Interactive Brokers Group Inc (IBKR) 2022 Q3 法說會逐字稿

Hello. Thank you for standing by, and welcome to the Interactive Brokers Group Third Quarter Earnings Call.

(Operator Instructions)

Please be advised that today's conference may be recorded. I would now like to hand the conference over to your speaker today, Nancy Stuebe, Director of Investor Relations. Please go ahead. Thank you.

Thank you. Good afternoon, and thank you for joining us for our third quarter 2022 earnings conference call. Once again, Thomas is on the call, but asked me to present his comments on the business. Also joining us today are Milan Galik, our CEO; and Paul Brody, our CFO.

After prepared remarks, we will have a Q&A. As a reminder, today's call may include forward-looking statements, which represent the company's belief regarding future events, which by their nature are not certain and are outside of the company's control. Our actual results and financial condition may differ, possibly materially, from what is 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 risk factors contained in our financial reports filed with the SEC.

This quarter showed the strength of the Interactive Brokers business model, automating substantial parts of the brokerage business in order to keep costs low and global product offerings and opportunities high even as unfavorable market conditions continued to extend into this quarter and beyond. While we were able to maintain our commission income just barely, it is understandable that in these mostly one-way markets, only very few retail clients feel any urge to open new brokerage accounts.

This is a large and unfavorable implication for the growth of our business and we expect this to continue into the early part of next year. In spite of that, by this time next year, we expect that our accounts will be about 30% higher than today due to some new larger introducing broker relationships we have mentioned earlier. Preparing to onboard these accounts is a very slow process. It is unlikely that any sign of these will show before the spring.

Account number growth comes on the retail end from direct and introducing broker customers. Much of our commission income comes from hedge funds and proprietary trading groups. An average hedge fund account generates 67x as much revenue as an average individual account. And for prop trading accounts, this multiplier is around 10. Hedge funds and proprietary trading accounts are less affected by the direction of the markets and are, therefore, our emphasis has turned more in their direction lately.

As most recent Kraken statistics illustrate, for the past 3 consecutive years, the number of hedge funds on our platform has grown faster than any other leading bank or broker. IBKR is now the sixth largest provider of prime brokerage services by number of funds, and we feel fairly confident about moving to be #4 in the current year, right behind Morgan Stanley, Goldman and JPMorgan.

This growth in hedge fund accounts is happening even though we still do not provide some of the products hedge funds use, like non-exchange listed products outside of cash ForEx or firsthand research and organization of meetings and introductions to corporate CEOs or CFOs. Our reversion toward non-exchange listed products is due to our fear of taking on counterparty credit risk that often turns out to be the source for existential difficulties in the business. But these products also create opportunities for outsized trading gains as they are usually exchange-listed options dressed in different cloth, i.e., different custom-made terms that they are always ultimately hedged by exchange-listed products.

Since their terms are unique, they cannot be directly compared to anything to ensure reasonable pricing. While we are not going to change our stance with respect to OTC products, we do not feel the same way about other products like research and corporate introductions. And as we continue to grow in this business, that is something we may consider in the future.

The point is that ever since we started in the brokerage business, we said that we will build our platform for the most demanding investors and we automate it so that we can easily make it available for anyone who may care to use it. We were often told that, that was not a realistic approach. You must choose your target audience. Relying on our growing hedge fund customer base, we are now able to turn this logic around and market the platform to the more sophisticated individual investors by saying to them to get better results, get a better platform. The best informed investors choose Interactive Brokers. We are planning to use this as our tagline in our branding efforts.

Another welcome development during the quarter was the growth of our bond platform. For many years, this platform has been growing very slowly, recording about 1,000 trades a day. Suddenly, with more active bond market volumes, this now reaches 3,000 transactions a day. Given the relevance of bonds, our bonds marketplace has a search tool where you can scan by maturity date, yield to worst and duration to analyze and compare issuers and save your scan to run again at any time. Many of our customers realize that they can achieve better execution prices by sending us limit orders between the prevailing bids and offers. We go out to numerous other platforms to show these orders, but if no trade occurs, and we get an offsetting order, we match the 2.

We also have order types that instruct us to keep the order internally and wait for a match. This way, the client is not driving the quote in the market against yourself. Despite the slower growth in accounts, we welcomed our 2 millionth customer in September, less than 2 years after adding our 1 millionth customer and ended the quarter with a record 2,012,000 accounts, an increase of 31% from last year.

We saw account growth in all client segments in all geographic regions, with particular strength, 43% and 31% in Europe and Asia, which together represent the majority of our accounts. Account growth once again occurred in all 5 of the client types that we service. Individual account growth was fastest at 38% and followed by proprietary traders at 28%, introducing brokers at 20%, financial advisers at 14% and hedge funds at 13%.

Commission per DART continues to rise as our clients continue to be active in options and especially in futures, which carry a higher commission, although the bulk of that goes to exchange fees. In equities, higher commission per DART was driven by a mix with fewer penny stock orders where we limit our commissions not to exceed 1% of trade value. Higher futures commissions include very high exchange and regulatory fees, which in part explain our higher execution and clearing direct expense.

An advantage of providing many product types to worldwide customers is the ability to capture opportunities when one product or another becomes active. This quarter, while stock share volumes were below those of last year, options and particularly futures volumes remain strong.

We are always looking to find opportunities to grow our business. We have been letting investors know that Interactive Brokers pays its clients 2.58% on their cash balances. And if the Federal Reserve raises rates again by 75 basis points, then their rate will also rise by 75 basis points to 3.33%. We recently introduced our options wizard, a tool where you can enter your outlook about the future of the underlying price movement and the wizard will provide some standard strategies that can be filtered by aggressiveness or by probability of profit or you can set up your own strategy.

Continuing high inflation is a catalyst that convinces people that holding on to their money as cash will not earn them any return. Investing in securities worldwide will be necessary for a chance to earn a positive rate of return, which is why we have focused on investor educational materials like our traders academy courses, our webinars, podcasts and blogs to inform our customers and make our platform the platform of choice for successful investors, the $2 million we have and the millions more we hope to have.

With that, I will turn the call over to our CFO, Paul Brody, who will go through the numbers for the quarter. Paul?

Thank you, Nancy, and thanks, everyone, as usual, for joining the call. We'll review the third quarter operating results, and then we'll open it up for questions. Starting with our revenue items on Page 3 of the release. We recorded another strong quarter with record net revenues and pretax income on an adjusted basis. With customer account growth of 31% year-over-year, we continued to expand our potential for both commission and interest revenues in the future. Commissions were strong, reaching $320 million despite weak equity markets worldwide. Futures volume outpaced the third quarter of 2021. Options volume was roughly unchanged, and while stock share volumes declined from the last year's quarter, the drop in notional dollar value of stock trades was generally in line with the drop in regional equity indices around the world.

Net interest income of $473 million reflected higher margin loan interest despite lower balances, thanks to increases in benchmark rates and higher interest earned on our segregated cash portfolio as U.S. rates have moved from an average effective rate of 9 basis points last year to 218 basis points in this year's quarter. These gains were partially offset by higher interest we paid on customer credit balances, as we pass through rate hikes above 50 basis points to our customers on their qualified front.

Other fees and services generated $45 million with biggest contributors being market data fees of $19 million unchanged and options exchange liquidity payments of $9 million, down 18% from the prior year.

Risk exposure fee revenues was worth $5 million, down 38% in the current risk-off environment. Other income includes the gains and losses on our investments, our currency diversification strategy and principal transactions. Note that many of these noncore items are excluded in our adjusted earnings. And without these excluded items, other income was $9 million for the quarter.

Turning to expenses. Execution, clearing and distribution costs rose 41% from last year, led by lower liquidity rebates, higher futures volumes, which carry higher fees and an increase in the SEC fee rate on U.S. stocks and options. As a percent of commission revenues, execution and clearing costs, which are driven by a combination of trading volume, exchange rebates and changing fee schedules or 21% this quarter versus 18% in the second quarter. Note that market data expense, a pass-through item, is included in execution, clearing and distribution fees, while the corresponding market data revenue is reported in other fees and services rather than in commission.

So to align the volume-driven expenses with commissions, we look at pure execution and clearing costs, excluding market data expense. Compensation and benefits expense rose $14 million or 14% over the prior year, in line with hiring. While up in dollar terms for the quarter, comp and benefits expense fell to 13% of our adjusted net revenues, somewhat below its historical level. Our headcount at quarter end was 2,752. G&A expenses were down $7 million or 16% versus last year's third quarter on lower legal expenses from a higher than typical number last year. Our adjusted pretax margin was a record 68%. Automation remains our key means maintaining high margins as well as continued expense control while we hire talented people and invest in the future of our business.

Income taxes of $40 million reflects the sum of the public company's $23 million and the operating company's $17 million.

Moving to our balance sheet on Page 5 of the release, our total assets were $115 billion at the end of the quarter with growth over the last year, driven by increases in our segregated cash and securities, partially offset by a reduction in customer margin loans. We maintain a balance sheet aimed at supporting our growing business and providing ample financial resources during volatile markets. We have no long-term debt.

In our operating data on Pages 6 and 7. Our contract volumes for all customers were strong, about even with the strong prior year quarter in options and the third highest ever in futures, up 37%. Stock share volume was down significantly versus last year's active third quarter, and the drop-off is largely attributable to trading in pink sheet and other very low price stock. Of note, the notional dollar value of shares traded dropped less than a number of shares traded, reflecting the shift away from low-priced stocks, which tends to raise the average commission per order.

On Page 7, you can see that our account growth remains robust with nearly 90,000 net account adds in the quarter and total accounts exceeding $2 million, up 31% over the prior year. Total customer DARTs were 1.9 million trades per day, down 15% from the strong prior year quarter. Our cleared IBKR Pro customers paid an average of $2.96 commissioned per cleared commissionable order, up 20% from the last year as our clients volume mix included higher preorder contributions from stocks and options.

Page 8 presents our net interest margin numbers. Total GAAP net interest income was $473 million for the quarter, up 73% in the year ago quarter, reflecting stronger margin loan and segregated cash interest, partially offset by higher interest expense on customer cash balances. The Federal Reserve raised interest rates twice in the quarter by 75 basis points in late July, by a further 75 points in late September with about a week left in the quarter. The latter raised had a minor positive impact in a 12-week quarter, but will have a fuller positive impact in the third quarter.

Many other central banks also raised rates this quarter. This group includes the U.K., Canada, Australia and Hong Kong as well as the Eurozone and Switzerland, which are now out of negative rate territory for the first time since 2014. Margin loan interest was up 125% to $317 million, despite average margin loan balances that were down 9% from last year's third quarter. Higher rates in the U.S. and internationally continue to bode well for our margin interest income. Net interest on segregated cash was $228 million, primarily due to federal reserve rate hikes, but also to our managing to short duration on invested funds, which has allowed us to pick up benchmark rate increases quickly.

At September 30, our U.S. portfolio duration was 42 days, so the investments roll over into new higher rates with fairly short lag time. Securities lending net interest was $114 million, down 7% from the year ago quarter. It's worth noting that while securities lending opportunities maintained a relatively strong pace, it is also the case that as benchmark rates rise, a greater portion of the revenue generated by securities lending is reflected in interest on segregated cash because the cash collateral received is invested as segregated funds. We estimate this impact to be about $24 million for the quarter versus the year ago quarter.

Interest on customer credit balances or the interest we pay our customers grew as higher rates in many currencies led to our paying interest on qualifying accounts as we pass through rate increases. We paid $248 million to our customers on these balances in the third quarter.

Now for our estimates of the impact of increases in rates, given market expectations of more rates -- rate hikes to come, we estimate the effects of increases in the Fed funds rate to produce an additional annual net interest income as follows: at 25 basis points, an increase of $55 million; at 50 basis points, an increase of $110 million; at 75 basis points, an increase of $166 million; and at 100 basis points, an increase of $221 million. Note that our starting point for these estimates is September 30, with the Fed funds effective rate at 3.08% and based on balances at that date.

These estimates don't take into account any change in how we may adjust our investment strategy to take advantage of newly higher rates or any change in our assets. About 20% of our customer segregated cash is not in U.S. dollars. So estimates that U.S. rate change impact excludes those currencies.

We estimate a 25 basis point increase in all the relevant non-USD benchmark rates, would produce an additional annual net interest income of $14 million and rising to about $56 million at a 100 basis point rate increase.

In conclusion, the company generated another solid performance in the third quarter, reflecting our continued ability to grow our customer base, deliver on our core services to customers while continuously adding new features and products all at a low cost and managing the business effectively with strong expense control.

And with that, we will open it up for questions.

(Operator Instructions) Our first question comes from Richard Repetto with Piper Sandler.

I guess the question -- first question is on account growth. You -- Thomas, you had sort of warned that you're starting to feel or -- a slowdown, but if you look at the quarter, you had a couple of months at about 20,000 -- 25,000 then on August 1, -- excuse me, 38,000. So can you give us what you feel like is a run rate going forward? And what happened? Why August, it seemed like it was 35% to 50% higher than the other months. And just a little bit of color on, I guess, the delay, I guess, just administrative delays with these introducing brokers.

So look, the account growth is very lumpy. Sometimes, we get introducing brokers or larger RIAs who bunch up and all come to us in the same months. And other months, we have much fewer of those. But you generally understand that in these markets, people are not adventurous to open account with -- new account in the brokerage firms as there are enough markets, right? So that's -- I think that's pretty clear to everybody. And so -- and things I expect the market to continue to go down for a while, I expect the new account openings to become even slower going forward. But as we have said, indicated before that we have 2 large introducing broker accounts that we are going to onboard probably early next year. And to tell you, frankly, I am -- maybe Milan could talk a little bit about all the complexities are why they take such a long time.

Sure. So there are really 2 different things going on. One of them has to do with the fact that we are dealing with larger organizations and to just to arrive in an agreement that we can both live with, takes a while. They are -- there is an army of lawyers involved on their end. There is a smaller group of lawyers involved on our end, and we have to hammer out the contract in a way that is acceptable to both of us, what the liabilities are, what the economics are, et cetera, et cetera. So that's on the legal side.

On the technology side, 2 things have to happen. First, the eye broker has to choose the way they're going to interact with us, how they're going to integrate? Are the clients going to use our platform? Or is the other going to provide theirs? Is there going to be fixed connectivity involved? How are the accounts going to be opened? All these details first have to be figured out, they have to choose the right solution for them. And then the integration work starts. We have to do some software customization for them. They have to do a lot of interfacing work on their end. And this typically takes a while.

Got it. It is very helpful, Milan and Thomas. And I guess a follow-up question for Paul would be on this stock loan, like I'm trying to understand what you meant, the $24 million that was paid on segregated cash, is that really a subtraction of what would be revenue allocated to securities lending? Is that what you're trying to communicate?

It's just -- it's purely a matter of which line item the income is reported on. So as the rates go up, when you lend stock and take in cash collateral, on behalf of the customer, that cash gets put into segregated bank accounts and treasury and so forth. And so that simply gets the interest earned is reported as segregated cash interest. And as the rates go up, more interest goes there and a stable amount of securities lending revenue stays in securities lending.

Okay. So it actually would be -- if you just had to net out the revenue from securities lending, what it would be paid in interest on surrogate cash. It would probably be -- it's not up $114 million compared to -- I think it was pretty flat year-over-year. It would be down. Is that what you said? I mean it makes some difference. Can you...

Yes. Think of it this way. When you lend stock and take in cash collateral, there's a base interest rate, a benchmark rate to call it federal funds rate, right? There's a fee for borrowing the stock that the borrower pays to the lender, we are the lender. The fee is always reflected as securities lending. In the U.S., however, the fee is embedded into an all-in rate that includes interest paid on the cash collateral and the fee charge to the lender. But only the fees should show up in securities lending, it's an accounting convention, if you will. But in reality, because the cash side of the transaction must go into segregated cash, as the rates go up, the interest income in a sense, migrate from the securities lending reporting line to the segregated cash reporting line.

Got it. Understood. It's really -- your net interest income definitely showed the sensitivities that you've put out. So it's not really material, I guess. Thank you.

(Operator Instructions)

Our next question comes from Craig Siegenthaler with Bank of America.

Congratulations on eclipsing 2 million accounts. So for the 30% account growth target over the next 12 months, roughly, how much of that do you see coming from the 3 large introducing broker wins? Are they driving 75% of that?

Thank you. 65% to 75%, yes.

Got it. And then just to confirm, I think Nancy said no account inflows from those before the spring, so April. So I'm guessing we'll see none of the...

We're not sure about April. I mean maybe -- so at the beginning, maybe that will open some accounts for the employees themselves to -- and then one of these banks is going to bring up accounts, country by country, and we don't exactly know in what order that is going to take place. So what I would say is the earlier maybe February and the latest maybe April.

(Operator Instructions)

Our next question comes from Ben Budish with Barclays.

I wanted to kind of follow up on the introducing broker topic, but maybe instead of talking about kind of the pipeline of new accounts. Could you perhaps talk a little bit about the pipeline of introducing brokers. So you mentioned that retail investors may be reluctant to open a new account in this environment, but are you finding the same sort of sentiment from potential new partners, banks and other financial institutions that may be, a year from now, you may be telling us about the next wave of introducing progress. So I guess the question is how is the sentiment with that customer group?

So obviously, the sentiment is probably very similar across different brokers. And then we are talking about onboarding large introducing brokers, we're basically talking about the existing accounts.

Okay. Makes sense. Maybe one more -- one follow-up, if I could. Could you maybe talk a little bit about the hedge fund business since that seems to be where you're going to be a little bit more focused kind of in the near term? Maybe just kind of help us understand a little bit the cost structure. I think you gave some helpful stats around the average revenue for your hedge fund and market banking clients. But is it in terms of the kind of net margin there? Is it more costly to serve? Or is it kind of a higher margin group just given the individual...

I was not talking about the cost. I was talking about revenues. So I took the revenues and coming from hedge funds and took the revenues coming from individual customers, it's true that 67 individual accounts generate as much revenue as an average hedge fund account in our case, right? And in our case, among the individual accounts, they are small accounts and large accounts and along the hedge funds accounts, there are also smaller accounts and large accounts. But so I'm just working with the averages here.

(Operator Instructions)

Our next question comes from Daniel Fannon with Jefferies.

We can't hear you.

Daniel Fannon, if your line is on mute, please unmute. Our next question comes from Craig Siegenthaler with Bank of America.

Great. I had a follow-up on the hedge fund prime commentary that you gave earlier in the call. Are you starting to win business more from larger hedge funds or is the growth mostly from kind of smaller funds where I believe most of your business sit? And also where are you stealing this share from within the prime industry. And also, can you just comment on -- in terms of how this is going to drive earnings growth longer term, just given the size differential?

So yes, we have almost all smaller hedge funds come to us now and as far as we believe. And larger hedge funds are beginning to look at us and they usually work with 2, 3, maybe even 4 different custodians or at least executing brokers. And these larger funds are talking to us more seriously and are giving us a little bit of their business. But we're very happy to take a little bit because we figured that as they begin to use us, they will see the advantages that we can offer relative to the custodian -- other custodians they are using.

Thomas, and it sounds like since you're very focused on growing this business, I believe that they're somewhat sensitive to the amount of capital you have. So maybe can you talk about when you'll feel more comfortable? No, probably not buying back stock just given the stock liquidity, but maybe raising the dividend or returning more capital to shareholders just because I believe a lot of those hedge funds are sensitive to how much capital you have.

I completely agree with you, and we are not going to increase the dividend. We are just going to grow the capital.

Our next question comes from Ryan Bailey with Goldman Sachs.

Paul, in the right guidance for a few quarters now, you've mentioned that the guide is based on no change in strategy to take advantage of higher rates. I was wondering, is there a consideration to change some of the strategy around rate sensitivity?

We don't have any immediate plans. We have stayed short term because of the uncertainty in the market. And certainly, with rates going up, we're able to capture that the upswing much quicker than had we been invested further out. If there wasn't a yield curve for a long time, it's sort of developing, but it's still only developing out through a year. So I think we're unlikely to make any meaningful changes there. Thomas, if you'd like to add anything to that, please feel free.

Yes, I'd like to point out that we pay our customer interest on the idle cash of our customers more than anybody else that we know. And so we have -- we basically have that 50 basis point spread that we earn on customers' idle cash. So that puts us into a position that -- where we have to be extremely careful about how we invest this cash because when interest rates go up, we immediately raise the amount that we pay to our customers. So if we were to invest at, say, 2 year forward -- 2 years forward and suddenly interest rates went up, we would immediately have to increase the cash we pay out, but the amounts we taking would not increase immediately, right? So we cannot put ourselves into a position where we are very much mismatched, right?

Understood. Maybe sort of taking that last point. I apologize if I missed it, but can you give us an update on, where the sort of non-rate-sensitive cash sits today, what that balance looks like? And as we get through some of these introducing brokers, does that have any impact on what those cash balances could look like?

I don't know if any of you understand, please answer it, I do not.

So Ryan, you're asking about the fully sensitive balances?

The other side of it. So the balances were, I think it's below $10,000 in cash per account that you're not paying rates on.

Right. So that's certainly the bulk of it, and there are a few other categories there totaling about $20 billion out of our total, which allows us the earn rate increases. And on the rest, we are locked into our spreads. So the net interest income increases will come from growing balances, but not from growing spreads.

Our next question comes from Chris Allen with Citi.

I guess just following up a little bit on the introducing broker, the ones that are coming over next year. Are these going to be fully disclosed or omnibus, I'm assuming fully disclosed, given the account impact?

Yes. So they are going to be bringing us individual accounts. So it's going to be a structure with a master account at the top and lots of subaccounts underneath. As to fully disclosed, it's not going to be a fully disclosed relationship. So the end client will not know unless they try to research it who the ultimate provider of the services is. They will have the contract with their introducing broker. But to answer your question most directly, it's going to be lots of accounts, not an omnibus.

Understood. And just on the outlook for hedge funds moving up to number 4. Is that some analysis that you've done? Or is this based on kind of industry stats. Just trying to understand, just to dig a little deeper, it seems to be a real nice opportunity moving forward.

Yes, it's industry stats, and we see our -- the rate at which we're getting in new funds. We're doing very well, getting in new funds currently.

Our next question comes from Daniel Fannon with Jefferies.

Great. So a question just on expenses came in a little bit better in this quarter and thinking about the fourth quarter and into next year, just the progression of spend, if there's -- as you bring on some of these larger introducing brokers, should we anticipate some additional expenses for that process and/or any change in priority as you think about spend into next year that you're contemplating at this point?

So no, these introducing brokers are not -- can you hear me?

Yes.

These introducing brokers are not expecting to lag at a terrible equity -- I'm sorry. So I will try to remove my headphone so that I do not hear myself. What I was going to say is that we do not expect to hire a large number of people to service these eye brokers. We are going to use the technology that we have been developing over the past few decades to the extent that we have a very large number of subaccounts that we have to service. The number of customer service representatives will have to increase a little bit, but we expect the eye brokers to provide the customer service themselves.

On the compliance side, the situation is a little different because we are responsible for doing the surveillance of their money moves as well as the trading activity. So there is going to be some number of surveillance analysts that we will have to hire. But that number of analysts would be required, whether we grow the number of accounts as direct accounts of our clients or eye broker clients.

And as far as expenses, I would like to add the fact that you are aware of the high rate of inflation and we have to increase our compensation [adherence] in line with inflation rates.

Great. And then just in terms of broadly account growth in the regions, you mentioned the subsegments of your customer base. Is this from a geographic perspective, are there areas that you are having greater success? Or you're seeing more pullback, understanding that broadly, as you said earlier, the sentiment isn't great for new account growth.

So yes, I mean Asia fell off the cliffs about a year ago. And Europe joined soon after Russia went into the Ukraine. So yes, the slowdown is -- and as we go along, the European slowdown is becoming more and more apparent. And so in the United States, in the Americas, in general, the slowdown is less apparent than in Europe and Asia.

Our next question comes from Kyle Voigt with KBW.

Maybe just one for Paul. And sorry if this was addressed earlier, I dropped off. The other net interest income increased to $65 million in the quarter. Was just the majority of that increase driven by higher interest on corporate cash balances. I know there's some other items in there, too, including the FDIC suite. So I just wanted to get some clarity there.

Yes, that's right, Kyle. It's primarily the corporate cash, which as you know, with rates near 0, it was earning near 0. So therefore, we're now earning commensurate with the current benchmarks.

Got it. And then the -- is there just any update you can give us on the percentage of your balances or is it just absolute level of the cash balances that are -- or the credit balances that are non-rate sensitive or, I guess, noninterest-bearing?

Yes. Actually, we did mention that before. It's about $20 billion out of the total.

Okay. Perfect.

That's a connotation of fully rate-sensitive and partially rate-sensitive.

Perfect. And then I just wanted to ask a clarification question regarding the introducing broker onboardings. I think last quarter, you mentioned several relationships that you expect to begin onboarding and Thomas, I think you mentioned 2 large IB specifically. I just wanted to clarify, was there any potential introducing broker clients that decided not to move forward with the relationship? Or is this just purely a timing issue and the pipeline hasn't changed at all in terms of number of clients?

There is no change in terms of number of clients.

Our next question comes from Richard Repetto with Piper Sandler.

Yes. Thomas, I was just going to quickly follow up. I know you're very conservative on the account growth. And if -- I just did the math and if the introducing brokers of 65% to 75% of your goal of 30% account growth overall. It just puts your -- I don't know what you would call it, your organic account growth at numbers that's certainly lower than what we've seen in the -- since the pandemic started. And I guess the question is, is that how you see the sort of a near-term year to next year or 2 account growth slowing back to 2019 levels and introducing...

Yes. And I think that because, as I said, I expect the market not to be very buoyant. So I think that individual clients are going to dry up more and more and more as we go into next year.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Nancy Stuebe for any further remarks.

Thank you, everyone, for participating today. As a reminder, this call will be available for replay on our website, and we will also be posting a clean version of our transcript on the site tomorrow. Thank you again, and we will talk to you next quarter end.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.