Thank you all for joining Bank of America's 34th Annual Financial Services Conference. This is Craig Siegenthaler, North American Head of Diversified Financials at Bank of America, and it's my pleasure to introduce Thomas Peterffy. Thomas is the founder and chairman of Interactive Brokers. He founded the firm 49 years ago, and is the pioneer of electronic trading. Interactive Brokers is a digital investing platform that services its clients globally across multiple segments, targeting not just individuals, but RIAs, hedge funds, prop traders, and institutional brokers, and it extends this to most international markets. In our view, Interactive Brokers' competitive advantage is its technology R&D effort, which allows them to offer multiple products in multiple markets, launch new capabilities quicker, and also underprice its competition. Thomas, we're thankful that you're joining us again this year. It's a great pleasure. So let's start on the macro front. It's been a fairly Goldilocks setup. You've had a bull market, you've had relatively high rates, strong account growth, elevated client engagement. I wanted your thoughts on the macro backdrop today. On the economy, you mean? Yeah. Yes. Well, there are two economies in this country. If you listen to the BLS, the economy is doing great. If you listen to the big firms that are making huge capital investments, the economy is doing great. If you listen to the newspapers and the television, the economy is doing extremely poorly. So I don't quite know how to interpret that. But I believe that the economy is doing great, and it will continue to do great. So I do not think that interest rates will come down by much. Maybe they could come down at most half a point to help Trump in the midterms. So 0.5 point drop in interest rates would hit IBKR's net income by $200 million for the year, so it's not a huge impact. But of course, it's the same if interest rates were to go up, it wouldn't be a tremendous boom either. So, and that's where I'm on interest rates. That's all short end, not long end? Short end. Short end. Absolutely short end. So Thomas, I wanted to talk about your strategic priorities. What are you looking to do over the next three years? What's most important at IBKR? So our long-term goals are to grow the business at a healthy pace. As long as our clients and prospects know that IBKR is the best platform to achieve higher than average returns, we can be certain to do that. What we need for that, of course, is best execution. That's the most important, and this is not difficult for us to achieve because our competitors, both the online brokers and the large prime brokers, are basically, one way or another, are profiting for trading against or along with their customers. And these trading profits, by my, as I counted them up, they are approaching $300 billion a year. So it's no chump change, and they all wanna participate in that, and therefore, they are basically frozen in place because they cannot compete on our turf by providing best execution because the better price they give to the customer, the worse price they get themselves. So, I think that we are extremely comfortable from that point of view. We do not sell our order flow. We do not trade our own account, except in very small ways to facilitate fractional shares or overnight orders, or when we can provide a better price than the other available. Client-to-client crossing, of course, is the best way to provide great executions, and the more volume we have, the more we can convince our clients to use limit orders, the better we can do that. In addition, we continue to pay interest on our clients' cash holdings of 50 basis points under the Fed funds, and we pay interest on short proceeds. We charge very low margin rates. We try to lend out our clients' fully paid shares and share the interest with them. We continue to build novel research and trading tools, keep on adding new products and trading venues. So in other words, we do whatever we can do to make our clients as profitable as we can. So Thomas, your first point was growth. Account growth is around 20% a couple of years ago, but it accelerated up to 30%. It's even been above 30% kind of recently. The question is, what do you think about the longer term trajectory of account growth over the next three to five years? Can you keep it up at this level? Yeah, I think there is no problem with keeping them at this level. So 30% account growth is very fast, much faster than your peers. One pushback that we've been hearing is that there is a shift going towards accounts with smaller equity balances, they're less active. Is that true, and, and how do you think about that? So over the last 10 years, the mean value of a customer account, the liquidating value of a customer account, has been fluctuating between $140,000 and $270,000. Currently, it's about $180,000. So it's not, you know, if it were true that the new accounts are always smaller, then the number would be continuously going down, but that we don't see that. So let's talk about regulations. The regulatory backdrop has gotten a little more favorable for financials and the brokers, and this could include changes to the SEC equity market structure proposal. But what are you expecting on the regulatory front in the U.S., including with crypto? We may be near passage of the Clarity Act this year. SEC Chairman Atkins' basic approach is let the free market and competition take care of the best execution. That fits us perfectly. It allows us to be flag carriers, and the requirement for more detailed 605 reports may help us. Although in my mind, nothing is as good as marking your customer trades to market, and the brokers that are trade with the customers to mark their trades to markets, that I think would give you the real story, but that is not going to happen, I don't think. Thomas, on the international side of things, are there any big regulatory initiatives outside the U.S. that you guys are focused on, that's impacting the business? I, as I looked into the EU regulations, they mostly are focused on ESG, and they are not focused on the brokers, but they are focused on the companies whose shares people are investing in. So that's where all the action seems to be. So the U.S. dollar has been weak over the last year. And then, you know, we had Liberation Day trade war. My question is, investors outside the U.S. hold a lot of U.S. assets. Your clients, probably outside the U.S., hold a lot of U.S. assets. Have you been seeing any mixing from U.S. to non-U.S. assets, just given what's been going on recently? Well, there is some movement, especially in currencies. So people have been keeping their money in dollars, foreign customers keeping their cash in dollars, and that changed over the last several months. So the stock holdings did not change much. Most of the stock holdings are still the big U.S. stocks, but the cash holdings, certainly, they wandered into euros and mostly euros. So you started ForecastEx. This was an exciting new business, where you started it before the 2024 presidential election. Yeah, 2024 presidential election. I'm losing time here. But you also decided not to go into sports, which is a decent chunk of that market. What are the prospects for that business longer term, and why did you decide not to go into sports? So I am extremely bullish on the prediction markets. I think this is going to be the biggest thing that happened in our business in the last hundred years. So I look at prediction markets as the ultimate synthesis of human imagination and economic incentive. Our participants are rewarded for accuracy and penalized for error. This transforms guessing about the future into rigorous analysis that forces a continuous, real-time calibration of expectations based on the new data. If you aggregate a diverse pool of incentivized, rational actors, the resulting consensus is mathematically likely to be the most accurate proxy for reality available. By assembling these forecasted facts, we are mapping the future with high resolution. We create a model on which we can plan our investments, our businesses, and our lives with better results. This is the most significant utility of instantaneous global communication. A decentralized, voluntary collective that replaces government fiat with free individual initiative. Eventually, all traditional markets will operate within the framework established by the prediction markets. We are building a centralized nervous system for the global, for global decision-making, the ultimate resolution to the dichotomy of free market capitalism and socialism. Just think about it. It will take some time to develop a sufficient, sophisticated, and large following for these markets, and to develop the right contracts, and to show participants the connections and interdependencies among these contracts and other markets will take some time. I think sports betting is a distraction from all this. But to some degree, of course, we are all corruptible, so when all the legal wrangling with the states eases a bit, we may enter into sports betting. But, I mean, some people at the firm want to do it. I rather would leave it alone, but, you know, if they really wanna do it, I'll do it. But more importantly, we will need some regulatory help in distinguishing between securities and commodities as far as the prediction questions go. We know that the price of a share of Tesla is a security, but is a question about the number of cars sold by Tesla in any quarter, or the dollar amount of Tesla sales, or the company's income or profits in any quarter, or the number of employees, or the average wages, a security? I'm not sure. We know that the average wages of a state, or the number of new cars sold in a state, or the quarterly profits of all the companies headquartered in the state together are not a security. We know that. How do we go from a region to a specific company in the region is a question that will need to be answered in order to establish clear connections between securities markets and the commodities markets, the prediction markets, and the local economies. So when you, Craig, publish your spreadsheet about about your predictions about Interactive Brokers and the other companies that you analyze, I'm suggesting that you may have some company in the future, in the ForecastTrader platform. Eventually, the regulatory barriers will break down, and analyst forward-looking spreadsheets will be created by the prediction markets. That is no way a threat for your occupation, of course, because you may just as well earn even more money than you currently do, much more money, if you tend to be right most of the time. Right? You know? And then, Thomas, how do you think about, like, right now, like, Kalshi, Polymarket, Big, CME has a new venture in this space, you have ForecastEx. What's the scale advantage? You know, is it important to be first? Now, some of them are involved in sports, which could create some hurdles in the future, but, you know, what does this market look like longer term? Do you think there's a few big players? Do you think there's lots of players? I think there'll be many players, but I think that there'll be. So the brokers will be distinguished by whether they can give their customers access to all the available markets, and of course, whether they can give you the best price that is available at any one moment. So from that point of view, those markets will be the same as the current stock or option markets. Thomas, let's move into crypto. Very quickly, and it's very impressive, you went from not having a lot in crypto to now having a lot, and I, I still think you're in the process of launching a few things. But you have a partnership with Paxos and Zero Hash. That was helpful. What capabilities do you offer today, and what do you still plan to launch over the near term? So we believe that crypto requires dedicated expertise and institutional-grade controls, which we do not have at our, on our own. That's why we partner up with Paxos and Zero Hash. As a matter of fact, IBKR owns 30% of Zero Hash. So I think that's the stance we're going to take here. Got it. You're working on crypto transfers in and out. Is that live yet? Crypto transfers are going to come alive within the next couple of weeks. Okay. And is that, like USDC and stablecoins, is that some of the cryptocurrencies, like Ethereum, you can move in and out, or is it kind of every- Yes, but our strategy is not to offer every new token, short-lived meme, meme coins, and things like that. We focus on serving sophisticated investors who want measured exposure to establish cryptocurrencies. At the same time, we want IBKR to be a platform of choice for crypto investors who trade crypto on major exchanges, but also want access to the broad range of traditional asset classes and global markets we offer. To support this, we are building a seamless bridge between traditional and digital finance. We recently enabled account funding via stablecoins that will soon support crypto asset transfers. Thomas, just circling back on that, you have a large client base. It's growing nicely. Is crypto really a cross-sell to them, or are you actually trying to attract new investors that are really focused on sort of crypto first before stocks? No, our initiative was always to enable our existing clients to not have to go elsewhere to gain crypto exposure. Got it. Let's talk about capital management for a second. Dividends, organic buybacks, you know, how do you think about the various uses of capital? Because I think since I've covered you over the last 10 years, kind of I watched that balance sheet keep growing. So is there ever an opportunity to do something with that capital? I know it does partly help the prime brokerage business too. I think if you keep watching, you will just keep seeing it grow. Got it. And the issue with buybacks, is liquidity still an issue? Because it's a, you know... You obviously, it's a very large market cap now with a large float. Small relative to the total, but the flow is pretty big these days. So the float is, I mean, still relatively small given the size of the company. So I do not regret selling the stock that I did sell, but I don't feel that I need to sell any more. I wanted more float out there, but... So currently, I don't think that I need to sell any more stock. And the float is increasing a tiny bit every year by employee bonus shares, and as the price keeps rising, some holders may think that they had enough and give others a chance to take a ride. Let's come back to M&A. You commented, I think it was a year ago in the earnings call, that you were looking at a few things, maybe you didn't agree on price. What type of deals do you look at? What businesses are interesting to IBKR? And when something sounds expensive, you know, what does that mean? Well, to tell you frankly, we are so busy building the company, and we think that we are doing a really good job, and we're doing it very well and have a great deal of satisfaction doing so. So we do not think that we really need to take a shot at a task that is much less well-defined. It's not to say that we never look at other things, but every time we do, so far, we always concluded that we better stick with what we know best. We think that the opportunities we can create for ourselves are greater and easier to achieve than something else that would arise in somebody's business that they no longer want, right? So your operating margin today is almost at 80%. That's the highest margin of my coverage. It might be the highest margin in the S&P 500 now, but at 80%, and yet, you know, we're still forecasting good revenue growth, so it looks like it could go up. But how do you think about incremental margins and a potential ceiling? Because, you know, obviously, 80% is very high. I don't think we're gonna go over 80%. I think, I think if, you know, we should probably start spending a little bit more money on new products and more white glove service. Let's talk about technology, which I said earlier, I thought, you know, is one of your key competitive advantages. You know, if you look across your leadership team, how many have a background or even in the university studied computer science? And besides that, you know, what else is special about your ability to generate technology organically inside of IBKR, rather than having to go out and buy or lease something from a third party? So it's true that we started on the technology side, and most of the executives of the company are computer people. But the fact is that today, I don't think the major advantage that we have is technology. I think it is the culture. We basically have a very different culture than most other publicly held companies. We are more like a privately held firm. People do not come to Interactive Brokers as a career step and then move on. Most people tend to come to us when they get out of school or soon thereafter, build their own specialty, their own expertise. They become proud of it and take responsibility for it and grow with the company. At other firms, people build something, and then they move on and do not much care if what they build does not work any longer, or maybe the new users do not know how to use it, and it ends up in storage. I mean, it's absolutely staggering how some of the larger, best-known firms have really very primitive back office processes, even after they have spent $ many billions and billions on building them over the decades. I don't really know what, how that happens. So let's stick with technology and shift into artificial intelligence. I know you've automated many processes inside of IBKR, but how are you employing AI today? And if you think about the firm in three or five years, what else could you be using AI for? So looking at the use of computers from a very long-term perspective, I basically see a very long-term progression of how people get to use those chips to do more things with less effort. When I started some 60 years ago, people were still using Machine Language, moving variables to and from specific memory locations, and they had to keep track of it with pencil and paper. Writing a routine to sort a column of numbers, optimize for time, was a huge project. We came from there through Assembler Language, to COBOL, to C, to Java, and now we have AI. It can guess at what you really want to get done from your not-so-precise description. As the technology keeps getting better, the question moves from moves more and more to what you want done from how to get it done. That means that we really have to be thinking hard about how to transfer our technological advantage and focus more on products, enabling our customers to take advantage of the relationship among our unique collection of products and services. That will continue to set us apart. Inventing new products is key. We must continue to provide an environment in which people can manage their money profitable, profitably with satisfaction. That is, that's all that Interactive Brokers is about. We want our customers to make more money than any other broker's customers. And the fact is that in 2025, our individual customers have outperformed the S&P by 1.3%. Our wealth management customer, our people who, wealth managers who run their accounts on our platform, those accounts have outperformed by 2.67%, and hedge funds outperformed the S&P by 11% through 2025. I have a question here on- I'm beginning to lose the people. Six of them just left in this sentence. I think, no, he was the photographer, though, so he's allowed to go. Yeah. Okay. At margin loan usage, it's had a really nice growth here that normally happens in a bull market. I think it's mostly driven by the hedge fund prime business, the prop trading business, the active trader business. What are your thoughts on the growth of that margin loan balance over time, and is there anything else kind of special happening there? So margin loans have been on roughly 10%-12% of client assets, and to tell you frankly, I get nervous when margin loans rise too quickly. I'm not happy when I see that happening. Okay, so with that, let me see if there's any questions from the audience. Please raise your hand. We got one up here in row two. So just, wait before you state your question, 'cause we'll get you the mic. Thank you so much for taking the question. IBKR, you guys are, you know, have presence in over 160 countries. Most recently, you've enabled access to UAE, Taiwan, and Brazil. Kind of like, you know, looking ahead, are there any other countries or region where you would like to expand or deepen your product offering? Thank you. Yeah, well, over the years, you will see us going into more and more countries. We will always want to be covering all the exchanges that basically are important. And as more and more exchanges come alive in different countries, we will become a member of those exchanges, and as more new products are introduced, more different kind of exchanges will arise. We will continue to become members. It's very important for us that our customers can access all the products in the world that matter. I think with that, we are out of time, but Thomas, on behalf of all of us at Bank of America, I just wanted to thank you for joining us. Thank you very much.