The stock of Thomas Peterffy’s Interactive Brokers has outperformed most over the last year– up 114%– catapulting its founder up to an all-time high on the FORBES 400 Real-time ranking.
The stock has risen in value due to positive impacts from higher interest rates and an increase in the number of client accounts and assets. Also, Interactive Brokers charges fees per trade and more volatile markets lead to increased activity, says Macrae Sykes, a research analyst at Gabelli & Company. The firm's net income for 2017 was $793 million, the highest since 2008.
Peterffy's net worth climbed almost 60% from $15.3 billion at the FORBES 400 when he was ranked 31 to a recent $24 billion, pushing him into the ranks of the 20 richest Americans for the first time. The “father of digital trading” is now richer than George Soros, Elon Musk and Rupert Murdoch and is the second richest immigrant to the U.S., trailing only Google cofounder Sergey Brin.
Peterffy is the CEO, founder and majority shareholder of discount brokerage firm Interactive Brokers, which offers a specialized trading platform to sophisticated investors. Founded in 1993, Peterffy fended off an early takeover bid from Goldman Sachs before eventually deciding to sell 10% of the company in a 2007 public offering, in which he pocketed $1 billion.
Today, Interactive Brokers is the largest publicly-traded U.S. electronic broker, executing more than 1 million trades per day.
Of noble Hungarian decent, Peterffy grew up in communist Hungary. An early entrepreneurial spirit, Peterffy sold contraband Juicy Fruit gum in high school for a 500% markup. At 21, he packed a suitcase and moved to New York, where he landed a job at an engineering firm in 1966.
A gifted programmer, Peterffy took his skills to Wall Street, where he peddled trading modules for others. He eventually saved up enough money to buy himself a seat on the American Stock Exchange in 1977 and started trading as an individual market maker in equity options. Back then, computers were not allowed on the trading floor, so Peterffy would develop algorithms at night to determine the best prices to buy particular option, bringing cheat-sheets to the floor. By 1979 he had four traders working off his models.
Four years later, the American Stock Exchange decided to allow his traders to bring the hand-held devices with his own computer programs onto the trading floor, arming them with algorithm-based calculations at their fingertips and putting them ahead of the curve in high-speed trading.
Today, Peterffy, 73, no longer relies on speed for success. Interactive sold off part of its marketmaker arm, Timber Hill, in September 2017 after profitability came under attack from faster competitors. Since the announcement in March 2017, the market cap of Interactive Broker has effectively doubled.
“Shareholders have been well rewarded in keeping their faith with Mr. Peterffy, who has been an innovator since arriving in this country,” says Sykes.
Thomas Peterffy, who is Florida’s richest person, is not shy about generating headlines for causes he supports. He publicly backed Trump prior to the election and in November took out a full-page ad in The Wall Street Journal to warn markets about the risks of bitcoin. For more on his colorful background read FORBES profile of Peterffy from 2014.