Interactive Brokers

Interactive Brokers benefits from multiple reinforcing moats. Cost advantage: decades of proprietary automation reduce unit costs in clearing, margining, routing and risk control, enabling very low commissions and margin rates while still delivering 75% to 79% pre‑tax margins in recent quarters.

Scale and efficient scale: global market access across 160+ venues, 36 countries and 28 currencies is hard to replicate due to technology, regulatory licenses and risk systems. Switching costs: sophisticated users integrate TWS/Desktop, APIs, advisor tools and portfolio margin into workflows, raising migration friction.

Intangibles: a reputation among pros for best execution and breadth, reinforced by transparent monthly metric disclosures and execution statistics. Network effects are modest but present via introducing brokers, RIAs and small funds that gather clients onto the platform.

Risks to the moat include large incumbents subsidizing pricing, or new technologies eroding execution edges, but IBKR’s automation and pace of product rollouts continue to deepen its advantages.