Interactive Brokers Nets European Brokerage License to End 2020

Interactive Brokers (IBKR) ends the year with good news from Hungary’s central bank, Magyar Nemzeti Bank. By granting the massive trading platform a brokerage licence, Hungary’s capitol – Budapest – becomes IBKR’s second new branch this year, following Singapore.

IBKR’s Expansion to Budapest Explained

Founded long before the internet went mainstream, Interactive Brokers (IBKR) continues to expand its brokerage footprint. Servicing clients interested in bonds, funds, stocks, currencies, and derivatives, IBKR already covers over a million clients globally. After receiving approval by Hungary’s central bank on December 12, IBKR announced the expansion into a Budapest office. 

The new Budapest division will go under Interactive Brokers Central Europe Zrt. (IBCE), joining ten other divisions across all continents. In Europe, IBKR already has an established Luxembourg outpost, but the Hungarian office will serve as a launching pad for Central European institutional investors. Interestingly, the chairman and founder of IBKR, Thomas Peterffy, has Hungarian roots, emigrating from Hungary to the US in 1965. He emphasized the importance of the IBCE branch for the company’s growth:

“We plan to make Budapest the center of our operations for Central Europe to keep pace with account growth, which has been rapid in both Western and Eastern Europe and around the world.”

Although the bulk of IBKR’s revenue stream comes from the US, Europe and Africa already comprise a quarter of the brokerage’s accounts. In fact, the company experienced 80% of account growth this year from outside the US. The CEO of the Hungarian IBCE will be Miklos Hanti.

IBKR Makes the Most of a Turbulent Year

Across the board, thanks in large part to the isolation effects of the pandemic and stimulus checks, FinTech companies and online brokerages have seen a rapid rise in traffic. Interactive Brokers used that opportunity to:

• Gain a brokerage license to operate in Singapore.
• Launch Impact Dashboard to make socially responsible investing (SRI) easier.
• Set up a deal to acquire the self-directed brokerage Folio Financial from Goldman Sachs, which will increase IBKR’s client base by 70,000.  

In Tokenist’s review of Interactive Brokers, the trading platform achieved a high score, boasting comprehensive asset trading options and very low costs for high volume trading. As far as the company’s financial health goes, it recovered above the average line. While the industry’s growth stalled at 14.8% during the year, IBKR’s shares rallied by 16.6%.

As of December 1, 2020, IBKR’s financial stats show gains across the board. Its total equity sits at $268.7 billion, which represents a 61% increase over the previous year. Likewise, IBKR’s margin loan balances are 22% higher, at $33 billion. More tellingly, its DARTs – Daily Average Revenue Trades – are 179% higher compared to last year. 

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