Interactive Brokers presents

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1 Interactive Brokers presents Why Become an Independent Advisor on IB s Platform? Mary MacNamara, Interactive Brokers mmacnamara@interactivebrokers.com Webinar 4:30 EDT webinars@interactivebrokers.com Member SIPC 1

2 What is an RIA? Registered Investment Advisors (RIAs) are people who provide investment advice to others for a fee and are required by the SEC or most states to register or become licensed An RIA provides analysis or advice on securities either by making direct or indirect recommendations to clients or by providing research or opinions on securities or securities markets Receives compensation in any form for the advice provided Engages in a regular business of providing advice on securities 2

3 Advantages of being a Registered Investment Advisor * State limits vary. 3

4 Duties of an RIA Fiduciary Client Disclosure Code of Ethics Maintain Books & Records RIA s in the United States are typically regulated by either the SEC or the states in which they have a place of business 4

5 Steps to become a Registered Investment Advisor For additional information about IARD and registering with the SEC, see 5

6 Why become an independent Advisor on Interactive Brokers Platform? Freedom and flexibility to run your own business - No contract Keep 100% of your fees - Minimal start up and overhead costs Full White Branding capability with customized statements Manage clients accounts wherever they come from* and wherever they want to trade on over 100 exchanges around the world * subject to state registration requirements in the US 6

7 Why become an independent Advisor on Interactive Brokers Platform? Generate Higher Returns: Lower commissions, no ticket charges; no minimums; and no technology, software, platform, or reporting fees Better executions. Low interest rates, and higher loan values on portfolio margin accounts over $100K Minimize Your Costs - Transparent Pricing Transparent commissions discounted by monthly adviser volume from $0.5 to $0.05 per 100 shares and $0.70 to $0.075 per option contract. 2 Financing rates are pegged to daily benchmarks (US$ Fed funds or EUR Libor) + 150bps discounted to 25bps for larger amounts Plus an additional fee based on exchange, regulatory, transaction and carry fees where applicable. In the case that an exchange provides a rebate we pass some or all of the savings directly back to you. For additional information see 3. For additional information, see 7

8 Minimize Your Costs Best Price Execution Most brokers trade against your orders or sell them to others to execute who will trade against them. IB's Smart Router continuously searches and reroutes to the best available prices for stocks, options and combinations. 1. Net $ Improvement per Share Definition: ((# of Price Improved Shares * Price Improvement Amount) - (# of Price Disimproved Shares * Price Disimprovement Amount)) = Total Number of Executed Shares 2. The Transaction Auditing Group (TAG). Industry as a whole for the referenced periods according to TAG. The TAG analysis for US stocks included all market orders of 100 shares or more up to 10,000 shares. The analysis for US options included all market order sizes in US options and includes exchange rebates received by clients under IB's cost-plus pricing structure. The TAG analysis of orders routed to exchanges in Europe included all orders routed for execution during regular trading hours including all market and marketable limit orders and orders near the market (orders having a limit price within one-tenth of a Euro from the quote price at time of order receipt) on stocks listed on the included exchanges, weighted by the volume executed on each exchange. The exchanges for European stocks are XETRA, EURONEXT, CHI-X, WIENER BORSE, TURQUOISE, LONDON and NASDAQ OMX. 8

9 State-of-the-art Trading Platform Our market maker-designed Trader Workstation (TWS) lets you trade stocks, options, futures, forex, bonds, and funds on over 100 markets in 24 countries and 20 currencies from a single account Simple and sophisticated workspace that puts market data, order management, analytics, account monitoring and more at your fingertips Comprehensive news, fundamentals and research 9

10 IB s Financial Strength and Stability Strong capital position, conservative balance sheet and automated risk controls help protect IB and our customers from large trading losses Interactive Brokers Group (IBG LLC) equity capital exceeds $5 billion Our positions are marked to market daily and the resulting payables/receivables are reconciled to outside sources and settled automatically Our real time margining system marks all customer positions to market continuously We hold no material positions in OTC securities or derivatives. We hold no CDOs, MBS or CDS. The gross amount of our portfolio of debt securities, with the exception of US governments is less than 10% of our equity capital All orders are credit vetted before being executed and positions in accounts with inadequate margin deposits are liquidated automatically We have reported solidly positive earnings for the past 20 consecutive years 10

11 Unique Technology for Advisors Pre-Trade Allocations Allocate trades to multiple client accounts with a single mouse click Set-up Account Groups to allocate shares based on a single method for a group of accounts Create Allocation profiles that use percentages or shares of each order to individual accounts based on your own rules Easily modify allocations on an order by order basis Create Account Aliases to easily assign names to accounts Most Powerful: Allocate by Model Portfolios 11

12 Unique Technology for Advisors (Cont.) Build Model Portfolios and allocate client funds among the different models based on your clients' individual needs 12

13 Unique Technology for Advisors (Cont.) Advisors can automatically rebalance all accounts, a single subaccount, or a user-defined Account Group. As a Wealth Manager, you may assign certain client accounts to Registered Money Managers Automated tax lot assignment to optimize stated objectives Add Pension Plan Trust Accounts holding assets for a qualified Pension Plan subaccount IB provides broker-assisted trading through our Stock, Option or Bond desks Full White branding of customer registration and other informational materials with your own organization's identity 13

14 Automated calculation, billing and withdrawal of management and performance fees Advisors can charge their client(s) for services rendered, automatically with our flexible billing and invoicing system. With automatic billing, a calculated fee is automatically billed to the client's account with blanket client authorization using any of the following in any combination: Annualized Percent of Net Liquidation Value Annualized Flat Fee Percentage of P&L Fee per trade unit (shares, contracts, %) - Specified by currency/asset class Client Fee Templates Advisor Daily Invoicing 14

15 Advanced Trading Tools Task-specific trading tools to enhance efficiency for all trading styles, including : Accumulate/Distribute algo FXTrader ScaleTrader SpreadTrader OptionTrader BookTrader Market Scanners BasketTrader TWS Option Labs 15

16 Over 60 Order Types and Algos Trader Workstation (TWS) supports over 60 order types, from the most basic limit order to advanced trading to the most complex algorithmic trading, to help you execute a wide variety of trading strategies. Limit Risk Speed Execution Provide Price Improvement Allow Privacy Time the Market Advanced Trading Algorithmic Trading 16

17 Integrated Solutions Order Management System (OMS) Alternative Access via IB API and FIX CTCI 17

18 Securities Lending Stock Borrow/Loan feature in TWS uses AQS Marketplace Short Stock Availability Tool Stock Yield Enhancement Program Pre-Borrow Program 18

19 Sophisticated Risk Management Tools IB Risk Navigator SM 19

20 Real-time Monitoring Unlike other brokers who calculate margin only at the end of the trading day, IB provides real-time data that gives you the edge you need to react quickly to the markets. View your margin requirements in real time at any moment of the day Create real-time alerts based on margin to stay on top of a potential margin deficit Use our What If function to see the impact of potential trades on your margin requirements 20

21 Comprehensive Reporting Easy to view &customize Including Advisor Fee Cap Report Advisor and Broker Summary Report Statements & Reports PortfolioAnalyst Tax Optimizer 21

22 Assign User Access Rights Match user access and authorizations to your organization's security requirements. 22

23 Client Relationship Management (CRM) Allows Advisors to easily store and view information about their clients, prospective clients and contacts from a single screen in Account Management. 23

24 IB s Investors Marketplace Where individual investors, brokers, registered financial advisors, fund managers and administrators can interact to form connections and to do business with each other on Interactive Brokers' platform. 24

25 IB Group Offices IB Electronic Market Access Unrivaled Global Access Trade on over 100 market centers in 24 countries. Direct market access to stocks, options, futures, forex, bonds, ETFs and CFDs from a single IB Universal Account. 25

26 Rated #1 by Barron s 2015 Best Online Broker Again, Four Years in a Row! Best for Options Traders Best Trading Experience & Tech Best for International Traders Best for Frequent Traders Best Portfolio Analysis & Reports Lowest Margin Fees 1 Low Cost for the 11th year in a row 2 Best Overall 2015 WSL Institutional Trading Awards Winner 2015 "Best cross-asset trading solution" 2015 Winner "Best FCM - Innovation" [1] According to Barron's online broker review on March 9, 2015, "How Secure Is Your Securities Portfolio?". Lowest cost and margin fees of any broker in Barron's survey. [2] Low Cost Rated by Barron's 11 Years Straight - Low cost broker 2005 through 2015 according to Barron's online broker review Stars, Stars, Stars, Stars, Stars, stars, stars, stars, stars, stars, stars. Interactive Brokers earned a 4.5 star ranking in the March 9, 2015 Barron's Annual Best Online Brokers - "How Secure Is Your Securities Portfolio?". Criteria included Trade Experience and Technology, Usability, Mobile, Range of Offerings, Research Amenities, Portfolio Analysis & Report, Customer Service & Education, and Costs. Barron's is a registered trademark of Dow Jones & Co. Inc. 26

27 Our Mission Create technology to provide liquidity on better terms. Compete on price, speed, size, diversity of global products and advanced trading tools. - Thomas Peterffy, Founder & CEO 27

28 Disclosures Options involve risk and are not suitable for all investors. For more information read the Characteristics and Risks of Standardized Options. For a copy visit interactivebrokers.com/disclosures or call Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. For a copy visit interactivebrokers.com. Security futures involve a high degree of risk and are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading security futures, please read the Security Futures Risk Disclosure Statement. For a copy visit Interactivebrokers.com. There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets. The Order types available through Interactive Brokers LLC s Trader Workstation are designed to help you limit your loss and/or lock in a profit. Market conditions and other factors may affect execution. In general, orders guarantee a fill or guarantee a price, but not both. In extreme market conditions, an order may either be executed at a different price than anticipated or may not be filled in the marketplace. There is a substantial risk of loss in trading futures and options. Past performance is not indicative of future results. Any stock, options or futures symbols displayed are for illustrative purposes only and are not intended to portray recommendations. 1 Source: The Transaction Auditing Group (TAG). Industry as a whole for the referenced periods according to TAG. For additional information, see 2 Plus an additional fee based on exchange, regulatory, transaction and carry fees where applicable. In the case that an exchange provides a rebate we pass some or all of the savings directly back to you. For additional information see 3 For additional information, see Interactive Brokers LLC is a member of NYSE FINRA SIPC Interactive Brokers LLC is registered with HKSFC and is a participant of the Sydney Futures Exchange (SFE) 28