So we are delighted to have Thomas Peterffy, Founder and Chairman of Interactive Brokers Board of Directors, join us again for a fireside chat. Thomas founded Interactive Brokers 46 years ago, if I have that correct. He's been- You do. Excellent. He's been instrumental in the creation of electronic market making, and Interactive Brokers has become one of the fastest-growing broker-dealers in the market, servicing both retail and institutional clients and offering a unique tech-enabled platform. Thanks so much for joining us, Thomas. Okay, so it's great to have you back at the conference. I think a lot's changed over the past year, both in terms of the macro and frankly, your business. So maybe we could just talk about your perspective on the macro backdrop and what that means for markets and rate structures. So I'd like to get to your point, to your question in a roundabout way. If you are an investor in IBKR, you're justifiably unhappy today. When I looked at the stock at the end of November, I saw that it was exactly $2 lower than it was the year before, and that is in the face of the S&P rising by something like 18%. So what happened during that year and why did this happen? During the year, our number of accounts have risen by 22%. The customer deposits have risen by 27%. Our pre-tax profits went from $2 billion a year to $3.3 billion a year, so it's a rise of 65%. But the problem is that the way we achieved that was that we have taken full benefits of the rise in interest rates, while our peers have many of our peers have locked up their customers' money in long-term government debt, which of course has lost a lot of its value. And if they had to mark to market, they would show a negative net worth, some of them. But they don't have to mark to market, so they can carry these long-term government securities at face value and borrow against them. And to the extent their clients are either withdrawing money or they are moving the money into money market funds, they have to and they don't wanna sell the long-term bonds and don't wanna take the losses, so they use the face value of those bonds and borrow against them at the Fed, which is a special provision the Fed allowed for them at the time when these couple of banks went bankrupt. So they don't actually have to take the loss and even though they are showing much lower earnings. Now, as the long-term rates now are going down from 5% to approaching 4%, they appear to be better off, but they don't really, because they are still borrowing at 5.5% and have the locked-up securities still yielding less than 2%. But it looks like their future is looking rosier, while ours are less so. But to how big a problem is this for us? 1% of lower interest rates would cost us $300 million. So if interest rates that were forcing to be 5% go to 4%, instead of $3.3 billion, we will only make $3 billion, other things being equal. But of course, we are expecting to grow at roughly more or less the same rate as we have been growing in the course of this year. So, you know, 22% account growth, with... And growth with account deposits. And, you know, even though our commissions have not grown much because they haven't grown because 2021 and 2022 were very big years. Mostly 2021 was a very big year because of the lockup. So commissions spiked in at that time, and then as they've been basically holding steady, while the trading volumes have diminished drastically overall, not ours, but overall in the industry. So, how do you explain. I don't know how to explain the behavior of the stock. That's basically what you got. Okay, well, let me just ask one other one. Okay, so you're asking me what I see going forward as far as interest rates? I mean, I don't think that. I have learned over the years to never argue with the market. If the market believes that long-term rates will be 4.16%, I don't think that it's any of my business to argue with that. But if I'm thinking about it, I see that there are several long-term trends in the economy that call for higher inflation and higher rates. And there are the de-globalization, the... As you know, over the last several decades, the manufacturing of goods have been reallocated around the globe due to containerization, which reduced the shipping expenses, so they were reallocated wherever is cheapest. So that reduced costs of goods by very substantial amount, by as much as 50%-90% in many cases. You know, with the rising geopolitical tensions and transportation is going to become less certain and more expensive, insurance rates for transportation are rising every day, as you see more and more international shipping vessels being attacked by various, you know, pirates and other, you know, whoever is attacking these ships, it's hard to tell. Secondly, we have the rising of the problem of replacing our skilled workforce. Skilled workforce is produced in the United States and Europe mostly, and to some extent in Asia. But it is all in countries whose population growth has slowed drastically, even in some cases have gone into negative. So most of the population growth around the globe is coming from countries where skilled workforce is not produced. So as a result, skilled labor is going to cost more and more and more as we go along. Thirdly, are the deficits, again, in the same countries, especially in the United States. So these deficits are going to contribute to inflation, and therefore, it is hard for me to believe that inflation on the longer run is going to substantially decrease. Add to this, the ESG spending, which is just, you know, going to be huge, right? So if you add all these four factors together, it's hard to see how inflation is going to subside, even though, for the short term, in the next several months, it could go down, but I think that on the longer run, it will come back. So, there are these long-term trends that you can't get away from that. And, on the other side, we have the substantial increase in productivity, which we saw this morning, and the productivity increase in use by AI, and that is, of course, very hard for me to speculate on. It could be very, very substantial, and it could be disastrous. I really don't know what's going to happen there. But so if I had to bet, I would bet on long-term interest rates, maybe 4% for now, and going back to 5%, 6%, 7%, 8% as the deficit spending keeps increasing, and the national debt keeps increasing, and the refinancing of this debt is going to become more and more expensive. So that's what I see. Okay, that, that's very clear. Maybe we can just turn to your strategy, investment priorities. Maybe, you know, where do you see the best opportunities to invest today? And then, you know, I know this is really difficult because you—your TAM is sort of every, you know, financial asset out there, and I know you've talked about that. But how do you think about your market share today? And you can take that in any direction you'd like. And then what are your aspirations for what that market share could look like three to five years from now? So our market share is negligible. It's almost nothing, right? We have 2.5 million customers. Theoretically, we could have 100 million or 200 million or 300 million. So it's really less than 1%.... And this is true in all the segments we are in, with the potential exception of proprietary traders. So proprietary traders tend to come to us because they like our executions, and they like our technology, and they like our prime services, and they do not have the customers that hedge funds would also like to come to us, but their customers want them to go to the large primes, so proprietary traders don't have that pressure. So with proprietary traders, I do not know, but I think that our market share is very substantial, especially in the United States and probably in Europe. It's unknown how many they are, so we cannot tell what our market share is. Now, as far as individuals, I mean, you know, our accounts are growing kind of rapidly, around 25% a year, and that's been basically the same over many, many years, and it's probably going on forward, going to be similar. So eventually, on the long run, we'll get there. What is important for us is the recognition worldwide that free market economy is the way to go. In many countries, that is not really accepted or understood or well known, so it is our job to teach people about the free market economy and how public corporations would naturally evolve in a free market economy where there is free competition, and then you take the invention of so-called publicly owned corporations, which is, I mean, it's originally European, but lately an American idea. But so to spread that idea in the countries where it is not a popular and well-accepted way of growing the economy. So it is our job to teach the public about that and to develop the educational aspect of our platform. And we are going to spend a lot of money on that in the years to come, and we expect that people who learn about the economy and investing on our platform will become our customers. What our market share will be, I don't even know what the size of the market will be, so I have no idea. Fair enough. Maybe if we just turn to introducing brokers, and I understand why you don't want to give, you know, as much detail on those, given the delays, you know, you've had so far this year with adding those two new I Brokers. But maybe you could just take a step back and talk about, you know, what the longer-term opportunity is in your mind for I Brokers, based on the lessons you've learned this year, and how the opportunity set has perhaps changed. So I've been talking for a long time about two large potential introducing brokers coming onto a platform. The smaller of the two has done so, and the larger one has not yet, and it turns out that they are a more less centrally governed institution than we thought they were. So it's basically a fiefdom, many fiefdoms that are basically under one umbrella, and they have a lot of individual authority as to whether they want to put their customers onto a platform or not. The central governance would like them to do so, but they don't necessarily have to go along. So it's all the legal agreements have finally been ironed out, but I really cannot tell at what rate they will proceed and put their clients on our platform. But we do have a large number of other institutions, because basically, other than Pershing, which is Bank of New York, and Saxo, which is a small Danish bank, relative to Pershing, is very small, and relative to us, it's very small. We basically have no competition around the world, as far as marketing our platform to other financial institutions to use for their individual customers. So that's what introducing brokers are, and the opportunity is huge because there are many, many banks around the world who do not have the technology, and it wouldn't be It would not be conceivable for them to develop this technology. And all the people around the world want to trade in the United States. So basically, we have developed, as you know, we have the platform, but we also have developed the AML and all the local regulatory requirements that we have to comply with in many, many countries. And so they are able to bring their customers onto our platform. And there are literally hundreds of these kinds of institutions. So it's going to be a long process, but it is happening, and it's happening, you know, hopefully at an increasing rate. All right. I wanna turn to the trading trends you're seeing. You know, I think a lot's changed, frankly, over the past year. You've seen the continued proliferation of 0DTE options, and I think you've benefited from that. I'd be just interested, you know, as you look at the business, perhaps if you could just differentiate between the trading trends you're seeing for your retail customers versus the institutional ones, and sort of what the outlook is for trading generally. So, you know, these zero date options appear to be a controversial thing, but the fact is that we had them for 50 years. Although 50 years ago, we only had four zero date expiration options a year, and then we went to 12 when options were listed for every month. And then, when options were listed for every week, we went to 52 zero date options, and then finally, when they were listed for every day, now we have 250 of them. You know, I don't think... I mean, it's, they are substantially cheaper, especially if you're looking at certain corporate actions that are like earnings or, you know, they come out at a specific date. So why would you have to buy a one-month long option if you want to speculate on what the specific earnings would be? I think you wait for the last day before, and you buy it at that time, so you pay a lot less. And so, also, markets are relatively illiquid for moving large portfolios, whether you wanna buy them or sell them. So it makes sense to, during the day, instead of buying or selling the portfolio, to buy or sell the zero day call or put, depending upon whether you wanna buy your portfolio or sell it, and then just do the trade on the close. And then you don't care what price you pay when you do the trade, because the same price is going to be reflected in the option when it expires. So you will get paid whatever you lose in the execution. So I think it has zero date options have a very good economic justification for existing. Now, you're asking me what is it? Yeah, yeah. So, So, you know, just trading trends and differences that you're seeing between the retail and the institutional clients. Well, you know, I'm very confused about what is a retail client as well, what is an institutional client. So the way we separate them is that if you are an account holder in an individual name, then you are individual client, and you call that retail, even though it could be a person like me who has a very, very large account. Or, so you know, corporate names are institutional for us, and individual names are retail. We do not really look at the differences in the trading. So I tell you frankly, I don't know what the difference is in the trends. Okay. That's fair enough. All right, well, maybe we could just unpack a little bit more on the account growth. You know, you've reiterated just a few minutes ago the sort of 20%-25% account growth. Maybe you could just unpack a little bit of the differences or what's driving that account growth, and maybe split, you know, by the various customer segments, and maybe even geography as well. The highest account growth rate is on the individual customer side. But again, I say that it doesn't mean retail. Many of them are retail and so if I characterize retail, I say somebody who has less than $100,000. And so say accounts under $100,000 are retail, accounts over $100,000, maybe professional. Most of our accounts. So our average account starts at something like $30,000-$40,000. Six months later, they tend to double, and a year later, they tend to double from that. So they start at $30,000-$40,000 and up to $150,000-$160,000 an account. That is, of course, an average, and as you know, no account is an average account, so many of them are under, and many of them and some of them are much, much larger accounts. The growth rate, as I said, is the largest in individual accounts, then come proprietary trading groups, hedge funds, introducing brokers, and lastly, financial advisors. That's basically the rate at which financial advisors are growing the slowest, and that's to some extent our fault, because we haven't placed as much emphasis on financial advisors as other types of accounts, especially proprietary trading groups. Because the best parts of our platform is basically executing trades, borrowing money at a low rate, getting a high rate on your cash. If you want to short, which financial advisors practically never do, you see our short inventory. We display our rates, our rate where we're willing to borrow any security and the rate at which we're willing to lend it. These rates are usually substantially better than what is offered at other prime brokers, where we basically don't know until you call and you start to negotiate with them. With us, there is no negotiation. What you see is what you get, and it's usually more favorable than your prime broker has to offer you. So larger hedge funds, many of them are having a second, third, or fourth prime broker, and that is us, and that is often because of the shorting capability on our platform. Great. So I just want to turn to some of the dynamics around your, your margin profile, which has certainly always been impressive and actually has continued to improve over the past few years. Do you think that the sustainable low 60s% margin guidance is, is achievable in a lower NII growth environment, like what you talked about at the beginning of this chat? And then just how should we think about the growth trajectory of some of the major expense categories? Well, I think that in this last quarter, our pre-tax profit margin was 75%. And that, of course, is, I mean, unparalleled, not only in the industry, but probably very few publicly owned companies have that kind of profit margin. So I don't expect it, that number to go higher. And as we talked about reduction in rates, it's probably gonna go lower. I don't expect it to ever go below 60%, and it hasn't been below 60%, I think, in years. So I think our profit margin is going to be between 60% and 75%. I hope it's going to be much closer to 70% than 60%. Now, our expenses. Well, our largest expense is compensation. We do pay our... Many of our employees are technology workers, and we are very particular about getting the best ones, so we pay them more than what is usual in the financial industry. And that is going to continue that way, so I expect that our compensation is going to continue to grow. Compensation expense is going to continue to grow around 8%-9%. And, you know, the rest of our expenses, fixed expenses are depending upon execution costs... that is not really up to us. That's just a pass through from the exchanges and trading venues. And then we have hardware expenses and, you know, we just buy the hardware we have to buy, and at the cost that we're being charged, it's not we don't have much room for negotiation there. Yep, that makes sense. Maybe just one other one on this side of the P&L, which is just thinking about hiring for next year. You know, how are you thinking about recruiting generally across, you know, technology, sales, generally, just sort of the opportunity set and what you're thinking for next year? We expect it to go about, you know, at around high single, low double-digit rates, so around 10% or so. Okay. That's easy enough. So I, I think another one that has been, in my mind, very interesting was, you know, what's going on with your, you know, looking for a bank charter in Europe. So maybe you could just update us on, you know, how you're thinking about the opportunity for a bank charter in Europe. You obviously didn't go ahead with the Hungarian one. And then I think it would just be really interesting if you could dig in on just exactly what sort of opportunity that creates in terms of freeing up capital, on the margin loan side. So, in the U.S., we can lend our customers the cash to other customers. In Europe, that is not allowed, so only a bank can do that. And that is what prompts us to try to get a bank. We started out doing that in Hungary. It didn't work out because Hungary, being a small nation, comes out with rules every now and then, unexpected rules that we simply can't cope with it because we're not, you know, we are an internal... We serve all the countries inside Europe, and so you can't... It puts you at a competitive disadvantage. Now, this is not an area that is extremely urgent, but in the back of our minds, we are constantly looking for opportunities, and there are plenty of opportunities, but we're not really pursuing them with a very high vigor. Okay. Just one last one here, which is around inorganic growth. You have alluded to the potential for acquisitions, I think, a few times in recent months. Maybe you could just speak to what you're seeing in the market and whether there are, you know, any potential targets on the table today. Well, there are always potential targets, and they always look very good because we have technology that we believe is much superior to what anybody else has. So the idea is, why don't we just buy a firm, and we put it on our platform, and the cost will be drastically reduced. But once we approach an actual target, and we look at their business, it seems that many of these businesses are not like us at all, because, you know, we are very automated, and we're very inexpensive, but we give you the rate that we publish, and that's what it is, and there is not much negotiation. At other firms, it turns out that everybody has a different deal, and that is very difficult to automate. So we basically look at the firm, and we say, "Well, how much more profitable they could be if they were with us?" But the fact is that their profits come from all kinds of different little charges, and it's not... You know, they all appear to be free, but they, then they charge for this and charge for that, and that's what their profits come from. We wouldn't know how to replicate it. So far, we have looked at a number of them, and, you know, nothing really seems to work out. Okay. We just have to rely on our own growth. Well, pretty darn good growth. So, with that, thank you so much, Thomas. This was fantastic. Thank you very much.