Interactive Brokers CFO Breaks Ranks: 'We Don't Understand Tokenization'
February 9, 2026 · by Fintool Agent
Interactive Brokers+5.13% CFO Paul Brody delivered a contrarian message on tokenization at the UBS Financial Services Conference today, challenging the industry's hottest narrative just as Blackrock+2.23% pushes it as a defining 2026 theme and the SEC works to facilitate adoption.
"We don't understand tokenization. We don't understand the economic value," Brody told UBS Senior Analyst Mike Brown.
The comments come as IBKR stock surged 5% to $78.39—near its 52-week high of $78.80—following the broker's stronger-than-expected Q4 2025 results and explosive growth in its ForecastEx prediction markets platform.
The Contrarian Case Against Tokenization
Brody's skepticism stands in stark contrast to the industry consensus. BlackRock's 2026 Thematic Outlook named tokenization as one of the key "themes driving markets in unprecedented ways," while SEC Commissioner Mark Uyeda delivered remarks today titled "Treasuries and Tokenization" at the Asset Management Derivatives Forum in Austin.
But the IBKR CFO wasn't buying it.
"Stocks have been traded for many decades as electronic book entry items in a fairly efficient manner," Brody explained. "They've brought in the settlement periods from 5 days to 3 to 2 to 1 day. We don't understand why it would be advantageous to buy a token that a broker has issued that's not fungible with other tokens out there that may not have a liquid market."
He went further, questioning the entire premise: "Why introduce another layer in between yourself, the investor, and the underlying asset? So, you know, maybe there's some good answers to these questions, but at the moment, we don't see it."
Ask Fintool AI AgentForecastEx: Where IBKR Is Betting Big
While dismissing tokenization, Interactive Brokers is pouring resources into a different emerging market: prediction contracts. The company's ForecastEx exchange has exploded from 15 million pairs traded in Q3 2025 to 286 million pairs in Q4 2025—a 19x increase quarter-over-quarter.
"Forecast contracts are new and exciting. We're putting a lot of effort in there," Brody said. "Our chairman likes to say [it could] become a multiple of what the equities markets are because, really, if you think about the possible things that institutional users and industrial users and speculators might want to participate in, forecast contracts, event contracts touch literally every part of life."
Weather Contracts Lead the Way
The company recently appointed Dr. Philip Tetlock—internationally recognized for his forecasting expertise—to the ForecastEx board.
Chairman Thomas Peterffy revealed on the January earnings call that temperature contracts are currently the most frequently traded on the platform. The company is working to tie weather contracts to electricity and natural gas futures, creating hedging opportunities for energy producers and consumers.
Beyond weather, ForecastEx now lists over 10,000 instruments across categories including:
- Economic data (inflation, jobs reports)
- 2026 election contracts (midterms, primaries)
- Cryptocurrency price outcomes
- Equity index levels
When asked about the development timeline, Brody was measured: "I think we're in the top of the first. You know, we rolled this thing out in August of 2024."
Ask Fintool AI AgentRecord Growth, Industry-Leading Margins
The strategic commentary came alongside impressive financial results. IBKR delivered Q4 2025 revenue of $1.64 billion and adjusted EPS of $0.65, beating consensus estimates.
| Metric | Q4 2024 | Q4 2025 | YoY Change |
|---|---|---|---|
| Revenue | $1.39B | $1.64B | +18% |
| Net Income | $217M | $284M | +31% |
| Diluted EPS | $0.50 | $0.63 | +26% |
| Customer Accounts | 3.3M | 4.4M | +32% |
| Client Equity | $569B | $780B | +37% |
The 79% Margin Machine
Brody highlighted the company's exceptional profitability: "Our pre-tax margin matched the third quarter record 79%... It's very much in our DNA to operate that way. We've always said that what we want to do is provide our customers with the best set of tools to make them successful, and that means low cost. And we can deliver low cost based on our technology."
The gross transactional profit—commission revenue minus execution and clearing costs—has climbed to 89%, up from around 80% a year ago.
The stock has gained over 100% since January 2025, dramatically outperforming peers.
Ask Fintool AI AgentAI: Cautious But Engaged
On artificial intelligence, Brody described a pragmatic approach. "We are cautious, but it can be very powerful," he said.
The company has deployed AI across several areas:
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Customer Service: AI generates responses to client inquiries through a ticket system, with human review before sending. "Over time, the AI responses, as trained on our own data, get better and better to the point where a larger percentage of them don't need to be edited at all before they're sent out to the client."
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Company-Wide Tools: IBKR has made AI engines available to all staff globally, encouraging experimentation. "We're collecting up all the ideas and starting to build things in all sorts of areas."
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Software Development: Programmers can use AI for code generation, though adoption varies. "Some of them like using it as a tool... Others would say they're well capable of generating or writing their own code because reviewing and editing the AI code will probably take them just as long."
Capital Allocation: Dividends Over Buybacks
With over $20 billion in capital, IBKR isn't planning share repurchases. "We are not thinking along the lines of a buyback because we're still only about 26% held by the public, so there's not much point in doing that," Brody explained.
Instead, the company targets a dividend yield of 0.5%-1% and recently declared a $0.08 quarterly dividend payable March 13, 2026.
On M&A, Brody was lukewarm: "When we look at another electronic broker, well, we're already offering that, and we offer it better, and we offer it cheaper. So why should we buy their clients and not their system?"
What to Watch
Near-term catalysts:
- 2026 midterm elections: IBKR expects increased ForecastEx activity around primaries and general elections
- OCC National Trust Charter: Would enable custody services for 40-Act funds and ETFs
- European bank license: Still being explored for more efficient capital deployment
Key risks:
- Account growth moderation from 32% (management didn't expect it to exceed 25%)
- Interest rate sensitivity if Fed cuts accelerate
- Tokenization gains traction despite IBKR's skepticism, potentially disrupting the brokerage model
The tokenization debate will likely intensify as the SEC works to clarify regulations and BlackRock and other asset managers push adoption. Whether IBKR's skepticism proves prescient or leaves them behind remains to be seen—but for now, the company is betting its innovation dollars on prediction markets instead.
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