Good day everyone and welcome to the Interactive Brokers’ First Quarter 2014 Financial Results Conference Call. This call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Ms. Deborah Liston, Director of Investor Relations. Please go ahead.

Thank you, operator and welcome everyone. Hopefully, by now you’ve seen our first quarter earnings release, which is released today after the market close, and which is also available on our website. The speakers today are Thomas Peterffy, our Chairman and CEO; and Paul Brody, our Group CFO. And they’ll start the call with some prepared remarks about the quarter and then we can take Q&A. Today’s call may include forward-looking statements, which represent the company’s belief regarding future events and by their nature are not certain and outside of the company’s control. Our actual results and financial condition may differ possibly materially from what’s indicated in these forward looking statements. We ask that you refer to our disclaimers in our press release. You can also review a description of risk factors contained in our financial reports filed with the SEC. And now, I’d like to turn the call over to Thomas Peterffy.

Good afternoon everyone and thank you for joining us to review our first quarter performance. We are off to an exceptionally strong start this year with our Electronic Brokerage business breaking several new records and our Market Making business benefiting from improved market conditions. We continue to see an increasing number of customers transferring their accounts to IB in the first quarter and we had our highest ever level of customer daily average revenue trades or DARTs. This surge in trading volume can be attributed to a combination of factors including more customer accounts, higher market volatility, and higher industry trading volumes overall, but we benefit especially because our customer base is comprised of sophisticated experienced traders and investors that take advantage of volatility spikes to enter or exit positions. On the final day of the quarter, a highly publicized book Flash Boys was released. This has reignited the debate over high frequency trading and its effect an overall fairness of the market. It has also intensified ongoing inquiries and prompted new investigations of the HFT industry by various regulators and law enforcement agencies that are concerned with potentially illegal front running and insider trading. I want to be very clear on this. This is going to be a positive and may even be a very big positive for us. First, we have always been strong and outspoken advocate for fair and orderly market and believe that such a scrutiny at the end will be beneficial to our customers and will ensure a more level playing field. I have spoken several times publicly about my views on market structure and you can find these speeches on our website about IB comment letters and papers. Second, I have been telling everybody who is willing to listen that the evolution of electronic…

Thank you, Thomas. Thanks everyone for joining the call. As usual, I’ll review the summary results and then we’ll get segment highlights and then we will take questions. First quarter results were outstanding in Brokerage and quite strong in Market Making as well. As compared to the year ago quarter, net revenues were driven by rising brokerage commissions and net interest income, but also by trading gains in the Market Making segment even after excluding the currency translation gains on the weaker U.S. dollar. Our financial statements as a reminder include the GAAP accounting presentation known as comprehensive income. Comprehensive income reports all currency translation gains and losses including those that reflect changes in the U.S. dollar value of the company’s non-U.S. subsidiaries known as other comprehensive income or OCI. These are reported in the statement of comprehensive income. But only a few exceptions, the U.S. dollar weakened relative to other currencies during the first quarter of 2014. As a result, the currency basket we called the global strengthened against the U.S. dollar by about 0.4%. OCI is a component of the total global effect, adding OCI to net income increased our reported earnings per share by $0.01 for the quarter. Overall operating metrics for the latest quarter were mixed, volumes were up in futures and stocks and down in options versus the year ago quarter. Average overall daily trade volume was up -- was 1.17 million trades per day, up 16% from the first quarter of 2013. Electronic Brokerage metrics showed solid increases in the number of customer accounts and customer equity as Thomas pointed out. Total and cleared customer DARTs were both up 25% from the year ago quarter and up strong sequentially as well. Orders from cleared customers who clear and carry their positions and cash with…

Thank you. (Operator Instructions). Our first question comes from Chris Allen of Evercore. Your line is now open.

Good afternoon, guys. I guess if we could start off, Tom as you mentioned that on the account growth in the Brokerage side, a healthy percentage was coming from countries where you have barely scratched the surface, I was wondering if you could touch on what countries they are, where you see the opportunities going forward from a regional perspective?

I don’t really want to be specific about that other than to say that Asia is growing faster than other places. Reason, I don’t want to be very specific as you would understand that it is not so easy to do this work, and if I tell other people, our competitors where they would be most effective to go after customers, they would do that.

No problem. And then on the market structure debate, I guess you could say that’s going on now, I mean clearly you are on the side of no payment for order flow. Do you think this issue would be solved by implementing a trade-at rule or do you think the SEC should just come out right and ban payment for order flow?

I think it would be helpful if they ban payment for order flow, because it makes the landscape extremely complicated, and the fact is it’s a huge conflict of interest and nobody can tell me that they can really function with this conflict of interest in the best interest of the customer. I think that’s nonsense.

Okay. And then last for me, I mean how do you perceive the competitive dynamic currently within the Market Making business? I mean clearly volatility was a helping hand ; I am just wondering how the competitive landscape is shaping up in your view point?

It appears that as the Market Making gets stabilized in the sense that we have maybe as many (inaudible) people leaving the business. So it’s still not something that I would want to go into if I were not in it already.

Okay. I’ll get back in queue. Thanks guys.

Thank you. And our next question comes from the line of Chris Harris of Wells Fargo. Your line is now open.

Thanks. Thomas, thanks for sharing all your thoughts about Flash Boys and everything that’s been happening, I did have a question on that. So, I think it does seem pretty obvious how you guys potentially benefit on the brokerage side, but one thing I am wondering is how your Market Making business could potentially be impacted by any HFT associated regulation? I mean it sounds like you’re not too worried about that. Just wondering if you could expand upon why that might not be negatively impacted?

If you’ve been following our earnings calls for some time, then you know that we consider that HFTs are a negative on our operations because you see we have to maintain continuous markets and so many instruments that no matter how fast we get, people who target just a few instruments can always act faster than we can. So as a result, whenever we traded HFTs, we tend to be under the wrong end of the trade. And so, I think generally people who make markets are not in favor of HFTs, and we would like them to join us and make market instead of picking us off.

So, if there were speed advantages that were kind of done away with in the markets that you’re in similar to what IEX is trying to do in the equity market, would that be a good thing for you guys in the Market Making business or how should we think about it?

On balance, it would be good.

Sorry?

On balance it would be good I believe.

Good, okay. Any idea, the number or the size of kind of these predatory HFT activities, I mean I know it’s really hard to quantify it, but I mean you guys are kind of front and center in there in the markets, so I think you have much better visibility than perhaps we would.

We really don’t know. We can just speculate about this, and we really, really have -- we practically have no idea.

Okay. All right. And then thanks for clarifying by the way on your order flow revenue and other income. I assume is that revenue that basically is generated from maker taker that the exchanges offer up?

The bulk of it is exchange sponsored order, basically rebates of exchange fee.

Okay.

Although not directly saying that we’ve done our rebate X percent of the exchange fees, but we pay them fees and they send back some of those fees.

No, I understood. It just seems like a really small number for you guys because my understanding was limit orders, general limit orders sent in typically qualified for the maker taker or rebate and being that the revenue numbers so low for you guys, it would suggest that a very small proportion of limit orders being made by your customers?

The proportion of the limit orders; to tell you frankly, I’m sorry, I don’t want to say the wrong thing, and I’m somewhere here, I don’t clearly see the mechanism.

Okay. All right. Well, that's all I had. Thanks a lot guys.

Thank you.

Thank you. And our next question comes from Rich Repetto of Sandler O'Neill. Your line is now open.

Good evening Thomas. Good evening Paul.

Good evening Rich.

I guess Thomas, you made one recommendation on how to improve the market structure with the, I guess the holding period, so 10 to 200 milliseconds. Would you be a supporter of just removing maker taker? And could you explain why you would be far against it, just removing it completely?

You see that when we started that we came up with -- I came up with the maker taker idea. And then it’s become a life of its own, and now it’s become a source of a monster. If you look at it theoretically, this is basically just equal to rating the penny which is the minimum price fluctuation because if the maker charge a fee, then that’s like bidding higher and offering lower; if he pays a fee, then it’s like him offering higher and bidding lower. So as you know, there are some exchanges on both sides of this equation. And I understand that there are people who are making markets they get paid and then they immediately turnaround and do the trade on another exchange where they also get paid and all they get out of it is collecting the payment. And I think it just basically means that it’s not real volume. I would generally [be and say there] simplified structure because all these payments where order flow and maker taker, it’s just clouds up the picture and it gives more opportunities for brokers to really not tell their customers what it is that they are doing with their orders.

Got it, got it. And I would assume given all the automation the years you have been in the market, you co-locate and take proprietary feeds as well I would assume.

We certainly do, their value would be [toast].

Got it. And I guess moving on a little bit away from the market structure, but on the eBroker you mentioned that the channel that I believe you said hedge funds and institutions continue to be the biggest sort of fastest growing area. Could you just refresh how you are penetrating and why that is that if I have the right segment that’s building the fastest, growing the fastest?

You see, to be very precise here, the fastest growing area is introducing brokers and they are two types. There are the introducing broker, who basically has an omnibucket can’t leave us and so they collect all their customer order flow and they execute that in their name. And then there is disclosed introducing, fully disclosed introducing broker who actually puts these clients in direct communication with us. And so to us they feel like individual clients, but since they come through an introducing broker, we do not count them as individual clients, even though they basically had a very similar profile than our individual clients. So, they are the fastest growing customer segment and our individual customers are the slowest growing customer segment. And in between we have financial advisors and then trading, proprietary trading shops and hedge funds. And they are sort of in between these two groups.

Got it, very helpful. And I guess the very last question; I’ll flip back a little bit on market structure. And Thomas my understanding was the payment for (inaudible) at least on an exchange level on options, it’s aggregated by the exchange, but it comes from the market makers in particular, I guess option, I guess. And is that what you are realizing or the answer to your other question sort of made it that you are actually reporting or realizing the rebate from the maker taker model on limit orders, is it both or…?

That’s some of the exchange and they are different, but so the CBOE for example is I think, it may still be the biggest exchange. That for example, assess market makers and then they give the specialist or lead market maker a bucket of money and he can then give it to brokers or according to his whatever he likes to do, however he decides which broker gets how much. And so that is probably the primary, because when we are specialists and we get this bucket of money as market makers, we give it all to Interactive Brokers after all, who else would be doing.

And that’s -- but it’s officially coming from the exchange?

That’s correct.

Got it, got it. Congrats on a solid quarter on both the Broker and the Market Maker, thanks.

Thank you. Thank you very much.

Thank you. And our next question comes from Mac Sykes of Gabelli & Company. Your line is now open. Mac Sykes - Gabelli & Company: Gentlemen, and Thomas congratulations. I feel like you have been finally indicated about your position on the market structure and the negative aspects of HFTs. So…

Thank you. Thank you. Mac Sykes - Gabelli & Company: I guess it only took you to the smaller red book, but just to extrapolate on your confident, how would you handicap the timeframe for seeing material market perform changes or would you expect this to happen over a couple of years, could it be sooner, I mean would they go after all the items that you discussed tonight or would you expect some kind of staggered approach?

I will tell you frankly, I don’t know, I’m not as close to the regulators as I used to be. I mean they used to ask me for advice, but they don’t ask me anymore. So, I have no idea. And even when they did, they didn’t do what I advised. Mac Sykes - Gabelli & Company: Are you thinking about positioning the firm in terms of marketing or you’re acting to this in [situation] event or…

Yes, I would like to make a big deal out of this and I’m working on various ways, so I could make a big deal out of it and take advantage of this mini scandal. Mac Sykes - Gabelli & Company: A lot of the client -- you referred that your client is being sophisticated. But would you think that some of the clients at eBrokers that have payment for order flow, do you think they are waking up in the last month and thinking about their trade, execution and rates and about these comp debentures or if that’s going drive any change I guess in venue?

What I hear is that people are upset and they are thinking about it, but they don’t really understand. So, that’s the problem. Some of them understand it and those who understand it are even more likely to come to Interactive Brokers than they before. So, that’s a good thing because I think we are probably the only broker that I can think of that neither trades against the order flow or sells it, I mean I include all the brokers not only the eBrokers. Mac Sykes - Gabelli & Company: Okay. And just my last comment, the Brokerage capital continues to build nicely, is there a point where you would think that it could get overcapitalized or you’re just still in sort of growth mode there?

I hope it gets over capitalized. I hope that, I keep reading that [brokerage] firms will have to cut down on certain businesses and I keep hoping that it really happens and that we can up-sell the business. Mac Sykes - Gabelli & Company: Okay. Thank you very much.

Thank you.

Thank you. And our next question comes from the line of [Brian Morris] of [Oakleaf] Capital. Your line is now open.

Yes. Thanks for taking my question. I wonder if you could give some color on the growth in stock trading volume in the Brokerage business, which showed kind of a triple-digit gain for the quarter, a sizable selling gain last year?

It’s a very surprising high gain and it comes from people who are, I mean the bulk of that growth comes from people who are trading low price stocks because we have an extremely low commission on low price stocks in the sense that we limit the commission as a percentage of the dollar value of the trade.

Got it. Thank you.

Thank you. And at this time, I am showing no further questions in the queue. I would like to turn the call back over to Ms. Deborah Liston, Director of Investor Relations for any closing remarks.

Thanks operator. And I just want to thank everyone for participating today. I want to mention that we will be posting a clean transcript, a clean version of our transcript on our website tomorrow and also the call is available for replay on our website. Thanks again for your time. And have a good evening.

Ladies and gentlemen, thank you for your participation on today’s conference. This concludes the program. You may now disconnect. Everyone, have a great day.