferred tax asset arising from equity offerings	$ 142			$ 146	$ 142
Percent of tax savings owed to IBG Holdings LLC	85.00%
Percentage of tax savings retained by IBG Inc.	15.00%
Deferred tax asset from common stock offerings	$ 483				483
Tax savings owed to IBG Holdings LLC	410				410
Tax savings retained by IBG Inc.	$ 73				73
Tax savings paid to IBG Holdings LLC					$ 131
Shares reserved for future issuance						360,000,000
Shares redeemed by IBG Holdings from IBG LLC			5,013,259
Cash Redemptions IBG Holdings			$ 114
Fair Value of Issued Shares in Exchange for Membership Interests				$ 410
Shares Issued				13,858,355
Thomas Peterffy and Affiliates Ownership	89.20%				89.20%	84.60%
Distribution from IBG LLC	$ 74
Cash distribution to IBG, Inc.	$ 13
Dividend per share	$ 0.10
Dividends paid to common shareholders	$ 7	$ 7
Declaration Date	Apr. 17, 2018
Payment Date	Jun. 14, 2018
Record Date	Jun. 01, 2018
IBG LLC [Member]
Equity And Earnings Per Share [Line Items]
IBG Inc. ownership % of IBG LLC	17.40%				17.40%	10.00%
Common Class A
Equity And Earnings Per Share [Line Items]
Common stock, par value	$ 0.01			$ 0.01	$ 0.01
Shares authorized	1,000,000,000			1,000,000,000	1,000,000,000
Common stock, shares issued	71,610,581			71,609,049	71,610,581
Common stock, shares outstanding	71,481,133			71,475,755	71,481,133
Common Class B
Equity And Earnings Per Share [Line Items]
Shares authorized	100			100	100
Common stock, shares issued	100			100	100
Common stock, shares outstanding	100			100	100

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Equity And Earnings Per Share (IBG LLC Ownership of Member Interests) (Details)	Mar. 31, 2018 shares
Ownership Percentage	100.00%
Membership Interests	411,710,580
IBG Inc [Member]
Ownership Percentage	17.40%
Membership Interests	71,481,136
Holdings [Member]
Ownership Percentage	82.60%
Membership Interests	340,229,444

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Equity And Earnings Per Share (Basic Table) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Basic earnings per share:
Net income available for common stockholders	$ 46	$ 24
Weighted average shares of common stock outstanding:
Weighted Average Number of Shares Outstanding, Basic	71,475,950	67,985,107
Basic earnings per share	$ 0.64	$ 0.35
Common Class A
Weighted average shares of common stock outstanding:
Weighted Average Number of Shares Outstanding, Basic	71,475,850	67,985,007
Common Class B
Weighted average shares of common stock outstanding:
Weighted Average Number of Shares Outstanding, Basic	100	100

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Equity And Earnings Per Share (Diluted Table) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Diluted earnings per share:
Net income available for common stockholders	$ 46	$ 24
Weighted Average Shares Outstanding [Abstract]
Weighted Average Number of Shares Outstanding, Basic	71,475,950	67,985,107
Potentially dilutive common shares:
Issuable pursuant to employee incentive plans	1,036,512	1,172,507
Weighted Average Number of Shares Outstanding, Diluted	72,512,462	69,157,614
Earnings Per Share, Diluted	$ 0.63	$ 0.34
Common Class A
Weighted Average Shares Outstanding [Abstract]
Weighted Average Number of Shares Outstanding, Basic	71,475,850	67,985,007
Common Class B
Weighted Average Shares Outstanding [Abstract]
Weighted Average Number of Shares Outstanding, Basic	100	100

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Comprehensive Income (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Comprehensive Income Detail [Abstract]
Comprehensive income available for common stockholders	$ 47	$ 28
Earnings per share on comprehensive income:
Basic	$ 0.66	$ 0.41
Diluted	$ 0.65	$ 0.40
Weighted average common shares outstanding:
Weighted Average Number of Shares Outstanding, Basic	71,475,950	67,985,107
Weighted Average Number of Shares Outstanding, Diluted	72,512,462	69,157,614

XML

Financial Assets And Financial Liabilities (Narrative) (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities purchased under agreement to resell segregated for regulatory purposes	$ 8,300	$ 9,200
Total financial instruments owned, at fair value	2,415	3,154
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	4	$ 4
Level 3 | Corporate And Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	3
Level 3 | Common Stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	$ 1

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Financial Assets And Financial Liabilities (Fair Value Table) (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities segregated for regulatory purposes	$ 4,472	$ 4,519
Total financial instruments owned, at fair value	2,415	3,154
Total Financial Assets at Fair Value	6,887	7,673
Financial instruments sold, not yet purchased, at fair value	242	767
Total Financial Liabilities at Fair Value	242	767
Common Stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	1,605	2,001
Financial instruments sold, not yet purchased, at fair value	181	302
Options owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	731	1,052
Financial instruments sold, not yet purchased, at fair value	56	464
Warrants And Discount Certificates [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	2	5
U.S. And Foreign Government Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	72	60
Corporate And Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	4	4
Currency Forward Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	1	32
Financial instruments sold, not yet purchased, at fair value	5	1
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities segregated for regulatory purposes	4,472	4,519
Total financial instruments owned, at fair value	2,409	3,117
Total Financial Assets at Fair Value	6,881	7,636
Financial instruments sold, not yet purchased, at fair value	237	766
Total Financial Liabilities at Fair Value	237	766
Level 1 | Common Stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	1,604	2,000
Financial instruments sold, not yet purchased, at fair value	181	302
Level 1 | Options owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	731	1,052
Financial instruments sold, not yet purchased, at fair value	56	464
Level 1 | Warrants And Discount Certificates [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	2	5
Level 1 | U.S. And Foreign Government Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	72	60
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	2	33
Total Financial Assets at Fair Value	2	33
Financial instruments sold, not yet purchased, at fair value	5	1
Total Financial Liabilities at Fair Value	5	1
Level 2 | Corporate And Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	1	1
Level 2 | Currency Forward Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	1	32
Financial instruments sold, not yet purchased, at fair value	5	1
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	4	4
Total Financial Assets at Fair Value	4	4
Level 3 | Common Stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	1	1
Level 3 | Corporate And Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial instruments owned, at fair value	$ 3	$ 3

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Financial Assets And Financial Liabilities (Trading Gains from Market Making Transactions) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Financial Assets And Financial Liabilities [Abstract]
Equities	$ 13	$ 3
Foreign exchange		(1)
Total trading gains, net	$ 13	$ 2

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Financial Assets And Financial Liabilities (Financial Assets and Liabilities Not Measured at Fair Value) (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017
Cash and cash equivalents	$ 1,901	$ 1,732	$ 1,656
Cash - segregated for regulatory purposes	7,515	6,547	$ 6,612
Securities - segregated for regulatory purposes	12,753	13,685
Securities borrowed	2,968	2,957
Securities purchased under agreements to resell	677	2,035
Receivables from customer	29,464	29,821
Receivables from brokers, dealers and clearing organizations	1,002	823
Interest receivable	99	116
Other assets	299	292
Short-term borrowings	19	15
Securities loaned	4,171	4,444
Securities sold under agreements to repurchase		1,316
Payables to customers	47,423	47,548
Payables to brokers, dealers and clearing organizations	170	283
Interest payable	27	22
at Fair Value
Cash and cash equivalents	1,901	1,732
Cash - segregated for regulatory purposes	7,515	6,547
Securities - segregated for regulatory purposes	8,281	9,166
Securities borrowed	2,968	2,957
Securities purchased under agreements to resell	677	2,035
Receivables from customer	29,464	29,821
Receivables from brokers, dealers and clearing organizations	1,002	823
Interest receivable	99	116
Other assets	6	6
Total financial assets, not measured at fair value	51,913	53,203
Short-term borrowings	19	15
Securities loaned	4,171	4,444
Securities sold under agreements to repurchase		1,316
Payables to customers	47,423	47,548
Payables to brokers, dealers and clearing organizations	170	283
Interest payable	27	22
Total financial liabilities, not measured at fair value	51,810	53,628
Carrying Value
Cash and cash equivalents	1,901	1,732
Cash - segregated for regulatory purposes	7,515	6,547
Securities - segregated for regulatory purposes	8,281	9,166
Securities borrowed	2,968	2,957
Securities purchased under agreements to resell	677	2,035
Receivables from customer	29,464	29,821
Receivables from brokers, dealers and clearing organizations	1,002	823
Interest receivable	99	116
Other assets	5	6
Total financial assets, not measured at fair value	51,912	53,203
Short-term borrowings	19	15
Securities loaned	4,171	4,444
Securities sold under agreements to repurchase		1,316
Payables to customers	47,423	47,548
Payables to brokers, dealers and clearing organizations	170	283
Interest payable	27	22
Total financial liabilities, not measured at fair value	51,810	53,628
Level 1
Cash and cash equivalents	1,901	1,732
Cash - segregated for regulatory purposes	7,515	6,547
Total financial assets, not measured at fair value	9,416	8,279
Short-term borrowings
Securities loaned
Securities sold under agreements to repurchase
Payables to customers
Payables to brokers, dealers and clearing organizations
Interest payable
Total financial liabilities, not measured at fair value
Level 2
Securities - segregated for regulatory purposes	8,281	9,166
Securities borrowed	2,968	2,957
Securities purchased under agreements to resell	677	2,035
Receivables from customer	29,464	29,821
Receivables from brokers, dealers and clearing organizations	1,002	823
Interest receivable	99	116
Other assets	6	6
Total financial assets, not measured at fair value	42,497	44,924
Short-term borrowings	19	15
Securities loaned	4,171	4,444
Securities sold under agreements to repurchase		1,316
Payables to customers	47,423	47,548
Payables to brokers, dealers and clearing organizations	170	283
Interest payable	27	22
Total financial liabilities, not measured at fair value	51,810	53,628
Level 3
Cash and cash equivalents
Cash - segregated for regulatory purposes
Securities - segregated for regulatory purposes
Securities borrowed
Securities purchased under agreements to resell
Receivables from customer
Receivables from brokers, dealers and clearing organizations
Interest receivable
Other assets
Total financial assets, not measured at fair value
Short-term borrowings
Securities loaned
Securities sold under agreements to repurchase
Payables to customers
Payables to brokers, dealers and clearing organizations
Interest payable
Total financial liabilities, not measured at fair value

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Financial Assets And Financial Liabilities (Netting of Financial Assets) (Details) - USD ($) $ in Millions		Mar. 31, 2018	Dec. 31, 2017
Securities, Segregated For Regulatory Purposes, Purchased Under Agreements To Resell [Abstract]
Gross Amounts of Financial Assets Recognized	[1]	$ 8,281	$ 9,166
Amounts Offset in the Consolidated Statement of Financial Condition	[2]
Net Amounts Presented in the Consolidated Statement of Financial Condition		8,281	9,166
Amounts Not Offset in the Consolidated Statement of Financial Condition: Cash or Financial Instruments		(8,281)	(9,166)
Net Amount
Offsetting Securities Borrowed [Abstract]
Gross Amounts of Financial Assets Recognized		2,968	2,957
Amounts Offset in the Consolidated Statement of Financial Condition	[2]
Net Amounts Presented in the Consolidated Statement of Financial Condition		2,968	2,957
Amounts Not Offset in the Consolidated Statement of Financial Condition: Cash or Financial Instruments		(2,856)	(2,822)
Net Amount		112	135
Offsetting Securities Purchased under Agreements to Resell [Abstract]
Gross Amounts of Financial Assets Recognized		677	2,035
Amounts Offset in the Consolidated Statement of Financial Condition	[2]
Net Amounts Presented in the Consolidated Statement of Financial Condition		677	2,035
Amounts Not Offset in the Consolidated Statement of Financial Condition: Cash or Financial Instruments		(677)	(2,035)
Net Amount
Total [Abstract]
Gross Amounts of Financial Assets Recognized		12,660	15,247
Amounts Offset in the Consolidated Statement of Financial Condition	[2]
Net Amounts Presented in the Consolidated Statement of Financial Condition		12,660	15,247
Amounts Not Offset in the Consolidated Statement of Financial Condition: Cash or Financial Instruments		(11,870)	(14,474)
Net Amount		790	773
Options [Member]
Offsetting Financial Instruments Owned, At Fair Value [Abstract]
Gross Amounts of Financial Assets Recognized		731	1,052
Amounts Offset in the Consolidated Statement of Financial Condition	[2]
Net Amounts Presented in the Consolidated Statement of Financial Condition		731	1,052
Amounts Not Offset in the Consolidated Statement of Financial Condition: Cash or Financial Instruments		(56)	(451)
Net Amount		675	601
Warrants And Discount Certificates [Member]
Offsetting Financial Instruments Owned, At Fair Value [Abstract]
Gross Amounts of Financial Assets Recognized		2	5
Amounts Offset in the Consolidated Statement of Financial Condition	[2]
Net Amounts Presented in the Consolidated Statement of Financial Condition		2	5
Amounts Not Offset in the Consolidated Statement of Financial Condition: Cash or Financial Instruments
Net Amount		2	5
Currency Forward Contracts [Member]
Offsetting Financial Instruments Owned, At Fair Value [Abstract]
Gross Amounts of Financial Assets Recognized		1	32
Amounts Offset in the Consolidated Statement of Financial Condition	[2]
Net Amounts Presented in the Consolidated Statement of Financial Condition		1	32
Amounts Not Offset in the Consolidated Statement of Financial Condition: Cash or Financial Instruments
Net Amount		$ 1	$ 32

[1] As of March 31, 2018 and December 31, 2017, the Company had $8.3 billion and $9.2 billion, respectively, of securities purchased under agreements to resell that were segregated to satisfy regulatory requirements. These securities are included in "securities - segregated for regulatory purposes" in the condensed consolidated statements of financial condition.

[2] The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at March 31, 2018 and December 31, 2017.

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Financial Assets And Financial Liabilities (Netting of Financial Liabilities) (Details) - USD ($) $ in Millions		Mar. 31, 2018	Dec. 31, 2017
Offsetting Securities Loaned [Abstract]
Gross Amounts of Financial Assets Recognized		$ 4,171	$ 4,444
Amounts Offset in the Consolidated Statement of Financial Condition	[1]
Net Amounts Presented in the Consolidated Statement of Financial Condition		4,171	4,444
Amounts of Liabilities Not Offset in the Consolidated Statement of Financial Condition (Cash or Financial Instruments)		(4,020)	(4,201)
Net Amount		151	243
Securities Sold under Agreements to Repurchase [Abstract]
Gross Amounts of Financial Assets Recognized			1,316
Amounts Offset in the Consolidated Statement of Financial Condition	[1]
Net Amounts Presented in the Consolidated Statement of Financial Condition			1,316
Amounts of Liabilities Not Offset in the Consolidated Statement of Financial Condition (Cash or Financial Instruments)			(1,316)
Net Amount
Total [Abstract]
Gross Amounts of Financial Assets Recognized		4,232	6,225
Amounts Offset in the Consolidated Statement of Financial Condition	[1]
Net Amounts Presented in the Consolidated Statement of Financial Condition		4,232	6,225
Amounts of Liabilities Not Offset in the Consolidated Statement of Financial Condition (Cash or Financial Instruments)		(4,076)	(5,968)
Net Amount		156	257
Options [Member]
Offsetting Financial Instruments Sold, But Not Yet Purchased, At Fair Value [Abstract]
Gross Amounts of Financial Assets Recognized		56	464
Amounts Offset in the Consolidated Statement of Financial Condition	[1]
Net Amounts Presented in the Consolidated Statement of Financial Condition		56	464
Amounts of Liabilities Not Offset in the Consolidated Statement of Financial Condition (Cash or Financial Instruments)		(56)	(451)
Net Amount			13
Warrants And Discount Certificates [Member]
Offsetting Financial Instruments Sold, But Not Yet Purchased, At Fair Value [Abstract]
Gross Amounts of Financial Assets Recognized
Amounts Offset in the Consolidated Statement of Financial Condition	[1]
Net Amounts Presented in the Consolidated Statement of Financial Condition
Amounts of Liabilities Not Offset in the Consolidated Statement of Financial Condition (Cash or Financial Instruments)
Net Amount
Currency Forward Contracts [Member]
Offsetting Financial Instruments Sold, But Not Yet Purchased, At Fair Value [Abstract]
Gross Amounts of Financial Assets Recognized		5	1
Amounts Offset in the Consolidated Statement of Financial Condition	[1]
Net Amounts Presented in the Consolidated Statement of Financial Condition		5	1
Amounts of Liabilities Not Offset in the Consolidated Statement of Financial Condition (Cash or Financial Instruments)
Net Amount		$ 5	$ 1

[1] The Company did not have any balances eligible for netting in accordance with ASC Topic 210-20 at March 31, 2018 and December 31, 2017.

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Financial Assets And Financial Liabilities (Secured Financing Transactions) (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities loaned	$ 4,171	$ 4,444
Securities sold under agreements to repurchase		1,316
Total		5,760
Foreign Government Debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities loaned	5
US Government Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities sold under agreements to repurchase		1,316
Overnight and Open [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities loaned	4,171	4,444
Total		5,760
Overnight and Open [Member] | Foreign Government Debt [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities loaned	5
Overnight and Open [Member] | US Government Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities sold under agreements to repurchase		1,316
Common Stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities loaned	4,109	4,389
Common Stock [Member] | Overnight and Open [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities loaned	4,109	4,389
Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities loaned	57	55
Corporate Bonds [Member] | Overnight and Open [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities loaned	$ 57	$ 55

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Collateralized Transactions (Narrative) (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Disclosure Collateralized Transactions [Abstract]
Customers, less allowance for doubtful accounts of $43 and $40 as of March 31, 2018 and December 31, 2017	$ 29,464	$ 29,821
Securities purchased under agreement to resell segregated for regulatory purposes	$ 8,300	$ 9,200
Percentage of securities repledged and deposited for customers	92.00%	82.00%

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Collateralized Transactions (Amounts Related to Collateralized Transactions) (Details) - USD ($) $ in Millions		Mar. 31, 2018	Dec. 31, 2017
Permitted To Repledge [Member]
Collateralized Transactions [Line Items]
Securities lending transactions		$ 23,556	$ 23,662
Agreements to resell	[1]	8,976	11,231
Customer margin assets		29,412	30,236
Total collateralized transactions		61,944	65,129
Sold Or Repledged [Member]
Collateralized Transactions [Line Items]
Securities lending transactions		3,346	3,041
Agreements to resell	[1]	8,976	11,231
Customer margin assets		7,520	9,013
Total collateralized transactions		$ 19,842	$ 23,285

[1] As of March 31, 2018, $8.3 billion or 92% (as of December 31, 2017, $9.2 billion or 82%) of securities acquired through agreements to resell that are shown as repledged have been deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3.

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Collateralized Transactions (Financial instruments owned and pledged where the counterparty has the right to repledge) (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Disclosure Collateralized Transactions [Abstract]
Stocks	$ 553	$ 1,150
U.S. and foreign government securities	61	54
Financial Instruments Owned and Pledged as Collateral - Eligible to be Repledged by Counterparty	$ 614	$ 1,204

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Revenue From Contracts With Customers (Summary of Receivables, Contract Assets and Contract Liabilities) (Details) $ in Millions	Mar. 31, 2018 USD ($)
Revenue from Contract with Customer [Abstract]
Receivables	$ 12

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Revenue From Contracts With Customers (Disaggregation of Revenue ) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($)
Revenue from Contract with Customer, Excluding Assessed Tax	$ 256	[1]
Electronic Brokerage [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	254	[1]
Market Making [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	2	[1]
United States [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	184	[1]
United States [Member] | Electronic Brokerage [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	182	[1]
United States [Member] | Market Making [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	2	[1]
International [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	72	[1]
International [Member] | Electronic Brokerage [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	72	[1]
Commissions [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	220
Commissions [Member] | Electronic Brokerage [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	220
Market Data Fees [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	11	[2]
Market Data Fees [Member] | Electronic Brokerage [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	11	[2]
Risk Exposure Fees [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	8	[2]
Risk Exposure Fees [Member] | Electronic Brokerage [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	8	[2]
Payments For Order Flow [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	5	[2]
Payments For Order Flow [Member] | Electronic Brokerage [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	5	[2]
Minimum Activity Fees [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	5	[2]
Minimum Activity Fees [Member] | Electronic Brokerage [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	5	[2]
Others [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	7	[2]
Others [Member] | Electronic Brokerage [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	5	[2]
Others [Member] | Market Making [Member]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 2	[2]

[1] Based on the location of the subsidiaries in which the revenues are recorded.Included in other income on the condensed consolidated statements of comprehensive income.

[2] Included in other income on the condensed consolidated statements of comprehensive income.

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Other Income (Schedule Of Components Of Other Income) (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Other Income [Abstract]
Market data fees	[1]	$ 11	$ 9
Minimum activity fees	[1]	5	5
Risk exposure fees	[1]	8	5
Payments for order flow	[1]	5	4
Gains (losses) on financial instruments, at fair value and other investments, net		2	2
Gains (losses) from currency diversification strategy, net		38	49
Other, net		8	2
Other income		$ 77	$ 76

[1] See Note 8 for description of these revenues.

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Employee Incentive Plans (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		131 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	May 03, 2007
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
401(k) plan contribution expense	$ 1.0	$ 1.0
Common Stock Shares issued under ROI Unit Stock Plan				1,271,009
ROI Shares issued to IBG LLC				1,250,000
2007 SIP shares issued under ROI Unit Stock Plan				21,009
Fair value ROI Treasury Stock				$ 38.0
Maximum shares of stock distributable under 2007 Stock Incentive Plan	30,000,000		30,000,000
Stock Incentive Plan Granted Shares Adjustment	18,335
2007 Stock Incentive Plan Compensation Expense	$ 14.0	$ 13.0
Estimated Future 2007 Stock Incentive Plan Compensation Expense	$ 34.0		$ 34.0
Post employment shares distribution			578,574
2007 Stock Incentive Plan (Shares)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Percentage, description	• 10% on the first vesting date, which is on or about May 9 of each year; and• an additional 15% on each of the following six anniversaries of the first vesting, assuming continued employment with the Company and compliance with non-competition and other applicable covenants.
2007 Stock Incentive Plan (Shares) | External Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	5 years
Shares granted to external directors			24,263
2007 Stock Incentive Plan (Shares) | Share-based Compensation Award, Tranche One [Member] | External Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage per year	20.00%

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Employee Incentive Plans (Share Grants And Fair Value) (Details) - USD ($) $ in Millions	12 Months Ended				92 Months Ended	128 Months Ended
	Dec. 31, 2017		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2017
Employee Incentive Plans [Abstract]
Shares granted	941,742	[1],[2]	1,451,136	1,211,533	20,888,468
Fair Value - Date of Grant	$ 56		$ 55	$ 52	$ 397	$ 56
Shares Granted IPO to Date						24,492,879
Fair Value - Date of Grant IPO to Date						$ 560

[1] Granted under the Company's amended 2007 Stock Incentive Plan, which was approved by the Company's stockholders at its 2018 Annual Meeting, held on April 19, 2018.

[2] Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 18,335 additional restricted stock units during the three months ended March 31, 2018.

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Employee Incentive Plans (2007 Stock Incentive Plan, ROI Summary) (Details)	3 Months Ended
	Mar. 31, 2018 shares
2007 Stock Incentive Plan (Shares)
Beginning Balance	6,468,973	[1],[2]
Shares Cancelled	(11,637)
Shares Distributed	(1,532)
Ending Balance	6,455,804
2007 ROI Unit Stock Plan (Shares) [Member]
Beginning Balance	3,849
Shares Distributed	(3,849)

[1] Includes 941,742 restricted stock units granted under the Company's amended 2007 Stock Incentive Plan, which was approved by the Company's stockholders at its 2018 Annual Meeting, held on April 19, 2018.

[2] Stock Incentive Plan number of granted restricted stock units related to 2017 was adjusted by 18,335 additional restricted stock units during the three months ended March 31, 2018.

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Income Taxes (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Income Taxes [Abstract]
U.S. Statutory Tax Rate	21.00%	35.00%
Adjustment to deferred income tax expense (or deferred tax benefit)		$ 115
Provisional Transition Tax obligation		62
Undistributed accumulated earnings of foreign subsidiaries	$ 1,100	1,100
Accumulated earnings of foreign pass through subsidiaries	400	300
Accumulated earnings subject to additional foreign tax	$ 200	$ 200

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Segment And Geographic Information (Narrative) (Details)	3 Months Ended
	Mar. 31, 2018 segment
Segment And Geographic Information [Abstract]
Number of Operating Segments	2

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Segment And Geographic Information (Segment Table) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Segment Reporting Information [Line Items]
Total net revenues	$ 527	$ 374
Income before income taxes	340	213
Assets	59,093		$ 61,162
Electronic Brokerage [Member]
Segment Reporting Information [Line Items]
Total net revenues	465	314
Income before income taxes	291	185
Assets	57,316		58,787
Market Making [Member]
Segment Reporting Information [Line Items]
Total net revenues	21	8
Income before income taxes	9	(22)
Assets	3,618		8,469
Corporate [Member]
Segment Reporting Information [Line Items]
Total net revenues	41	52
Income before income taxes	40	$ 50
Assets	$ (1,841)		$ (6,094)

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Segment And Geographic Information (Geographic Table) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Segment Reporting Information [Line Items]
Total net revenues	$ 527	$ 374
Income before income taxes	340	213
United States [Member]
Segment Reporting Information [Line Items]
Total net revenues	420	303
Income before income taxes	294	195
International [Member]
Segment Reporting Information [Line Items]
Total net revenues	107	71
Income before income taxes	$ 46	$ 18

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Regulatory Requirements (Narrative) (Details) $ in Millions	Mar. 31, 2018 USD ($)
Regulatory Requirements [Abstract]
Excess regulatory capital	$ 5,212

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Regulatory Requirements (Summary Of Capital, Capital Requirements And Excess Capital) (Details) $ in Millions	Mar. 31, 2018 USD ($)
Net Capital / Eligible Equity	$ 5,898
Required net capital	686
Excess regulatory capital	5,212
IB LLC [Member]
Net Capital / Eligible Equity	4,230
Required net capital	458
Excess regulatory capital	3,772
TH LLC [Member]
Net Capital / Eligible Equity	232
Excess regulatory capital	232
THE [Member]
Net Capital / Eligible Equity	640
Required net capital	98
Excess regulatory capital	542
Other Regulated Operating Companies [Member]
Net Capital / Eligible Equity	796
Required net capital	130
Excess regulatory capital	$ 666

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Related Party Transactions (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Related Party Transactions [Abstract]
Due from Related Parties - Customers	$ 350	$ 250
Due to Related Parties - Customers	$ 825	$ 648