Interactive Brokers Group (IBKR) risk factors, FY2024 10-K

Risks Related to Our Company Structure

1. 01Future sales of our common stock in the public market could lower our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us
2. 02We depend on IBG LLC to distribute cash to us in amounts sufficient to pay our tax liabilities and other expenses
3. 07Future sales of our common stock in the public market could lower our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us
4. 08Control by Mr. Thomas Peterffy of a majority of the combined voting power of our common stock may give rise to conflicts of interests and could discourage a change of control that other stockholders may favor, which could negatively affect our stock price, and adversely affect stockholders in other ways
5. 09We depend on IBG LLC to distribute cash to us in amounts sufficient to pay our tax liabilities and other expenses
6. 10We are required to pay Holdings for the benefit relating to additional tax depreciation or amortization deductions we claim as a result of the tax basis step-up our subsidiaries received in connection with our initial public offering (“IPO”) and certain subsequent redemptions of Holdings membership interests
7. 11The tax basis increase of $31.2 billion assumes that (a) all remaining IBG LLC membership interests held by Holdings are purchased by us in one or more taxable transactions and (b) such purchases in the future are made at prices that reflect the closing share price as of December 31, 2024
8. 12Certain provisions in our amended and restated certificate of incorporation may prevent efforts by our stockholders to change our direction or management

Risks Related to Our Business

1. 03We are subject to counterparty risk whereby defaults by parties with whom we do business can have an adverse effect on our business, financial condition and results of operations
2. 13Macroeconomic, geopolitical and other challenges and uncertainties could have a negative impact on our business
3. 14Our business could be harmed by a systemic market event
4. 15Damage to our reputation could harm our business
5. 16The impact of a public health emergency may have a material adverse impact on our business and results of operations
6. 17Our net interest income and profitability could be negatively affected by lower benchmark interest rates caused by central banks lowering target benchmark rates in an attempt to buffer their economies from a public health emergency
7. 18Our future success will depend on our response to the demand for new services, products and technologies
8. 19evolving industry standards
9. 20The loss of our key employees would materially adversely affect our business
10. 21We may not pay dividends on our common stock at any time in the foreseeable future
11. 22Our direct market access clearing and non-clearing brokerage operations face intense competition
12. 23We are subject to potential losses as a result of our clearing and execution activities
13. 24We are exposed to risks associated with our international operations
14. 25We are subject to counterparty risk whereby defaults by parties with whom we do business can have an adverse effect on our business, financial condition and results of operations
15. 26Repos are collateralized by securities with a market value in excess of the obligation under the contract and are cleared and marked to market through a central clearing counterparty
16. 27Any future acquisitions may result in significant transaction expenses, integration and consolidation risks and risks associated with entering new markets, and we may be unable to profitably operate our consolidated company
17. 28Because our revenues and profitability depend on trading volume and interest rate levels, they are prone to significant fluctuations and are difficult to predict
18. 29We may incur material trading losses from our market making activities
19. 30the required performance of our market making obligations
20. 31Reduced spreads in securities pricing, levels of trading activity and trading through market makers could harm our business
21. 32We may incur losses in our market making activities in the event of failures of our proprietary pricing model
22. 33The valuation of the financial instruments we hold may result in large and occasionally anomalous swings in the value of our positions and in our earnings in any period
23. 34We are exposed to losses due to lack of perfect information
24. 35Rules governing designated market makers may require us to make unprofitable trades or prevent us from making profitable trades
25. 36Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks

Risks Related to Our Intellectual Property, Technology, Cybersecurity and Data Privacy

1. 04We may not be able to protect our intellectual property rights or may be prevented from using intellectual property necessary for our business
2. 05Internet-related issues may reduce or slow the growth in the use of our services in the future
3. 42We may not be able to protect our intellectual property rights or may be prevented from using intellectual property necessary for our business
4. 43Our reliance on our computer software could cause us great financial harm in the event of any disruption or corruption of our computer software. We may experience technology failures while developing our software
5. 44We depend on our proprietary technology, and our future results may be impacted if we cannot maintain technological superiority in our industry
6. 45We do not have fully redundant systems. System failures could harm our business
7. 46Failure of third-party systems on which we rely could adversely affect our business
8. 47Internet-related issues may reduce or slow the growth in the use of our services in the future
9. 48We could be the target of a cyber-attack or experience a cybersecurity incident that impairs internal systems, degrades services we provide to customers, or results in a data compromise, causing reputational or monetary damages as a consequence
10. 49We are subject to stringent and complex data privacy rules. Failure to comply with these rules could expose us to a risk of financial loss, litigation, and other liabilities

Risks Related to Cryptocurrency

1. 06We may encounter technical issues which would result in disruption or interruption of our customers’ access to their CSP accounts

Risks Related to Laws, Regulations and Litigation

1. 37Our future efforts to sell shares or raise additional capital may be delayed or prohibited by regulations
2. 38Regulatory and legal uncertainties could harm our business
3. 39We are subject to risks relating to litigation and potential securities laws liability
4. 40Heightened regulatory and legislative requirements in the U.S. and internationally have increased our compliance, regulatory and other risks and costs
5. 41We may incur additional tax expense or become subject to additional tax liabilities

Risks Related to our Cryptocurrency Offering

1. 50We rely on third-party Cryptocurrency Service Providers (“CSPs”) to provide our customers the ability to access cryptocurrency trading and custody services
2. 51The CSPs are responsible for securing the customers’ Cryptocurrency Assets and protecting them from loss or theft
3. 52Customers of IBUK sign an agreement containing a substantially identical provision prior to being permitted to access the CSP’s services through IBUK’s platform
4. 53We may encounter technical issues which would result in disruption or interruption of our customers’ access to their CSP accounts
5. 54Changes in laws and regulations regarding cryptocurrency may negatively impact our ability to enable our customers to buy, hold and sell cryptocurrencies in the future and may adversely affect our business