EXHIBIT 99.1

INTERACTIVE BROKERS GROUP ANNOUNCES 2Q2020 RESULTS

— — —

DILUTED EARNINGS PER SHARE OF $0.40, ADJUSTED DILUTED EARNINGS PER SHARE OF $0.57.

PRETAX INCOME OF $222 MILLION ON $539 MILLION IN NET REVENUES.

ADJUSTED PRETAX INCOME OF $310 MILLION ON $523 MILLION IN ADJUSTED NET REVENUES¹.

DECLARES QUARTERLY DIVIDEND OF $0.10 PER SHARE.

GREENWICH, CONN, July 21, 2020 — Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, reported diluted earnings per share of $0.40 for the quarter ended June 30, 2020 compared to $0.43 for the same period in 2019, and adjusted diluted earnings per share of $0.57 for both this quarter and for the year-ago quarter.

Net revenues were $539 million and income before income taxes was $222 million this quarter, compared to net revenues of $413 million and income before income taxes of $225 million for the same period in 2019. Adjusted net revenues were $523 million and adjusted income before income taxes was $310 million this quarter, compared to adjusted net revenues of $488 million and adjusted income before income taxes of $300 million for the same period in 2019.

Financial Highlights

•	Commission revenue showed strong growth, increasing $98 million, or 55%, from the year-ago quarter on higher customer trading volumes within an active trading environment worldwide.

•	Net interest income decreased $63 million, or 24%, from the year-ago quarter as the average Federal Funds effective rate decreased to 0.06% from 2.40% in the year-ago quarter.

•

Other income increased $86 million from the year-ago quarter. This increase was mainly comprised of (1) $88 million related to our strategic investment in Up Fintech Holding Limited (“Tiger Brokers”), which swung to a $14 million mark-to-market gain this quarter from a $74 million mark-to-market loss in the same period in 2019; and (2) $22 million related to our currency diversification strategy, which gained $16 million this quarter compared to a loss of $6 million in the same period in 2019; partially offset by (3) $18 million related to our U.S. government securities portfolio, which swung to a $13 million mark-to-market loss this quarter from a $5 million mark-to-market gain in the same period in 2019.

•

General and administrative expenses increased $106 million from the year-ago quarter, primarily due to $103 million in expenses incurred to compensate certain affected customers in connection with their losses resulting from the West Texas Intermediate Crude Oil contracts settling at a price below zero on April 20, 2020, as described below.

•	41% pretax profit margin for this quarter, down from 54% in the year-ago quarter. 59% adjusted pretax profit margin for this quarter, down from 61% in the year-ago quarter.

•	Total equity of $8.3 billion.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on September 14, 2020 to shareholders of record as of September 1, 2020.

¹ See the reconciliation of non-GAAP financial measures starting on page 11.

Business Highlights

•	Customer equity grew 33% from the year-ago quarter to $203.2 billion.

•	Customer credits increased 30% from the year-ago quarter to $71 billion.

•	Customer margin loans decreased 3% from the year-ago quarter to $24.9 billion.

•	Customer accounts increased 36% from the year-ago quarter to 876 thousand.

•	Total DARTs2 increased 111% from the year-ago quarter to 1.75 million.

•	Cleared DARTs increased 111% from the year-ago quarter to 1.56 million.

West Texas Intermediate Crude Oil Event

On April 20, 2020 the energy markets exhibited extraordinary price activity in the New York Mercantile Exchange (“NYMEX”) West Texas Intermediate Crude Oil contract. The price of the May 2020 physically-settled contract dropped to an unprecedented negative price of $37.63. This price was the basis for determining the settlement price for cash-settled contracts traded on the CME Globex and also for a separate, expiring cash-settled futures contract listed on the Intercontinental Exchange Europe (“ICE Europe”). Several of the Company’s customers held long positions in these CME and ICE Europe contracts, and as a result they incurred losses, including losses in excess of the equity in their accounts. The Company fulfilled the required variation margin settlements with the respective clearinghouses on behalf of its customers. The Company subsequently compensated certain affected customers in connection with their losses resulting from the contracts settling at a price below zero. As a result, the Company recognized an aggregate loss of approximately $104 million.

COVID-19 Pandemic

In March 2020, the World Health Organization recognized the outbreak of Coronavirus Disease 2019 (COVID-19) caused by a novel strain of the coronavirus as a pandemic. The pandemic affects all countries in which we operate. The response of governments and societies to the COVID-19 pandemic, which includes temporary closures of certain businesses; social distancing; travel restrictions, “shelter in place” and other governmental regulations; and reduced consumer spending due to job losses, has significantly impacted market volatility and general economic conditions.

The COVID-19 pandemic has precipitated unprecedented market conditions with equally unprecedented social and community challenges. Amid these challenges:

•	The Company is committed to ensuring the highest levels of service to its customers so they can effectively manage their assets, portfolios and risks. The Company’s technical infrastructure has withstood the challenges presented by the extraordinary volatility and increased market volume.

•	The Company can run its business from alternate office locations and/or remotely if a Company office must temporarily close due to the spread of the COVID-19 pandemic.

•	As announced on April 9, 2020, the Company donated $5 million to assist efforts to provide food and support for people affected by the COVID-19 pandemic in the United States as well as to advance medical solutions.

The effects of the COVID-19 pandemic on the Company’s financial results for the second quarter of 2020 can be summarized as follows: (1) higher commission revenue due to increased trading activity and a higher rate of customer accounts opened during this period; and (2) lower net interest income resulting from lower benchmark interest rates and smaller aggregate margin loans extended to customers as they de-leveraged their exposures.

The impact of the COVID-19 pandemic on the Company’s future financial results could be significant but currently cannot be quantified, as it depends on numerous evolving factors that currently cannot be accurately predicted, including, but not limited to the duration and spread of the pandemic; its impact on our customers, employees and vendors; governmental actions in response to the pandemic; and the overall impact of the pandemic in the economy and society; among other factors. Any of these events could have a materially adverse effect on the Company’s financial results.

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Effects of Foreign Currency Diversification

In connection with our currency diversification strategy, we base our net worth in GLOBALs, a basket of 14 major currencies in which we hold our equity. In this quarter, our currency diversification strategy increased our comprehensive earnings by $38 million, as the U.S. dollar value of the GLOBAL increased by approximately 0.50%. The effects of the currency diversification strategy are reported as components of (1) Other Income ($16 million) and (2) Other Comprehensive Income ($22 million).

Regulatory Matters

The Company has provided information to FINRA, the SEC, and the CFTC concerning its historical anti-money laundering and Bank Secrecy Act practices and procedures, and these agencies have indicated that they believe that these historical practices and procedures were inadequate. The Company periodically reviews these practices and procedures to make them more robust and to respond to changing regulatory standards; and we have been enhancing and augmenting them, including hiring additional personnel, over the past several years. 

We are in discussions with these agencies to settle matters arising from their reviews, and while no agreements have been finalized, we believe that such settlements will entail monetary payments and the retention of an independent consultant to review the implementation of the Company’s enhanced practices and procedures. The Company has established a reserve that it deems adequate for such settlements. The Company is also cooperating with a Department of Justice inquiry concerning these matters, and while its outcome cannot be predicted, we do not believe that this inquiry is likely to have a materially adverse effect on the Company’s financial results.

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, July 21, 2020, at 4:30 p.m. ET to discuss its quarterly results.  Investors who would like to listen to the conference call live should dial 877-324-1965 (U.S. domestic) and 631-291-4512 (international). The number should be dialed approximately ten minutes prior to the start of the conference call. Ask for the “Interactive Brokers Conference Call.”

The conference call will also be accessible simultaneously, and through replays, as an audio webcast through the Investor Relations section of the Interactive Brokers web site, www.interactivebrokers.com/ir.

About Interactive Brokers Group, Inc.:

Interactive Brokers Group affiliates provide automated trade execution and custody of securities, commodities and foreign exchange around the clock on over 135 markets in numerous countries and currencies, from a single IBKR Integrated Investment Account to clients worldwide. We service individual investors, hedge funds, proprietary trading groups, financial advisors and introducing brokers. Our four decades of focus on technology and automation has enabled us to equip our clients with a uniquely sophisticated platform to manage their investment portfolios. We strive to provide our clients with advantageous execution prices and trading, risk and portfolio management tools, research facilities and investment products, all at low or no cost, positioning them to achieve superior returns on investments. Barron’s ranked Interactive Brokers #1 with 5 out of 5 stars in its February 24, 2020, Best Online Broker Review.

Cautionary Note Regarding Forward-Looking Statements:

The foregoing information contains certain forward-looking statements that reflect the Company’s current views with respect to certain current and future events and financial performance. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company’s operations and business environment which may cause the Company’s actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. Any forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized. Additional information on risk factors that could potentially affect the Company’s financial results may be found in the Company’s filings with the Securities and Exchange Commission.

For Interactive Brokers Group, Inc. Investors: Nancy Stuebe, 203-618-4070 or Media: Kalen Holliday, 203-913-1369.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA

		Cleared				Non-Cleared												Avg. Trades
		Customer		%		Customer		%		Principal		%		Total		%		per U.S.
Period		Trades		Change		Trades		Change		Trades		Change		Trades		Change		Trading Day
2017		265,501				14,835				31,282				311,618				1,246
2018		328,099		24%		21,880		47%		18,663		(40%)		368,642		18%		1,478
2019		302,289		(8%)		26,346		20%		17,136		(8%)		345,771		(6%)		1,380
2Q2019		74,269				6,827				3,853				84,949				1,348
2Q2020		153,212		106%		13,752		101%		7,252		88%		174,216		105%		2,765
1Q2020		128,564				11,373				4,879				144,816				2,336
2Q2020		153,212		19%		13,752		21%		7,252		49%		174,216		20%		2,765

ALL CUSTOMERS

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2017		293,860				118,427				213,108,299
2018		358,852		22%		148,485		25%		198,909,375		(7%)
2019		349,287		(3%)		126,363		(15%)		167,826,490		(16%)
2Q2019		85,999				31,803				40,396,674
2Q2020		140,787		64%		42,582		34%		65,818,295		63%
1Q2020		128,842				48,437				59,897,045
2Q2020		140,787		9%		42,582		(12%)		65,818,295		10%

CLEARED CUSTOMERS

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA, CONTINUED

PRINCIPAL TRANSACTIONS

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2017		102,025				5,696				7,139,622
2018		49,554		(51%)		3,277		(42%)		11,347,811		59%
2019		41,452		(16%)		2,407		(27%)		8,926,477		(21%)
2Q2019		10,008				621				2,598,531
2Q2020		10,878		9%		811		31%		1,819,150		(30%)
1Q2020		9,364				767				2,400,991
2Q2020		10,878		16%		811		6%		1,819,150		(24%)

CUSTOMER STATISTICS

Year over Year			2Q2020			2Q2019		% Change
Total Accounts (in thousands)			876			645		36%
Customer Equity (in billions)1		$	203.2		$	153.1		33%
Cleared DARTs (in thousands)			1,558			740		111%
Total Customer DARTs (in thousands)			1,746			828		111%
Cleared Customers
Commission per Cleared Commissionable Order2		$	2.81		$	3.68		(24%)
Cleared Avg. DARTs per Account (Annualized)			480			293		64%
Net Revenue per Avg. Account (Annualized)		$	2,442		$	2,863		(15%)
Consecutive Quarters			2Q2020			1Q2020		% Change
Total Accounts (in thousands)			876			760		15%
Customer Equity (in billions)1		$	203.2		$	160.7		26%
Cleared DARTs (in thousands)			1,558			1,301		20%
Total Customer DARTs (in thousands)			1,746			1,454		20%
Cleared Customers
Commission per Cleared Commissionable Order2		$	2.81		$	3.30		(15%)
Cleared Avg. DARTs per Account (Annualized)			480			453		6%
Net Revenue per Avg. Account (Annualized)		$	2,442		$	3,069		(20%)

   

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

NET INTEREST MARGIN

(UNAUDITED)

				Three Months						Six Months
				Ended June 30,						Ended June 30,
				2020			2019			2020			2019
				(in millions)
Average interest-earning assets
	Segregated cash and securities			$	45,463		$	27,313		$	38,978		$	26,452
	Customer margin loans				22,751			26,184			25,614			25,929
	Securities borrowed				4,911			3,991			4,420			3,840
	Other interest-earning assets				5,157			5,105			5,501			5,095
	FDIC sweeps1				2,990			2,012			2,745			1,924
				$	81,272		$	64,605		$	77,258		$	63,240
Average interest-bearing liabilities
	Customer credit balances			$	66,673		$	51,777		$	62,564		$	50,838
	Securities loaned				4,972			4,131			4,852			3,913
	Other interest-bearing liabilities				43			19			375			15
				$	71,688		$	55,927		$	67,791		$	54,766
Net interest income
	Segregated cash and securities, net			$	39		$	145		$	145		$	281
	Customer margin loans2				65			188			204			362
	Securities borrowed and loaned, net				80			48			142			100
	Customer credit balances, net2				6			(147)			(63)			(284)
	Other net interest income1/3				11			33			37			63
		Net interest income3		$	201		$	267		$	465		$	522
Net interest margin ("NIM")					0.99%			1.66%			1.21%			1.66%
Annualized yields
	Segregated cash and securities				0.34%			2.13%			0.75%			2.14%
	Customer margin loans				1.15%			2.88%			1.60%			2.82%
	Customer credit balances				-0.04%			1.14%			0.20%			1.13%

 

1	Represents the average amount of customer cash swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. This item is not recorded in the Company's consolidated statements of financial condition. Income derived from program deposits is reported in other net interest income in the table above.
2	Interest income and interest expense on customer margin loans and customer credit balances, respectively, are calculated on daily cash balances within each customer’s account on a net basis, which may result in an offset of balances across multiple account segments (e.g., between securities and commodities segments).
3	Includes income from financial instruments that has the same characteristics as interest, but is reported in other fees and services and other income in the Company’s consolidated statements of comprehensive income.  For the three and six months ended June 30, 2020 and 2019, $4 million, $3 million, $8 million, and $6 million were reported in other fees and services, respectively. For the three and six months ended June 30, 2020 and 2019, $1 million, $5 million, $5 million, and $11 million were reported in other income, respectively.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

				Three Months						Six Months
				Ended June 30,						Ended June 30,
				2020			2019			2020			2019
				(in millions, except share and per share data)
Revenues:
	Commissions			$	276		$	178		$	545		$	351
	Other fees and services1/2				40			35			78			70
	Other income (loss)1/3				27			(59)			(4)			45
		Total non-interest income			343			154			619			466
	Interest income				244			432			613			840
	Interest expense				(48)			(173)			(161)			(335)
		Total net interest income			196			259			452			505
		Total net revenues			539			413			1,071			971
Non-interest expenses:
	Execution, clearing and distribution fees				76			63			153			124
	Employee compensation and benefits				82			75			162			146
	Occupancy, depreciation and amortization				17			14			34			28
	Communications				7			6			13			12
	General and administrative				132			26			169			50
	Customer bad debt				3			4			10			47
		Total non-interest expenses			317			188			541			407
Income before income taxes					222			225			530			564
Income tax expense					15			15			33			30
Net income					207			210			497			534
Net income attributable to noncontrolling interests					175			178			419			453
Net income available for common stockholders				$	32		$	32		$	78		$	81
Earnings per share:
	Basic			$	0.41		$	0.43		$	1.01		$	1.08
	Diluted			$	0.40		$	0.43		$	1.00		$	1.07
Weighted average common shares outstanding:
	Basic				77,357,609			75,868,349			77,054,388			75,486,825
	Diluted				78,031,462			76,594,934			77,799,963			76,288,342

1	In the first quarter of 2020, we changed the presentation of our consolidated statements of income to better align with our business strategy. Previously reported amounts have been adjusted to conform with the new presentation.
2	Includes market data fees, account activity fees, risk exposure fees, order flow income from options exchange mandated programs, and revenues from other fees and services.
3	Includes gains (losses) from principal transactions; the impact of our currency diversification strategy; gains (losses) from our equity method investments, other revenue not directly attributable to our core business offerings.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

				Three Months						Six Months
				Ended June 30,						Ended June 30,
				2020			2019			2020			2019
				(in millions, except share and per share data)
Comprehensive income:
	Net income available for common stockholders			$	32		$	32		$	78		$	81
	Other comprehensive income:
		Cumulative translation adjustment, before income taxes			4			4			(3)			3
		Income taxes related to items of other comprehensive income			-			-			-			-
	Other comprehensive income (loss), net of tax				4			4			(3)			3
Comprehensive income available for common stockholders				$	36		$	36		$	75		$	84
Comprehensive earnings per share:
	Basic			$	0.46		$	0.47		$	0.97		$	1.11
	Diluted			$	0.46		$	0.46		$	0.96		$	1.10
Weighted average common shares outstanding:
	Basic				77,357,609			75,868,349			77,054,388			75,486,825
	Diluted				78,031,462			76,594,934			77,799,963			76,288,342
Comprehensive income attributable to noncontrolling interests:
	Net income attributable to noncontrolling interests			$	175		$	178		$	419		$	453
	Other comprehensive income - cumulative translation adjustment				18			12			(13)			11
Comprehensive income attributable to noncontrolling interests				$	193		$	190		$	406		$	464

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

						June 30, 2020			December 31, 2019
						(in millions)
Assets
Cash and cash equivalents						$	3,115		$	2,882
Cash - segregated for regulatory purposes							12,684			9,400
Securities - segregated for regulatory purposes							33,450			17,824
Securities borrowed							4,836			3,916
Securities purchased under agreements to resell							1,367			3,111
Financial instruments owned, at fair value							889			1,916
Receivables from customers, net of allowance for doubtful accounts							25,678			31,304
Receivables from brokers, dealers and clearing organizations							1,395			685
Other assets							551			638
	Total assets					$	83,965		$	71,676
Liabilities and equity
Liabilities
Short-term borrowings						$	139		$	16
Securities loaned							5,856			4,410
Securities sold under agreements to repurchase							-			1,909
Financial instruments sold but not yet purchased, at fair value							234			457
Other payables:
	Customers						68,796			56,248
	Brokers, dealers and clearing organizations						218			220
	Other payables						468			476
							69,482			56,944
	Total liabilities						75,711			63,736
Equity
Stockholders' equity							1,538			1,452
Noncontrolling interests							6,716			6,488
	Total equity						8,254			7,940
	Total liabilities and equity					$	83,965		$	71,676
		June 30, 2020					December 31, 2019
Ownership of IBG LLC Membership Interests		Interests		%			Interests			%
IBG, Inc.		78,057,622		18.7%			76,759,595			18.5%
Noncontrolling interests (IBG Holdings LLC)		338,670,642		81.3%			338,670,642			81.5%
Total IBG LLC membership interests		416,728,264		100.0%			415,430,237			100.0%

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

			Three Months						Six Months
			Ended June 30,						Ended June 30,
			2020			2019			2020			2019
			(in millions)
Adjusted net revenues1
Net revenues - GAAP			$	539		$	413		$	1,071		$	971
Non-GAAP adjustments
	Currency diversification strategy, net			(16)			6			33			25
	Mark-to-market on investments2			-			69			-			(40)
Total non-GAAP adjustments				(16)			75			33			(15)
Adjusted net revenues			$	523		$	488		$	1,104		$	956
Adjusted income before income taxes1
Income before income taxes - GAAP			$	222		$	225		$	530		$	564
Non-GAAP adjustments
	Currency diversification strategy, net			(16)			6			33			25
	Mark-to-market on investments2			-			69			-			(40)
	Customer compensation expense3			103			-			103			-
	Bad debt expense4			1			-			1			42
Total non-GAAP adjustments				88			75			137			27
Adjusted income before income taxes			$	310		$	300		$	667		$	591
Adjusted pre-tax profit margin				59%			61%			60%			62%

			Three Months						Six Months
			Ended June 30,						Ended June 30,
			2020			2019			2020			2019
			(in millions)
Adjusted net income available for common stockholders1
Net income available for common stockholders - GAAP			$	32		$	32		$	78		$	81
Non-GAAP adjustments
	Currency diversification strategy, net			(3)			1			6			5
	Mark-to-market on investments2			(0)			13			0			(7)
	Customer compensation expense3			19			-			19			-
	Bad debt expense4			0			(0)			0			8
	Income tax effect of above adjustments5			(4)			(3)			(5)			(1)
Total non-GAAP adjustments				12			11			20			4
Adjusted net income available for common stockholders			$	44		$	43		$	98		$	85

			Three Months						Six Months
			Ended June 30,						Ended June 30,
			2020			2019			2020			2019
			(in dollars)
Adjusted diluted EPS1
Diluted EPS - GAAP			$	0.40		$	0.43		$	1.00		$	1.07
Non-GAAP adjustments
	Currency diversification strategy, net			(0.04)			0.01			0.08			0.06
	Mark-to-market on investments2			(0.00)			0.16			0.00			(0.10)
	Customer compensation expense3			0.25			0.00			0.24			0.00
	Bad debt expense4			0.00			(0.00)			0.00			0.10
	Income tax effect of above adjustments			(0.05)			(0.04)			(0.07)			(0.01)
Total non-GAAP adjustments				0.16			0.14			0.26			0.05
Adjusted diluted EPS			$	0.57		$	0.57		$	1.26		$	1.12
Diluted weighted average common shares outstanding				78,031,462			76,594,934			77,799,963			76,288,342

Note: The term “GAAP” in the following explanation refers to generally accepted accounting principles in the United States.

¹ Adjusted net revenues, adjusted income before income taxes, adjusted net income available for common stockholders and adjusted diluted earnings per share (“EPS”) are non-GAAP financial measures as defined by SEC Regulation G.

•	We define adjusted net revenues as net revenues adjusted to remove the effect of our GLOBAL currency diversification strategy and our net mark-to-market gains (losses) on investments2.

•	We define adjusted income before income taxes as income before income taxes adjusted to remove the effect of our GLOBAL currency diversification strategy, our net mark-to-market gains (losses) on investments, customer compensation expenses3 and unusual bad debt expense4.

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We define adjusted net income available to common stockholders as net income available for common stockholders adjusted to remove the after-tax effects of our GLOBAL currency diversification strategy, the mark-to-market on investments, customer compensation expenses, and unusual bad debt expense attributable to IBG, Inc.

Management believes these non-GAAP items are important measures of our financial performance because they exclude certain items that may not be indicative of our core operating results and business outlook and may be useful to investors and analysts in evaluating the operating performance of the business and facilitating a meaningful comparison of our results in the current period to those in prior and future periods. Our GLOBAL currency diversification strategy, our mark-to-market on investments and unusual bad debt expense are excluded because management does not believe they are indicative of our underlying core business performance. Adjusted net revenues, adjusted income before income taxes, adjusted net income available to common stockholders and adjusted diluted EPS should be considered in addition to, rather than as a substitute for, GAAP net revenues, income before income taxes, net income attributable to common stockholders and diluted EPS.

 ² Mark-to-market on investments represents the net mark-to-market gains (losses) on our U.S. government securities portfolio, which are typically held to maturity, investments in equity securities that do not qualify for equity method accounting which are measured at fair value, and equity securities taken over by the Company from customers related to losses on margin loans described below.

 ³ Customer compensation expenses were incurred to compensate certain affected customers in connection with their losses resulting from the West Texas Intermediate Crude Oil contracts settling at a price below zero on April 20, 2020, as described above.

 ⁴ Unusual bad debt expense includes material losses on margin loans resulting from unusual events that occur in the marketplace. For the six months ending June 30, 2019, unusual bad debt expense reflects losses recognized on margin lending to a small number of our brokerage customers that had taken relatively large positions in a security listed on a major U.S. exchange, which lost a substantial amount of its value in a very short timeframe. For the three and six months ended June 30, 2020, unusual bad debt expense reflects losses incurred by futures customers in excess of the equity in their accounts, related the West Texas Intermediate Crude Oil event described above.

 ⁵ The income tax effect is estimated using the corporate income tax rates applicable to the Company.