Advisor Fee Information

Client fee schedules can be applied to accounts individually or can be stored in a Client Fee Template. As an advisor, you can configure fees for one or more client accounts, or set up client fee schedules in templates, then assign the templates to client accounts. The use of templates allows you to easily maintain different fee schedules for multiple client accounts.

If you are a new advisor (i.e., you just opened your IBKR account), then there will be a blank default client fee template, which you can then configure with your own fee schedule. If you are an existing advisor, your old global fee schedule is now the default client fee template. You can modify the default template but you cannot delete it.

As an Advisor, you can elect to charge client commissions to your own Advisor master account when configuring fees for a client account. Commission charges will revert to the client account if the Advisor master account has a balance of less than USD 1000 or equivalent when the commission charges are posted.

By default, minimum monthly fees, market data and research fees are charged to Advisor client accounts. However, Advisors can elect to charge these fees to their own Master account for each client account. Client fees will be charged to the client account if the Advisor master account has a balance of less than USD 1000 or equivalent when fees are posted.

As an Advisor, you can also charge fees on the current value of the amount that your clients have invested in hedge funds who participate in our Hedge Fund Capital Introduction Program (HFCIP), which is part of our Investors' Marketplace. If you have already invested funds for your client at the Hedge Fund Investor Site (available at the Marketplace), the amount invested in the hedge fund will automatically be enabled for the fee program.

For each client who invests in a participating hedge fund, you can charge fees based on the Annualized Percentage of Net Liquidation Value of the current value of the client's investment in the Fund and/or the percentage of profit and loss of the client's investment in the Fund, as well as configure the fee posting frequency (monthly or quarterly). Your clients must approve the fee schedule by signing a form.

Fees entered for the first time in the middle of a period will be calculated and applied as of the date the fee agreement is approved and entered into the system. Fees changed during a period will take effect as of the beginning of the next monthly or quarterly period. If you change the frequency from monthly to quarterly, the change will take effect as of the next calendar quarter. If you change the frequency from quarterly to monthly, the change will take effect after the end of the current calendar quarter.

Advisors can reimburse fees to client accounts up to a maximum of 50% of invoices (net of any prior rebate) for the trailing 12-month period. Advisors can also modify or cancel pending fee reimbursements and view the details of fee reimbursements that have already been processed.

We charge a minimum fee for US stock trades allocated by Advisors to their clients. Advisors can choose to charge the allocation minimum fee to their master account or to the client account. By default, the allocation minimum is charged to the client account unless there is a specific rate arrangement between the client and the Advisor.

The minimum amount charged per trade allocation is as follows:

• Fixed Rate Pricing Minimum: Minimum (trade value * 0.0005, USD 1)

• Tiered Pricing Minimum: Minimum (trade value * 0.0005, USD 0.35)

Entered as an annualized percentage, applied on a daily, monthly or quarterly basis.

End of Month_/Quarter_ fee is calculated by using the End of Month_/Quarter_ Net Liquidation Value, the rate and the number of business days in a particular month period.

Clients will be charged for number of business days in a month period for which the fee configuration was enabled.

Clients will not be charged if funds are withdrawn on the last business day of the month period.

Fees will be charged the first U.S. business day of the next month.

Formula:

(Last Business Day of Month/Quarter NLV amount * Rate) / (Number of business days per year / Number of Fee Days)

Number of business days per year set as 252

Number of Fee Days is the number of business days in a month period for which the fee configuration was enabled

Enter up to five separate net asset-value ranges, and an annualized fee percentage for each.

Entered as an annualized amount, applied on a daily, monthly or quarterly basis (apportioned by 252 days).

A fixed percent is applied to the mark-to-market P&L (positive or negative) at the end of each period. Any changes made to the specified percent during a period will only be applied on a forward looking basis and will not be applied retroactively. If you do make changes during a period, we break the period into two pieces and apply fees accordingly. If at the end of the billing period the accumulated fee calculation is negative, no fee will be charged. Two periods may be specified for this calculation:

1. Quarterly as of 3/31, 6/30, 9/30, and 12/31. Fees will be posted 10 days after the close of a quarter.

2. Annually as of 12/31. Fees will be posted 10 days after the close of the year.

The maximum percent of P&L that you can you charge for either period is 30%.

Advisors can configure a performance fee threshold by setting a static number or an index/benchmark. This fee can be paid out on an annual or quarterly basis. Your client's performance must exceed the threshold for the fee to be assessed to the client. It is important to note, performance fees and thresholds begin at the time the fee configuration has been accepted by the client and processed by IBKR. Fees and thresholds are not applied retroactively.

For Example:

• Static: Fee configuration is in place effective July 1. The Advisor charges a performance fee of 20% charged annually and sets a 10% threshold. Clients will not pay a fee if the client account’s money weighted return from July 1 to December 31 is less than or equal to 10%. If the account’s return for the configured period was 50%, the FA will receive a 20% performance fee on the excess return. (20% of (50%-10%)).

• Benchmark: Fee configuration is in place effective July 1. The Advisor charges a performance fee of 20% charged annually and selects the S&P 500 as the benchmark. Assuming the S&P 500 had a 10% return for the configured period, clients will not pay a fee if the client account’s money weighted return is less than or equal to the S&P return of 10%. If the account’s return for the configured period was 50%, the FA will receive a 20% performance fee on the excess return. (20% of (50%-10%)).

Advisors who select Percent of P&L as the basis of their client fees can apply High Water Marking to the billing period client fees to offset periods of losses in a volatile market. You set up High Water Marking on the Client Fees page in the Account Management. High Water Marking lets an Advisor:

• Specify a look-back period (in quarters or years, based on the period selection in the Percent of P&L fee schedule). High Water Marking keeps track of cumulative losses per billing period within the specified look-back period. A loss in any period will be added to the look-back period's cumulative losses. A gain in any period will decrease the cumulative loss recorded to date. Advisors cannot charge a profit-based fee as long as a cumulative loss exists. By default, the look-back period is zero. High Water Marking is effective on the day we process the approved client agreement.

• Specify the date on which High Water Marking takes effect.

• Choose to prorate for withdrawals or deposits. If a client makes withdrawals or deposits during a billing period, an Advisor can choose to prorate the loss (P&L) for that period.

• Optionally initialize High Water Marking with previous periods' losses by entering the amount of the losses. These losses may have been incurred for the client in another account or with another advisor.

A fee per trade unit may be entered as an absolute markup over and above commissions charged by IBKR, as a percentage of commissions charged by IBKR, or as an absolute amount (commissions charged by IBKR will be subtracted from this amount). Fee per trade unit is not available for US or US protectorate legal residents due to regulatory restrictions, with the exception of US commodity-registered advisors, who are allowed a per-trade schedule for futures. For more specifics on fee per trade unit, see our Broker Client Markup page.

See specific examples of automatic billing.

To help Advisors who bill advisory fees using one of IBKR's Automatic Calculation options meet their compliance obligations, we can send your clients invoices detailing the advisory fees automatically calculated and deducted from their accounts (as they have requested) when those fees are actually charged. These notices describe the method used to calculate the fee, the amount of the fee and the period covered by the fee.

Some states' "custody" rules require that advisors send, or have their broker send, these invoices to clients who sign up for automatic billing of advisory fees. (You may also need to send these invoices to your clients if you have "custody" under the SEC's or your state's custody rule for another reason.) Please review the state (or SEC) rules relevant to your firm to determine if you need IBKR to send your clients these invoices.

In Advisor Portal, you can configure how we send these notices to all of your clients: by email only, by email and in the Customer Service Message Center, or no notification at all. Please note that by default, US Registered advisors will be enrolled during the application. For all other advisors your clients will NOT receive these notices and you must instruct IBKR (through Advisor Portal) to send these invoices to your clients. Regardless of whether you sign up for invoices, all advisory fees processed through IBKR are reflected on the client's Activity Statements.

Advisors can submit electronic invoices from the Invoicing page in Portal (go to Administration & Tools > Fees & Invoicing > Invoicing). Before you can submit fee invoices for client accounts, you must first configure Automatic Billing for Monthly/Quarterly Invoicing for the account(s) on the Configure Client Fees page in Portal (go to Administration & Tools > Fees & Invoicing > Fees > Configure Client Fees).

You must specify the maximum percentage of the client’s Net Asset Value that can be deducted as advisory fees each month or quarter. Your client must then confirm this limit.

You then calculate the amount of fees and submit an electronic invoice for each client account at any time during the period, up to the specified limit. The invoice amount will be automatically transferred from the client account to the advisor account, again up to the specified limit.

Invoices submitted prior to 5:30 (17:30) PM EST will be processed by IBKR the same day (U.S. night) and appear on that day’s statements. Invoices submitted after 5:30 (17:30) PM EST will be processed by IBKR on the next business day. You can submit invoices for up to ten clients at a time, but only one invoice per client account per day.

You can also upload a .csv (comma-separated values) file containing multiple client invoices. The .csv file must contain fields for:

• Client Account Number

• Amount (in client account’s base currency)

• Money Manager Account Number (only if the invoice is to be paid to a Money Manager)

• Memo (this field is optional)

We offer 2 different options you can choose from.

When you configure client fees or create a client fee template, you will need to include a maximum invoicing limit, set as a percentage of the client’s Net Asset Value. You can charge on a monthly or quarterly basis.

To determine the available fees, we look back on the prior period to calculate the amount of fees your client has agreed you can charge during the current period.

To calculate the limit, at the end of each business day of the previous period (month or quarter) we multiply the annual percentage rate by the value of your account and divide that by the average number of business days per year. The sum of those daily values over the course of the previous period is the maximum amount you can charge for the current period.

(Fee Cap % x Ending Client NAV) / 252

where 252 is the average number of business days in a year.

For example:

• If you configure a new monthly fee percentage cap on July 1st, you will not be able to bill until August 1st. The fee limit in August will be based on the percentage cap you set and that is calculated in July.

• If a client account is configured for percentage cap on a monthly basis and you log into Portal to submit an invoice for the client in April, the available fee amount is based on the client's daily NAV for March. You can submit multiple invoices but the total cannot exceed the limit for the period.

The Month End Balance and Quarter End Balance invoicing options allow advisors to invoice clients with limits calculated based on the ending value of the previous period. These options help to address two main billing needs:

• Billing in advance: The new methods are based on the ending value of the previous period, which many advisors use as the basis for billing in advance.

• Ending value arrears calculation: Many advisors bill in arrears, but based on the ending values of a portfolio, not the daily calculation which is our standard method.

The following formula is used to determine the invoicing limit amount using the new Period End Invoicing method:

• Use the ending equity from the last day from the previous period (month/quarter).

• Multiply that ending equity by the configured percentage rate.

• Divide that by the number of periods (months/quarters) in the year.

To configure this new method, select the "Monthly (on month end balance)" or “Quarterly (on quarter end balance)” in the Applied field on the fee configuration screen.

Invoice new clients for a limited time after the accounts have been opened or funded, based on the value of the client's account at the time an invoice is submitted. Invoices may be submitted within 30 days after a new account configured with monthly invoicing was opened or funded, and 90 days after a new account configured with quarterly invoicing was opened or funded.

• Rate divided by the number of fee payment periods (12 for monthly, 4 for quarterly) per year to calculate the Period Fee Rate.

• Multiply the Period Fee Rate by the Account Value

After these initial, transition periods, our standard invoicing logic will apply.

Note: During the transition billing period only, all advisors will be limited to invoicing up to a maximum of 2%. After the transition period, the configured limits will apply.

¹: Many states have requirements that advisors register if they have any paying clients. Some allow advisors to have a de minimis number of paying clients. The rules vary from state to state. For example, Nevada has informed us that it requires that Nevada-domiciled persons be licensed as Investment Advisors to engage in this program per NRS 90.330. You must review the rules of your state and those of your clients to determine if you need to register.

²: For the purpose of calculating performance fees, P&L on FX trades is included solely on the dates at which the position is either open or closed and excludes the effect of any exchange rate fluctuations between those dates. On the open and close dates, P&L is calculated based upon the difference between the trade price and the end of day conversion rate.

• Markups for advisors are limited to three times the IBKR commission if the client has an account balance of less than USD 25,000.

• Automated advisors fees are not deducted from client accounts with balances below USD 3,000.

• Automatic bill processing only runs on US business days.

• Please note that if you elect to pay your advisor through one of these automatic billing options, IBKR will calculate and hold the amount of the fee during the billing period for the advisor. This allows advisors to collect fees owed from an account that may terminate the advisory relationship during a billing period.

• Fee configuration requests which are pending authorization from clients are not in effect and will expire 90 days after creation. To reestablish an expired fee configuration, you can reenter the request and have the client consent for the fees to become effective.