Good day everyone and welcome to the Interactive Brokers first quarter 2015 earnings 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 Bill Cavagnaro, Investor Relations. Please go ahead.

Thank you, operator. Welcome, everyone. Hopefully by now you’ve seen our first quarter earnings release, which was released today after the market closed and which is also available on our website. Our speakers today are Thomas Peterffy, our Chairman and CEO and Paul Brody, our Group CFO. They’ll start the call with prepared remarks about the quarter and then we’ll take questions. Today's call may include forward-looking statements which represent the Company’s belief regarding future events and by the 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 the forward-looking statements. We ask that you refer to disclaimers in our press release and you should also review a description of risk factors contained in our financial reports filed with the SEC. Now I'd like to turn the call over to Thomas Peterffy.

Good afternoon everyone, thank you for joining our first quarter 2015 earnings call. The first quarter was an eventual period full of good and bad news. In January '15 at 4 AM New York Time the Swiss National Bank announced the immediate removal of their peg which was willing to sell unlimited amount of Swiss francs against the euro. In the following, seconds all size of our offers of Swiss francs against any of their currency were withdrawn from the market. On Tuesday were reestablished later with the currency fluctuating wildly 15% to 30% higher. We were in the unenviable position with brokers of tons of very large price moves usually find themselves in, of having customers on both sides of this event and having to pay the winners while being unable to collect all the losses from the losers. The bulk of our losing customer's positions were futures contracts listed on the CME and some in the cash markets. As we announced at that time we estimated our difficult to collect customer losses of around $120 million. This loss turns out to be closer to $121 million and that is the amount that we have written down for the quarter. We are vigorously pursuing our claims but sizeable collections if any will likely come a long time from now but at a high legal cost. Besides from the violent moves into Swiss franc other currencies also traded in very volatile market, but by the end of the quarter the dollar ended at historic highs against many of them. As you know, being a global company, we service customers all over the world, loans and money and execute settle and clear trades for the many different currencies. Throughout the day, we keep our assets and liabilities hedged to the global…

Thank you, Thomas and welcome everyone to the call, thanks for joining. As usual I’ll review the summary of results then give segment highlights before we take questions. Results of the first quarter were driven by an outstanding performance in brokerage tempered by the setback and the Swiss franc event and by significant headwinds from the currency movement. Core brokerage results benefited from higher commission revenue and especially net interest income and market making results were in line with the average quarter for 2014. As we've stated before financial statements includes the GAAP accounting presentation known as comprehensive income which 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 which is known as other comprehensive income or OCI and these are reported in the statement of comprehensive income. The U.S. dollar strengthened relative to all major currencies except the Swiss franc during the first quarter 2015. And 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 larger 3.8%. OCI is a component of the total global effect and the rest is contained in other income. We estimate the total negative effect from the global on our reported earnings per share for the quarter to be $0.36 with $0.02 reported as OCI and $0.34 as other income. In addition, we estimate the negative effect from the Swiss franc event on reported earnings per share for the quarter to be $0.19. Excluding the effects from both the global and the Swiss franc event diluted earnings per share for the quarter is estimated at $0.31. Before I begin on the operating results, I would like to provide some updates on our risk management efforts…

[Operator Instructions]. Our first question comes from the line of Chris Harris from Wells Fargo. Your question please.

So a few questions on the Scottrade announcement, how many accounts Thomas are we talking about now that are kind of part of this arrangements and you made a comment where you expect other brokers potentially to migrate over, wondering if you could maybe elaborate on that a little bit, are you talking about other e-brokers or you’re talking about different brokerage firms than that?

In the first quarter the Scottrade on-boarding was only 1,014 accounts. So the arrangement started in I think on the 1st of March and in the course of that months we on boarded 1,014 accounts but this thing is continuing. As far as our expectation, our expectation is that in the fullness of time we'll have -- there are being very, very few smaller brokerage firms that even include large electronic brokerage firms like Scottrade. Are there any other similar firms we are currently in conversation with, no. But I think that eventually there we will be and we are in conversations with many not so large smaller brokerage firms on the same idea.

I guess my follow up is on the Covestor transaction. I’m sure I might get this wrong so definitely please correct me, but from what I understand it sounds like Covestor charges 1.5% of management fee and that seems kind of high relative to other Robo advisors in the space. So wondering what is that Covestor does that specifically differentiated where they can potentially capture a higher fee, in addition the performance fees.

We have a higher caliber of managers and to the extent we do not -- it’s up to the manager how much he charges, I’m saying that is the top the 1.5% is the top that the manager is allowed to charge.

Okay.

It was coming, say okay, I charge a quarter of 1% and if you otherwise qualify we will take you on.

Understood, thanks guys.

Thank you. Our next question comes from the line of Rich Repetto from Sandler O'Neill, your question please?

I guess the first question is sort of clean up on the accounting and I guess it’s for Paul on the e-brokerage results. You made an adjustment to the revenue side as well. I am just trying to -- when you try to do the -- stripping out the FX and the loss, so I’m just trying to see how the -- what was the net revenue adjustment on the e-brokerage results?

So, that net impact is what we talked about the $121 million net loss and that was spread across actual somewhat higher customer losses and the fact that we took immediate action taking over positions and then liquidating them in as optimal the way as possible and we earned money back on that. And it ends up in two line items because the straight customer losses are on expense side. And then the liquidation gains end up in other income, but the net of the thing was $121 million.

And then on the other income, if you added back the FX -- if you took the full I think it was $187 added back that to other income, you’d come up with a very high number. Is that the proper adjustment that all the FX impact went through other income?

Yes, as adjusted; if we took the whole $187 impact, it would all go to other income. Yes.

So, if you did that then the $187 minus $132, so there was $55 million of other income absent the FX impact?

It could have been along those lines. In other words, the comparative quarter was $40 million but it wasn't far off from that.

And then I guess last and this is for Thomas I guess. So, a market maker, automated market maker just went public and the capital is much more limited capital. And I guess the question is how did you look at, if you did look at it Thomas, that model with limited capital when your market maker, I know it's coming down but still has I believe it's up and close to $2 billion $1.9 or $1.8 or whatever it is now?

If you call them a market maker, they are different market maker than we are, namely they go home flat. We on the other end carry positions. So, our turnover is basically -- our market marking turnover is really once every 5 days. Their turnover is a matter of hours. So, they end up buying stock, buying a specific stock all day long, they eventually turnaround and sell it even if their stock never ticks up; we wouldn't do that. So, we provide longer term liquidity than Virtu provides and we almost never sell into a falling market or buy into a rising market which is not what they do.

And can I sneak one more in? Did you disclose how much you paid for Covestor?

I’d rather not.

Thank you. Our next question comes from the line of Niamh Alexander from KBW, your question please?

The Scottrade deal, if I could just clarify, is it specifically options trades that their customers are going to be using IBKR or their advisors that they work with for the options overlay? So, just help me understand the potential there. If they’ve moved over 1,000 accounts, will those customers know their trading with IBKR or will they have the option to trade equities as well or is there primarily just only the options capability that they'll be using IBKR for?

So, it's sophisticated options traders' accounts that have been moved over to us completely. So, those accounts are with us and they are -- and they do everything in that account. What they needed was the ability to execute complex trades. And instead of building the system themselves, they rather chose us to do this for them. But since these accounts also need to have stock often and stock is often a part of the trade, so the entire account is with us. Now, its 1,000 accounts that came over so far but there are about another several thousand still in the queue. And also in the future, these kinds of accounts for sophisticated options traders will be opened with us when they come to Scottrade to open a new account.

So, do you pay Scottrade some kind of a referral fee or how does that work? Will the commissions be low; are you paying them some kind of commission for passing…

No, we are not paying them anything. They are paying us. So, say if you for the first 10,000 option contracts, if you come to us directly, we charge you $0.75 a contract. But if you trade over I think 100,000 contracts, we charge you $0.15 a contract. So, all the Scottrade accounts are looked at as though they were one account. So, they get the benefit of these volume tiers.

So, hold on, everything that comes over from Scottrade is kind of treated as maybe omnibus or is it like a group accounts, so it kind of that lower fee?

It's a fully disclosed account but for purposes of charging commission, we use them all as though there were an omnibus account.

Thank you for explaining on that. And then, Paul, if I could just quickly on the -- I guess I'm trying to extract the Swiss because that was such an unusual item. Is it possible to separate maybe the tax effect of that and versus kind of a normalized tax rate because we saw very low tax rates during the quarter? A – Paul Brody: Difficult in a short few sentences. But I think suffice it to say that the customer losses all occurred in our U.S. broker dealer Interactive Brokers LLC. Therefore, they would be subject to ultimately to U.S. rates and too anything complicated because they're not in foreign market.

And then last if I could just and going back to Thomas, again if I could on the ownership of the business, you’ve given us some good information there, the discloser on the non-controlling versus the public and just more precise information. I guess the stock is back over to deal price such as a long time ago, just wanted to get an update on your thoughts owning the stock here and maybe starting to sell down some of your shares in the future and then may be exit capital.

I think I said in the last earnings call that I am thinking about selling more amounts like 1 million shares for each dollar up. So by the time, the stock is up for 350 bucks, I may be out.

Have you set up a 10b-5 or something like that?

Not yet.

But that’s the plan?

Haven’t reached that level yet.

And I guess the potential interest to sell the shares, but what about the capital in the business, still want to keep all this capital in the business?

That’s right.

[Operator Instructions]. Our next question comes from the line of Rob Koehn of Ivy Lane Capital. Your question please.

So, I’m going through the math on brokerage earnings and the trajectory and trying to skip out of these non-recurring items. At the current growth rate, it looks like mathematically you could get to a quarter of a billion dollars of quarterly pre-tax earnings in the broker sometime in 2016 which should be like $1 billion annualized. Is that a reasonable kind of conclusion looking at the growth track?

It’s reasonable if you look at the end of 2016, yes.

Do you really think that if you look at the -- it's reasonable if you look at the…

Last quarter of 2015.

Yes, last quarter right. That’s kind of what I am wondering, late Q3 and Q4 of 2016. And then going back to the Scottrade business, how does that come about? To the extent you are able to discuss, do you have a team of people that goes out and calls on other brokers, introducing broker business asking you and say hey, can we talk about this?

Well, we have a team of sales people around the globe, roughly 35 of them. And their task is to approach other brokers, hedge funds and investment advisors and prop traders. So, these are the four classes of clientele that we are marketing to. And we also -- there is more and more publicity about the various things we do, they often receive calls. So, the conversation with one of our sales folks and Scottrade has been going on for I think about a year and half before actually decided on doing this.

There was an article actually in January Investors Business Daily that said they have over 3 million total accounts. And I'm sure a lot of those are small but it seems like the active trader group is an important group to them and probably some of their most profitable customers. So, it's a little surprising. I mean what’s the math from their perspective do you think?

Well, you see that the next idea that we’re thinking about trying to get them into is offering futures because they did not offer future trading right now. As we transfer all the -- after we have transferred all the options accounts, maybe we will think about talking to them about futures and currencies. The 3 million accounts mostly are small stock traders and they are just as well being where they are.

And then I guess last question on the new account growth, the investor presentation hasn’t been updated in a couple of months. So, what classifications have you seen and that February and March were both records for the company in terms of new account growth. So, is that coming from which groups out of the I guess it’s page 16 of the presentation, introducing brokerage hedge funds, prop trading, financial advisors and individual investors?

I don’t think the mix has changed drastically, so, it’s about the same mix going forward.

I guess maybe last question in a couple of years or few years, what -- is it possible that a lot of these other kind of smaller prime brokers and electronic brokers just become front end sales organizations and white label?

Our task is to make our platform good enough for them to say that to themselves that we can offer better service, if we offer Interactive Brokers platform and we just do the hand holding. So that’s what we like to -- that’s where you’d like to get.

Is that because the technology is such a high proportion of their cost structure?

And it’s difficult to maintain and it's not only the technology, also the back office and the relations. They are getting more and more complex. So, I don’t think that smaller office can afford the expense of keeping that up to date.

Thank you. Our next question comes from the line of Patrick O’Brian from Teton Capital. Your question please? Patrick O’Brian: I guess I may be asking you to repeat yourself slightly, and it does look like the account growth accelerated in February and March. Could you just talk about what the drivers for that were?

It's better technology, better sales, we have better known. Two years ago whenever we approached a potential client, they said Interactive Brokers who is that, that they never heard of them. Now that’s no longer the case. The longer we have this, the better it will go I think. Patrick O’Brian: You wouldn’t call out Asia or more introducing brokers or anything else particularly?

No.

Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to management for any further remarks.

Thank you, everyone for participating today. Just as reminder, this call will be available for replay on our website. We will be posting a clean version of our transcript on our website tomorrow. Thanks again for your time.

Thank you, ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.