Good day, everyone. And welcome to the Interactive Brokers Second Quarter 2012 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 Ms. Deborah Liston, Director of Investor Relations. Please go ahead.

Welcome everyone and thanks for joining us today. Just after the close of regular trading, we released our second quarter financial results. We’re going to begin the call today with some prepared remarks on our performance that complements the material included in our press release and allocate the remaining time to Q&A. Our speakers are Thomas Peterffy, our Chairman and CEO; and Paul Brody, Group CFO. I just want to remind everyone that today’s discussion may include forward-looking statements. These statements represent the company’s beliefs regarding future events that by their nature are not certain and outside of the company’s control. The company’s actual results and financial condition may differ possibly materially from what’s indicated in these forward-looking statements. For a discussion of some of the risks and factors that could affect the company’s future results, please see the description of risk factors in our filings made with the SEC. I’d also direct you to read the forward-looking disclaimers in our quarterly earnings release. With that, I’ll turn the call over to Thomas Peterffy.

Thank you for joining us this afternoon. Our performance in the second quarter reflects a combination of positive trends in brokerage growth and slightly better market making conditions that were weighed down by unfavorable currency movements and diminishing investor participation. In our Brokerage business, we continue to attract accounts and grow customer equity at a faster rate than our peers and our customer trading activity is outperforming the industry. Trading volumes on global exchanges have been sluggish for several quarters now punctuated by some big but unsustainable rebounds. Our customers remain fairly active and their trading volumes are growing. This quarter total customer DARTs, on Daily Average Revenue Trades grew 5% compared to the year ago quarter, where it is 4% decline in OCC volumes. Customer equity is up 11% year-over-year exceeding the growth rate of other E-Brokers that we compare ourselves to. And while not a direct proxy, the S&P climbed nearly 6% during the same period. We must point out though that trading volumes are not growing at as higher rate as number of accounts or customer equity. So that the annualized DARTs per account are now down to 507. This is largely due to the greater inroads we are making in the registered financial advisors space, where accounts do not change positions as often as rogue traders or hedge funds or even individual investors. While our Brokerage business is weathering the current environment quite well, we continue to witness events that further erode investors trust in the capital markets and their faith in long-term investing. This quarter alone has had its share of issues, including high profile overpriced IPO and technical trading which issues at NASDAQ, the massive trading loss at JP Morgan, the LIBOR rate rigging scandal among top banks and the latest futures broker bankruptcy…

Thank you, Thomas, and thanks everyone for joining the call. As usual, I will first review the summary results and then give segment highlights before we take questions. Inside the overall lower results this quarter as compared to a year ago, brokerage performance was marginally better and Market Making was about even with the year ago quarter after adjusting for currency translation effects. Net revenues were driven by a small increase in brokerage commissions and trading gains were dragged down by the strength of the U.S. dollar relevant to nearly all other currencies. Net interest income declined slightly on lower customer margin borrowing. As a reminder, our financial statements include the GAAP accounting presentation known as comprehensive income which we adopted early in mid 2011 and became mandatory in the first quarter of this year. Comprehensive income reports all currency translation gains and losses, including those that reflect that changes in the U.S. dollar value of the company’s non-U.S. subsidiaries, that’s know as other comprehensive income or OCI. These are reported in the statement of comprehensive income, which replace the traditional income statement. Previously OCI was reported only in the balance sheet. We present compressive income first in our earnings release which we feel is appropriate as it represents the full measure of the change in our capital. In light of the strengthening of the U.S. dollar against the number of other currencies, adding OCI to net income decreased our reported earnings per share by $0.08 for this quarter. Before turning to our operating results, I’d like to provide an update on the accounting issue that came up recently. In May we filed disclosures with the SEC and issued a press release that our first quarter 10-Q filing was deficient. In that our independent registered public accounting firm have been…

(Operator Instructions) Our first question comes from Chris Harris from Wells Fargo. Chris Harris – Wells Fargo: Thanks. Good evening. Question on the FX impact in the Market Making segment. Is all of that loss related to GLOBAL?

The loss you’re referring to comes from the fact that we chose to carry our equity in proportion to the basket of currencies we call the GLOBAL. So that had a total of $91 million negative impact this quarter. As Thomas mentioned it can vary a lot from quarter-to-quarter and over the long period of time, it seems to prove itself to be fairly flat to the dollar. Chris Harris – Wells Fargo: Okay. And a lot of what’s driving that clearly is declining in the euro?

The euro is the major component of it. Chris Harris – Wells Fargo: Okay. Sorry, then Thomas want to follow-up on some of the comments you made. It sounds like you have a pretty cautious outlook for the Market Making segment, and just curious whether you guys are doing anything that kind of offset that negative outlook whether there is any flexibility on the expense side that you could take to maybe kind of offset those headwinds. Any additional color you have there would be great?

Well, no, we’re not trying to cut back on our efforts as we are just going to keep on trucking here and see if things get better in the coming quarter. And secondarily, we are waiting to see whether there will be any fallout from this Dodd-Frank regulation that we could have carved out a niche for ourselves, given that we have a very high amount of capital relative to the other brokers that are not banks. So there may be a special situation for us, we’re not sure yet. Chris Harris – Wells Fargo: Just trying to balance your comments with some of the deteriorating fundamentals, but then if you take a look at kind of your compensation costs they have just been basically rising every single year, which is kind of flies in the face of some of the deteriorating performance, particularly in the Market Making business but maybe that higher compensation is being used to support your brokerage business, I presume?

Of course, to a large extent it is. And as you look around, you will see other firms cutting compensation. We don’t intend to do that. We like everybody that works here and we want to reward them for their good work.

I may just add. Part of the increase we see in compensation with what I refer to which was a changed in the recognition of our stock incentive plan expenses which is the shift towards the front and away from the back end of the grant cycle. So, the overall expense taken by the company over time will be the same, but some of the expense recognition was shifted forward. Chris Harris – Wells Fargo: Last one from me and then I will hop back in the queue. Appreciate the comments of Paul on the SEC review. Just wondering if there is a plan B in case you don’t hear back from the SEC in a timely manner, my understanding is that NASDAQ is giving you until November to have this issue resolved. And I’m just wondering if the issue isn’t resolved by then the regulators kind of drag your feet, what are you prepared to do to keep your listing active?

Right. We certainly expect to have it resolved fairly shortly. And in fact we’ve had helpful and ongoing discussion with SEC staff and they have not drag their feet at all on this issue. And I wouldn’t expect them to start dragging their feet now. So, it is our expectation that we will be able to get back on track in a short period of time. Chris Harris – Wells Fargo: Okay. Thank you.

Our next question comes from Rich Repetto from Sandler O’Neill. Rich Repetto – Sandler O’Neill: Good evening, Thomas. Good evening, Paul. My first question is just when you mentioned Dodd Frank and capital, Thomas, are you talking about the excess capital at the market maker and then I’m just trying to understand the opportunity even in just vague terms that you are thinking about that could be potentially there?

Well, the large brokers that are all banks have to take more and more, greater and greater reserve, it appears. And so we’ll see what happens here with non-exchange OTC product. So we don’t know -- I really don’t want to put too much work into this up until the rules become really clear. But we suspect that there may be opportunities for us there, I don’t want to actually point out any one specific thing at this moment. Rich Repetto – Sandler O’Neill: Okay. And then, you may have mentioned Thomas of NYSE’s RLP program and the sort of the sub penny pricing. I guess I was just trying to understand your views on it, it might give as a broker, it might give you another venue to execute your retail equity trades, but that again, the market structure issues are the sub penny pricing, I think that’s what’s bothering you I guess. But just trying to…

It’s bothering me because if I were trying to make bids on the NYSE, knowing fully there that somebody can outbid me with very small amount and I can see that I will be less willing to make those bids. Rich Repetto – Sandler O’Neill: So from a market making standpoint people can step…

It’s not only from a market markers standpoint, I think that the visible market will widen out. Rich Repetto – Sandler O’Neill: And then the last, if I understand this right. There is a large amount of excess capital at the market maker and I know your strategy to -- sort of and you just explained it to the previous question of watching the quarters and see how the market maker does. But is there even possible, you said that you outlined the four sort of headwinds that weren’t going to correct themselves any time soon. So is there any other remedies where you could pull capital away more quickly than the dividend policy that you have or even in the -- in an extreme case, splitting the e-broker off?

We will never say never but there is nothing that will imminently happen along those lines. Rich Repetto – Sandler O’Neill: Understood. Okay. Thank you.

Thank you. Our next question comes from Chris Allen from Evercore. Chris Allen – Evercore Partners: I just wanted to touch on the account growth. Thomas, you mentioned before that in terms of like some of the slower account growth is just due to a slower overall environment. I wonder if there is some specifics in terms of where we are seeing the account growth slow in terms of customer buckets and if there is anything more to it than just kind of the environmental slow down.

Our account growth is shifting more and more away from the United States and more and more towards -- in the United States, more and more towards financial advisors. So that’s basically what I can say about that. Chris Allen – Evercore Partners: Okay. And then some of the headwinds you talked about in the Market Making business, I mean were you seeing them over the course of the quarter or are they just want to manifest themselves right now and looking back to the last period, we saw, this probably back in 2010 and lasted basically for about four quarters. Is that like the timeframe we should be thinking about here?

Well, when the market becomes extremely active, spreads widen out and the market maker usually does very well and that money is in fact lost by participants who then curtail their activity subsequently. So last -- in the third quarter last year was a period that although was not as pronounced than 2008 and ‘09, a lot of the people have quite a bit of money and therefore have cut down on the activities. So I would think that this is probably going to last there couple of quarters or so, if nothing else happens. Chris Allen – Evercore Partners: Okay. Thanks guys.

Our next question comes from Ed Ditmire from Macquarie. Ed Ditmire – Macquarie: Good afternoon. My question was about the market maker, especially in light of your latest commentary about the difficult pressures on the business. Do you think that the 10% capital return policy is aggressive enough as a self regulating force to help guide the unit towards acceptable returns. It seems like if a market maker produces below your target of say, 10% returns, it could take quite a while for this policy to right size the market markers capital base towards better returns. So that’s my first question.

I think it’s a very appropriate question. At this time, it is 10% and we are not thinking about changing it in the near future. Ed Ditmire – Macquarie: Okay. Then, a follow-up. This is for Paul. Did you mention specifically, how much capital -- equity capital is in the broker unit at the end of the second quarter?

I didn’t but it’s about 1.8 billion. Ed Ditmire – Macquarie: Okay. I’ll get back in the queue. Thank you.

Thank you. Our next question comes from Justin Hughes from Philadelphia Financial. Justin Hughes – Philadelphia Financial: Good afternoon. Sorry to keep bringing this up but let me just ask it a different way, a more direct but at the end of 2010, when it looked like dividend tax rates were going to go up, you guys paid a special dividend most likely really at the end of 2012 and there’ll be a lot of same speculation. If it looks like dividend rates are going to go up next year, would you consider another special?

We will keep our options open. Yes, we could. We will consider, if it looks like dividend rates are going to go up, we will consider. Justin Hughes – Philadelphia Financial: Okay.

But don’t forget that the dividend, as internal holders of stock, we do not pay taxes on the dividend because to us it’s a return of equity. We pay taxes on the earnings as we go along. And we pay that whether we draw the money from the company or leave it in the company. Justin Hughes – Philadelphia Financial: Okay. But I assume you managing the company in the best interest of all?

That is correct. Yes. Justin Hughes – Philadelphia Financial: Okay. Thank you.

Thank you. Our next question comes from Niamh Alexander from KBW. Niamh Alexander – KBW: Hi. Thanks for taking my question. And if I could touch back on to the issue outstanding with the SEC, I think the change you made was with regards to and the ability to convert the partner units into cash and the right to kind of pay cash or stock. So, going forward, similar to what you did last year, should we expect that if or remember is decide to kind of redeem their annual rights to kind of redeem the partner units, but you would kind of issue some stock into the market to raise cash to buy those out, because that had a nice little leveler on the public earnings last year, when you kind of just increased that relative public ownership. Is that at a similar level to think about think about this year? And then the second question is how do you uphold those numbers and do you expect maybe to be at a similar level?

I think it’s fair to say that the expectations of future redemptions, this is what you are referring to, will be done in terms of share transactions. We are not excluded from doing the cash out transaction. Recently accounting issue came up was sort of a very technical interpretation of contractual terms. It was never an expectation to employ that method forever. And we have no indications at this time as to what the appetite for future redemptions might be. Presumably, there would be some appetite from minority members as there has been in the past. So we can’t say it now. Niamh Alexander – KBW: Okay. Fair enough. Thanks Paul. And then if I could just touch on Europe, Thomas because you mentioned the environment got, I guess the stability kind of deteriorated a little bit and you pulled back in the market maker. Are you still kind of in that wait-and-see mode there that we should kind of expect a more paced performance in the next couple of quarters as well, until who knows when we get the ultimate improvement. But does it feel kind of still very difficult that you want to kind for remain out of the longer dated product and risk like that?

I was specifically talking about Europe, yes. We don’t want to be very much exposed to the various clearing houses and banks because we had a -- we can’t say with any certainty what could happen there. It’s better to be safe than sorry, just as simple. Niamh Alexander – KBW: Fair enough. Thanks Thomas. And then, could you just help me understand, I guess back to Justin’s and everyone else’s questions, because the $1 million question here is you did suggest a large distribution of capital, last time there wasn’t tax changes, is there anything different in the environment or in your business right now or opportunities that you think are closer to that might change the level of distribution that versus the prior time?

I think if you ask this question over the next conference, next earnings conference, I think may be able to tell you something more. Niamh Alexander – KBW: Okay. Fair enough. Thanks Thomas.

Thank you. Our next question comes from Matthew Heinz from Stifel Nicolaus. Matthew Heinz – Stifel Nicolaus: Good evening. Wonder if I could just go back to the OTC opportunities you spoke about. Just wondering if you’ve done any kind of early due diligence on some of the venues out there that are likely to become substance, how they might match with your existing technology?

Well, they keep on looking, yes, but nothing definite so far. Matthew Heinz – Stifel Nicolaus: Okay. And then kind of on the account growth side, it seems like for the last several quarters, the financial advisor segment has been kind of the leader there. And I’m wondering if you are concerned at all that segment might be dragging down the overall activity rate of the brokerage business and if that concerns you long-term with regard to margins?

Well, it is dragging down the activity rate, but nevertheless every additional -- like you said, financial advisor account is a plus as to earnings. It may drag down the rate but it increases the overall income. Matthew Heinz – Stifel Nicolaus: Okay. Thanks very much.

Thank you. Our next question comes from Mac Sykes from Gabelli & Company. Mac Sykes – Gabelli & Company: Good evening, gentlemen. Tom, excluding your comments about the OTC potential opportunity, can you imagine in the next five years an opportunity in brokerage or maybe to explain globally where you would want access to the levels capital and Market Making?

I’m sorry, Mac. Can you repeat it? Mac Sykes – Gabelli & Company: Right. So, I mean, can you imagine just for your brokerage unit say in the next five years, where you would want perhaps to have better access to capital than you do have in Market Making right now, opportunities excluding the OTC comments that you had made before?

That we would want access to more capital than we currently have? Mac Sykes – Gabelli & Company: Correct.

I’ll tell you frankly I do not understand why -- what is that kind of brokerage business where brokers need more capital than we have, I can’t see it. Mac Sykes – Gabelli & Company: No. I was thinking just in terms of your brokerage operations.

You have asked this question, I think a quarter or two ago and I didn’t understand it at that time and I still don’t understand it. Mac Sykes – Gabelli & Company: Well, I was just thinking about in terms of building out globally in terms of opportunities just to build your footprint instead of organically through acquisition or something like that?

No, we are not looking at acquisitions because we find that it is smoother and easier to manage internal growth than taking on an acquisition and get things discombobulated like some other brokers -- that it happens to some other brokers who then go into various troubles like look at MF Global, for example. Mac Sykes – Gabelli & Company: My second question is I was wondering if you could provide some context around competition for active trading accounts now versus when you first went public, perhaps what has changed in terms of the marketplace for acquisition?

You mean in brokerage or in Market Making? Mac Sykes – Gabelli & Company: In brokerage, for active trading accounts versus what you…

The people that are going after the active trading accounts are all much smaller and I find it surprising that the people just never learn, that they keep on -- they transfer their -- transfer their pension accounts to apex. It’s hard for me understand that they do not worry about safety of their funds. But I think most people with good commonsense are going to choose us even though our -- some of our charges maybe a little bit higher. Mac Sykes – Gabelli & Company: Thank you.

Thank you. This concludes our Q&A session. I’d like to hand the conference over for any closing remarks.

Thanks, Operator. And I would like to thank everyone for participating today. And just a reminder, this call is going to be available for replay in a little bit on our website. Thanks again for your time.

Thank you. Ladies and gentlemen, thank you for participating in today’s conference. This concludes your program for today. You may all disconnect. And have a wonderful day.