May 27, 2024

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Editor's note: The headline of this story has been updated to reflect that Interactive Brokers' new desktop product is in addition to, rather than a replacement of, the TWS platform.
Interactive Brokers Group Inc IBKR recently launched an updated desktop trading applicationfor Windows and Mac users.

Benzinga spoke with Steve Sanders, the firms EVP of Marketing and Product Development, about how IBKRs new platform redefines what traders should expect from technology.

"We're multi-platform," Sanders says. "Although we have this desktop replacement for the TWS, we also have our HTML based client portal and multiple mobile applications. We have a platform for whatever your need is."

Heres an edited transcript of the conversation.

Benzinga: Tell us more about the new desktop platform.

Sanders: The original TWS displayed as a spreadsheet. Given our options market-making roots, we designed it for market makers. In the mid-1990s, this was packaged as TWS, the Trader Workstation. Around 2010, we introduced Mosaic, which was a modern TWS with windows. It was so feature-packed that finding what you needed could sometimes be difficult. We redesigned it using different code, and this is what we launched. It has everything you need in four tabs.

Whats the average life of a platform?Loading… Loading…

Technology quickly becomes outdated. In the 1960s, people were on IBM mainframes, then that went away. Java was the latest when we got started, but that went away. We're putting this out and planning for the future. We hope that it has a long life, but as technology evolves, we're not shy about upgrading.

Who uses the IBKR desktop application?

We target the serious investor. Certainly, our retail and institutional clients such as hedge funds, proprietary traders, brokers, and advisors, as well as individuals all give us input on what they think is good. Beyond that, given that we've been in the trading business as professionals, our own employees build what they think is useful for the type of client we want to attract. Features that may be of interest to your audience include hundreds of different order types and options visualization tools. These extend to our GlobalTrader, an entry level platform. Regarding tools for technical analysis, weve started to enhance that, incorporating TradingView. Were willing to work in any area, and we certainly have news, research, and education.

Whats your pitch to a trader on a competing platform?

The number one pitch is that you can trade stocks, options, futures, forex, and bonds all over the world, across 100 market centers, from the same platform. If you want to be able to trade any asset class at any time, anywhere in the world, you can. With over 85% of our clients coming from outside of the U.S., whenever theres any kind of uncertainty in the world, we see a big uptick in the number of clients coming in from that particular country. So, our number one selling point is breadth of products around the world.

Number two is cost. This used to be an easier sell when people were charging commissions because we always offered the lowest commissions. But, to me, even though everyone in the U.S. charges zero commissions now, we still offer our smart routing, and that gets you what I believe is a better execution. Additionally, we offer one of the highest interest rates paid at over 4.8%. We offer the lowest margin rate, as well. We dont have a sweep account where you have to wait for it to be swept back and forth. It just automatically sits in the brokerage account. We have our stock yield enhancement program where, if you sign an agreement and you own fully paid shares, you can lend out those shares and well give you 50% of that revenue. Thats something other brokers dont tend to offer as well as stock loan and borrowing at transparent low rates. Our competitors may make that more opaque, and this extends to products other than stocks. As an example, bonds we dont mark up. Other brokers may mark up their bonds by as much as $5 for $1,000 bond. We just charge an explicit low commission. The same goes for futures where we tend to be the lowest. So, number two is cost.

Number three is our technology. We believe were a technology company that is in the brokerage business.

Number four is our strength and security. Our balance sheet is strong, and this is something you have to take into account when youre sending money to a broker. Surely, theres SIPC coverage. However, beyond $500,000, the insurance thats offered does not cover much. So, having a broker with strong capital is important.

What restrictions do you have regarding extended hours trade? I know that you can trade in the S&P and VIX complex after regular market hours, but not at all brokers.

You can trade that here. You also have overnight trading of stocks. Keep in mind we have clients all around the world, and people in Hong Kong like to trade during their trading day. We've always been a 24 hour operation, because we've always been into futures, which trade 24 hours a day. We have locations all over the world in Hong Kong, Australia, Singapore, Switzerland, the UK, London, and Ireland. So, as the sun sets, we move our operations from one location to the next. That is in our DNA. When we were options market makers, we traded around the world.

What are the activities that are going on at those locations?

Though our risk management is automated, somebody has to monitor if an exchange or clearing goes down. I've gotten calls from Hong Kong in the middle of the night, and we deal with those things right away.

What features can we expect to be added in the future?

We have most of the countries and exchanges around the world. I think one of the last ones we added was Taiwan. If there's a place with a fair market, and we don't have it, we would certainly continue to add those. If theres a new exchange or new products, we're going to be there and we're going to integrate and build features that clients want.

We also have our PortfolioAnalyst, and are just rolling out some new retirement planning tools. You can grab all your assets, whether they're at Interactive Brokers, Schwab, or Chase. You bring them into our Portfolio Management System, and you fill out a bunch of assumptions on what you think the growth of your assets is going to be and how long you and your partner are going to live. It will tell you what your cash flow will be, and whether that cash flow will be enough to cover your expenses until the end of your life. This is free. The other thing is for our advisors.

A lot of our advisor tools are built into the old TWS, and they will be in the new IBKR desktop application. However, there were a number of advisors who said they wanted an HTML based client portal. So, we will launch this too.

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