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

Thanks, operator, and welcome, everyone. Hopefully by now you’ve seen our third second quarter earnings release, which was just released today after the market closed, and is also available on our website. Today, our speakers are Thomas Peterffy, our Chairman and CEO; and Paul Brody, our Group CFO. They’re going to start the call with some prepared remarks about the quarter and then we’ll take some Q&A. Our call may include forward-looking statements which represent the Company’s belief regarding future events and by their nature are not certain and outside 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 the disclaimers in our press release. You should also review a description of the risk factors contained in our financial reports filed with the SEC. I'd now like to turn the call over to Thomas Peterffy.

Thank you for joining us to review our third quarter performance. This quarter we set new records in our brokerage business with total number of accounts, customer equity, margin balances, profits and profit margins reaching all-time highs. The message that IB is the best platform to minimize trading costs and optimize execution quality is spreading amongst professional traders and investors around the world. Our brand recognition is strengthening not only in the U.S. but in markets throughout Europe and Asia, where we are still way behind in terms of market penetration and where our primary advantage of being the lowest cost broker, is even more pronounced. In international markets our competitors are priced even higher by comparison, and word of mouth advertising is very effective. All this bodes very well for our prospects of continuing strong account growth. Unfortunately, this stellar performance was overshadowed by unusually strong currency movements, namely the strengthening of the US dollar, which negatively impacted our reported results in market making. As you know by now, we maintain our equity in a basket of 16 currencies that we call the GLOBAL in order to stabilize the currency risk we would otherwise be exposed to as a global company doing business in various currencies around the world. However, when we translate our results into US dollars for reporting purposes, the relationship between the US dollar and the GLOBAL is reflected in our financial statements. Usually the fluctuations are less than 2% from quarter to quarter. However, this quarter the dollar strengthened considerably against all other major currencies globally, which created an unusually large currency translation loss for us. This quarter, the GLOBAL fell by about 4% compared to the US dollar, which reduced our comprehensive earnings by $211 million. Of this total loss, $133 million reduced our…

Thank you, Thomas. And welcome everyone, thanks for joining the call. So as usual, I’ll review our summary results and then give segment highlights before we take questions. Results for the third quarter were driven by two stories: outstanding results in brokerage and tepid profits in Market Making, both of which were overshadowed in headline numbers by large currency translation losses on the strength of the U.S. dollar. Brokerage fees also benefited from higher commission revenue and especially net interest income. Market Making results were further impaired by the trading error that Thomas mentioned. Our financial statements 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. The U.S. dollar strengthened relative to all other major currencies during in the third quarter of 2014. As a result, the currency basket in which we keep our equity, which we call the GLOBAL, weakened against the U.S. dollar by an unusually large 4%. OCI is a component of the total GLOBAL effect and the rest is contained in trading gains. We estimate the total negative effect from the GLOBAL on our reported EPS for the quarter to be about $0.38 with $0.18 reported as OCI and $0.20 as trading loss. Overall, operating metrics for the latest quarter were generally up across all major product types versus the year ago quarter. Average overall daily trade volume was 1.13 million trades per day, up 14% from the third quarter of 2013. Electronic Brokerage metrics continue to show solid increases in the number of customer accounts and customer equity. Total and cleared customer DARTs were up…

Thank you. (Operator Instructions) Our first question comes from the line of Rich Repetto from Sandler O'Neill. Your line is open.

I guess the first question, Thomas, could you just give us a little bit more details on the $16 million trading loss, because that certainly weighed on the results for this quarter, the Market Making results.

Well, it was in an area of our software that is used from time-to-time and it’s kind of technical to really go into it in much detail. At this time the situation that it was applied to had a strange twist in it and the software misunderstood the situation and did their own thing.

So, could something like this -- is this like – it could ever happen again or do you think it's prevented now?

Well, this same thing will not happen again. But software, from time-to-time, errors can always happen in a software, as you know. Apple comes out with a -- or anybody comes out with a new chip, sooner or later you find the bug in the chip.

And then I know the market conditions -- you went through the metrics, can you just give us a little feel, like the world has changed at least in October today. Can you give us a little color on the market conditions in 4Q in October that you've ran into so far?

You see what I see.

So it would be very, very strong, vast contrast to 3Q?

Well, volumes are at much higher as we all see, right?

Right. And actual to implied is almost right around 1% or up in the 0.9%?

You mean as far as Market Making. I think we don’t really – we're not doing very well in Market Making.

Okay. I guess the last, well, let me follow on that then. Even with the metrics that we normally follow like the actual to implied, the volumes and the VIX, all showing significant improvement in October. You’re saying it’s not significantly better so far?

It’s not significantly better.

And would that be because of competition or...

That’s right. So when in the – in the past the markets would get very active. We were able to widen out our bid offer, our automated markets, right. This time when we try, the volume fell off. So we had to narrow it back down. So, I mean the results are somewhat better, but not significantly better.

And then I guess this would be my last thing. The idea that the regulatory restrictions and demands on capital, I guess at this point we’re really not seeing that. We’re not seeing any positive things from a competitive standpoint that we had sort of talked about in the past, that you would hope would come, impacting the other larger market makers?

I don’t know what you just said. But you keep talking about Market Making and our future is in Brokerage, not in Market Making. Look at focus on the Brokerage results, they are spectacular.

Okay. Well, then I’ll ask one more question. 2 billion, it appears you had -- you said 68% of the 3 billion is in excess is in brokerage. So do you…

We are not making any -- we are not doing any special dividends. We want to keep accumulating money because we think that we will have more and more opportunities in our Brokerage business to employ that capital.

Understood. You continue to have solid results in the Brokerage. Congrats, Thomas. And that’s all I had. Thank you.

Thank you. Our next question comes from the line of Niamh Alexander from KBW. Your line is now open. Niamh Alexander - Keefe, Bruyette & Woods: On the Brokerage businesses, which was a solid quarter and you talked about gaining momentum, the growth stats are really phenomenal in terms of growth of the clients and the margin and the activity. Where to from here? You’re talking about you’re seeing more growth coming in from referrals. But are there any specific markets -- you mentioned Asia, but give us a sense of maybe how far is it the markets you’ve penetrated versus where you could be and what kind of customers that you’re targeting there? And then that’s geographic. And maybe what can you share in terms of the types of clients that you see that you’re getting more growth from now? Is it the advisor community? Are you starting to see more momentum from the smaller institutional clients?

Well, our story is the same. It keeps growing and it keeps growing in all market segments. And yes, as far as the financial advisors are concerned, maybe we are now getting more interest from them than we used to in the past. And we have more -- the big prime brokers have tightened up on the requirements as far as who they take on as the hedge fund customers and what their minimum profit requirement is and the number of people who are getting rubbed off come to us. Niamh Alexander - Keefe, Bruyette & Woods: So what are you doing today? I mean, are you growing maybe more aggressively on the sales side to go out and target more business institutional clients or is it kind of this is the platform and they’ll come to us by word of mouth?

That’s basically it. This is the platform, but it’s a hell of a platform. Niamh Alexander - Keefe, Bruyette & Woods: All right, fair enough. And on to the succession planning, thank you for updating us on that. And I think you’d kind of signaled it recently. But can you help me understand like what are you going to do differently and what will Mr. Galik be doing differently? I mean leading the publicly traded company is kind of a whole different kind of a leadership role versus kind of running software into different departments. And then we, the public investors and then the analysts, don’t know Mr. Galik at all. So, what can you share here to kind of further inform us on how the transition will happen?

Well, the transition will happen over a long period of time. As you know, we have an executive group who has been together for many, many years. I am now 70, Milan is 48. He is I think one of -- maybe our youngest executive and also has the heaviest weight in the Group. And I mean that intellectually, not physically. And as long as I am healthy, I like what I do and I hope to stay around. But obviously over the next several years, I will become less and less and less capable. And I defer to the executive group and I defer to Milan in many decisions already. So, you can’t expect any sudden drastic changes, but gradually he will take over more and more of my responsibilities. Niamh Alexander - Keefe, Bruyette & Woods: Okay, fair enough, Thomas. And then if I could just go back to the Market Maker, I know you kind of prefer to talk about the broker because it is a phenomenal growth story. But we’re seeing the -- excluding the translation and the translation is real, but excluding that, we’re seeing such a big drop off in the profits and the volatility picked up a little bit towards the end of the third quarter and the first two months are very challenging for everybody. But I guess we’re getting close to a point where are you happy with the breakeven business? Are you happy with maybe the next stage getting to losses in this business? Because it doesn’t sound like the competitive environment is reversing and that some people are just going to squeezed out of it because there seems to be others coming into it as well. So, where's your level of comfort while continuing to remain in this business? If it gets to a point where you break even for a few quarters, you’re generating losses for a few quarters, does it still pay you to stay in this business?

Well, to tell you frankly, I am sort of ambivalent about it. But I have to accept the fact that many of the things that makes us such an incredibly good platform for customers is come from our Market Maker know-how, not only as far as the trading itself, but the order routing software and the understanding of the order types and how the exchanges work and the speed of execution we have to keep up with as market makers so we’re able to give the same technology to our customers. I think that sets us apart. And as long as we stay in there trying to compete, we’re able to impart those advantages to our customers and I think it’s important. And as we get more and more institutional customers, it will become even more important. Niamh Alexander - Keefe, Bruyette & Woods: I mean I guess in theory you could have those capabilities within the Brokerage business anyway. So it sounds like you'd be even willing to tolerate losses as long as that Market Marker expertise informs the Brokerage?

Well, I don’t know what losses you’re referring to. Niamh Alexander - Keefe, Bruyette & Woods: You know, if it progresses – like, it’s been deteriorating, so if you get to a point where…

Deteriorating? It hasn't hit losses yet. Niamh Alexander - Keefe, Bruyette & Woods: Yes. So I guess my question is, if you get there, do you still feel like the Market Marker, the contribution from that business is enough to offset to the brokerage?

It’s not going to get there. Niamh Alexander - Keefe, Bruyette & Woods: I see. Okay, fair enough. Thanks, Thomas.

Thank you. Our next question comes from the line of Mac Sykes from Gabelli. Your line is now open. Mac Sykes - Gabelli & Company: I wanted to dig further into the prime brokerage opportunity. Just two questions here. First, what are the current prime brokerage competitive advantages? I know cost of execution is certainly prominent, but maybe some other details on that? And secondly, a lot of the big banks are discarding some of these clients for unprofitable or lower profitability due to capital reasons. I was just curious as to why if you took them on would there be a profitable advantage to you in terms of your business model?

Okay. Well, the first question was -- I wish people asked one question at a time. The first question was what advantages do we have other than superior execution. For example, the stock borrow capability, we are almost as good as anybody else as far as -- almost as good as the best prime brokers as far as availability to short stock is concerned. Our interest rates are very good not only in as far as margin loans, but also in stock loans. So our stock loan is very competitive with the Goldmans and Morgan Stanleys of the world. So these are the primary advantages. Also, I think that our Risk Navigator is very good for hedge funds. Our trader workstation itself has many capabilities that other trader workstations do not have. So I think that for traders, we have excellent software, institutional traders. Now your second has to do with why would we make money on the accounts that the large prime brokers cannot make money on, simply because we’re much more automated than the large prime brokers are. And so as you see that our 63% profit margin, that our profit margin is much higher than anybody else's. So that’s why we can make money on that. Mac Sykes - Gabelli & Company: And just, I am sorry, a quick follow-up, just on the emerging hedge fund landscape. Do you get a sense that there is a cyclical balance in the industry in terms of formation in new offerings or is it being fairly steady? Just sort of any color you’re seeing in terms of the industry?

I didn’t get, new offerings of what? Mac Sykes - Gabelli & Company: New launches of hedge funds.

I have heard some hedge funds that they’re launching, but I think that happens all the time. So I have no evidence that there are more new hedge funds now than there were a year ago or that there are more initiatives now than they were a year ago. But there certainly are some.

Thank you. Our next question comes from the line of Sean Brown from Teton Capital. Your line is open.

Congratulations on the continued broker performance. Just a few quick questions. First one is, for broker bad debt expense, what does that come in at for the quarter?

We’ll have details like that in the 10-Q. But it was not out of the ordinary from prior experiences.

Got it. So despite margin growth still very low, that’s very good to hear. Is there any color you can give on sort of credit quality or its aggressiveness in these loans in terms of the leveragability has gone up or down for you guys?

So I have two things to say about, that one is that we have always had a policy of automated liquidation. So, each customer account is evaluated every minute of the day and we see it within margin tolerance and we send the signals to the customers who are coming close to the limit. And if they don’t reduce their positions, then at the moment they hit the limit we close them up. Now obviously there are some situations where stocks, especially these Bio stocks, can move 60%, 70%, 80% and in some of those cases we do end up with losses. And I mean there is not a heck of a lot we can do about that. But they aren't large. So, we look at concentration and the second thing that I would like to point out is that we have instituted an exposure fee where we examine accounts that would lose large amounts of moneys as a function of market move and at certain levels we start to charging them an exposure fee. And the larger the eventual loss may be, the larger the charge is. And that on the one hand encourages people to cut down on such exposure and on the other hand it gives us some additional income.

And then my last question is around the growth of the sales force that you guys discussed on the last call. If you could give some sort of update on that?

Well, we have expanded -- we’ve always expanded -- we work on expanding our sales force. You see that we don’t see -- to tell you frankly, we don’t have a very good experience in looking at it. But we're certainly not giving up and we’re going to continue to do that.

So, sales and marketing may take other means besides just hiring sales people, it sounds like?

Right.

Thank you. Our next question comes from the line of Andrew Bond from Wells Fargo. Your line is open.

You spoke about this briefly in the prepared remarks, but was...

Sorry, can you speak up a little bit?

Sure. You guys spoke about this briefly in the prepared remarks, but I was wondering if you could give a little more color on what exactly was the large increase in interest income and interest expense and this is kind of a good run rate that you usually report?

Well, we have for years been working on software that optimizes our stock lending-borrowing business and we are scaling new heights in that business. And we were also helped this quarter by certain hard to borrow inventory that we were able to utilize. And so I do expect our interest income to continue to increase into the future, but this past quarter may have been a stronger than expected.

And just a quick follow-up on the GLOBAL. I was wondered if you guys ever thought about changing the composition of the GLOBAL based on changes in the global economic environment or there is just something in particular that would change your thinking of how the GLOBAL composition should be?

I think about it all the time, but I don’t think that it will change.

Thank you. (Operator Instructions) Rob Koehn with Ivy Lane Capital, your line is now open.

Hi, Thomas. Thanks for taking my call. Congrats on the great quarter. Can you talk a little bit about how you think about market share in the Brokerage business being your runway for growth going forward and who your competition is and kind of where this business -- where do you see the Brokerage business going in the next few years?

Well, if you really want to know my honest opinion, I think that in 10 years we could be the biggest broker in the world, and I am not kidding, because our technology is way out ahead. And we are going to work away at it and we are – all of our emphasis is on keeping, building the technology and sooner or later they will realize what we’ve got.

What do you think you can do to kind of help -- from a marketing perspective, you’ve put out some new commercials and from a marketing perspective, what can you do to kind of improve the brand recognition, the name recognition and that sort of thing?

We do more advertising, we do more articles, we do more television appearances not only in the United States, but around the world, in other countries, because some forget that part of our great attraction as a broker is that our customers are global and where they can trade it globally. So, it is important for us that we are trying to brand ourselves not only in the United States but all over the world.

And I think ultimately we’ve seen really amazing growth coming from Asia. Is there anything more you can offer on that in terms of Asian growth rates going forward and what you’ve been seeing in the last quarter in that regard?

Well, the exceptional growth in Asia has continued in the last quarter. It certainly has grown faster than any other area. Maybe in the last few weeks I’ve been noticing some stronger growth from South America where we were very underrepresented in terms of number of customers that suddenly it seems to be perking up from a very low base.

Interesting. And so you had been taking – they would be moving accounts from the big banks or where would you be taking share from?

Most of the South America customers are with Pershing.

Ladies and gentlemen, that concludes our Q&A session for today. I would like to turn the call back over to Ms. Deborah Belevan.

Thank you, everyone, for participating today. And just a reminder, this call will be available for replay on our website and we’ll also post the clean version of our transcript on our website tomorrow. Thanks again for your time and have a great evening.