Interactive Brokers takes equity stake in OneChicago

Source: Interactive Brokers

OneChicago, LLC, the all-electronic security futures exchange offering futures on more than 200 individual stocks, and Interactive Brokers Group LLC, a premier electronic broker dealer, today announced a significant equity investment in the Exchange that will drive further growth in OneChicago's products.

In the transaction, Interactive Brokers joins Chicago Board Options Exchange Incorporated® (CBOE®), Chicago Mercantile Exchange Inc. (CME®) and the Chicago Board of Trade (CBOT®) as a major investor in OneChicago. Interactive Brokers will combine its key strengths, including broad access to customers, market making expertise and advanced trading technology with those of CBOE, CME and CBOT to accelerate the market's growing interest in security futures.

"We are pleased to be partnering with one of the most highly regarded, successful and innovative firms in the financial industry," said OneChicago President Marty Doyle. "This investment by Interactive Brokers reflects positively on our recent success and will enable us to build on our momentum.

"It also represents our mutual confidence in the growth potential of security futures. OneChicago's volume grew 188% last year. Volume through February is up more than 400% over the same period in 2005, and open interest reached a record 1.8 million contracts last month."

Thomas Peterffy, Chairman of Interactive Brokers, said, "OneChicago has a tremendous growth opportunity in the industry. Interactive Brokers' professional customers continue to have increased sensitivity to the cost of financing their positions, and they are realizing that stock futures are the low cost alternative to margin loans or short rebates. Interactive Brokers has the lowest margin rates in the industry, but by using stock futures on OneChicago, our customers can do even better. To that end, we are ready to work with our Chicago exchange partners to broaden the list of products, order types and facilities offered by OneChicago."

CBOE Chairman Bill Brodsky stated, "We are delighted that Interactive Brokers is joining us as a strategic partner in OneChicago. We believe Interactive Brokers' expertise in technology, marketing, education, product distribution and continuing market-making support at OneChicago will accelerate the continued growth of security futures. CBOE's decades-long relationship with Thomas Peterffy and his firm gives us great confidence in the future of this strategic alliance."

"The strategic and capital commitment from Interactive Brokers, combined with average daily volumes of about 30,000 and the strong potential for achieving regulatory approval of risk-based margining for security futures products later this year, strengthens both the strategic position and financial condition of OneChicago," said CME Chief Executive Officer Craig Donohue. "We look forward to working with Tom Peterffy and our colleagues at Interactive Brokers to promote new uses and new ways to trade security futures."

CBOT's President and CEO Bernie Dan said, "This is a monumental opportunity for OneChicago and its market participants and is reflective of the growing interest in U.S. single stock futures as an asset class. This new relationship with Interactive Brokers will fortify OneChicago's liquidity, broaden the customer base and enhance the education of how security futures can be used to meet portfolio management needs."

Mesirow Financial represented OneChicago in the transaction. Financial details of the agreement were not disclosed.

OneChicago lists 208 futures on single stocks, including futures on the DIAMONDS® Trust, as well as four OneChicago Select Indexes, a series of customer-designed narrow-based security index futures. Each contract is equivalent to 100 shares of the underlying stock or Exchange Traded Fund. Total volume in 2005 was 5.5 million contracts. OneChicago rules permit block and EFP trading and a substantial percentage of the Exchange's volume results from such trades.

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