NEW YORK, July 25, 2026, 10:09 EDT — U.S. markets have ended trading for the day.
- Long-short margin debits totaled $42.1 billion, representing 25.5% of Schwab’s margin-loan portfolio.
- Advisor Services generated $80.2 billion in net new assets during the second quarter, accounting for 67.6% of the total.
- Net interest accounted for 47.5% of revenue at Schwab and 55.7% at Interactive Brokers NASDAQ:IBKR.
Charles Schwab finished Friday at $101.97, up 0.4% from the previous Friday. The price stayed 0.6% lower than Monday’s close ahead of results, even after posting record quarterly revenue and adjusted earnings.
The stock’s upcoming challenge isn’t another surge in trading. Instead, it relates to lending activity influenced by the Federal Reserve.
According to Schwab, an adjustment of 25 basis points in the target rate shifts annualised net interest revenue by approximately $250 million to $300 million. Each increment of 100,000 daily trades is valued at around $40 million, based on the same presentation.
This means that a quarter-point change in rates matches roughly 625,000 to 750,000 trades per day. This figure represents between 5% and 6% of the trading volume seen in the second quarter.
Balance-sheet income had a larger impact. Schwab earned $3.36 billion from net interest, accounting for 47.5% of its revenue. At Interactive Brokers, net interest made up 55.7% of total revenue.
Schwab saw its long-short margin debits increase by $20.8 billion for the quarter, climbing to $42.1 billion. This accounts for 25.5% of the company’s $165.1 billion margin-loan portfolio. Related short cash credits amounted to $43.7 billion.
Registered investment advisers were the main contributors to asset growth. Advisor Services brought in $80.2 billion in net new assets, an increase of 89%. This accounted for 67.6% of Schwab’s total across the company.
The timing of the competition was advantageous. Fidelity Investments halted new long-short separately managed accounts and increased certain financing expenses. Schwab remained available, but restricted RIA allocations to 30%.
Chief Executive Rick Wurster anticipates an increase in the strategy’s scale. “Over the coming five or 10 years, I expect this strategy will get bigger,” he said. Financial Planning
Trading activity stayed robust, though unit economics weakened. The daily average number of trades increased by 57% to 11.92 million. However, revenue generated per trade declined 19% to $1.64.
The filings reveal the reasons behind the muted stock responses to both earnings beats.
| Second-quarter metric | Charles Schwab | Interactive Brokers |
|---|---|---|
| Reported revenue | $7.07 billion, up 21% | $1.90 billion, up 28% |
| Adjusted EPS | $1.62, up 42% | $0.69, up 35% |
| Net interest share of revenue | 47.5% | 55.7% |
| Margin loans | $165.1 billion, up 98% | $108.5 billion, up 67% |
| Trading economics | Trades up 57%; revenue per trade down 19% | DARTs up 36%; commission per order unchanged |
| Adjusted pretax margin | 54.3% | 77% |
| Pre-release close to Friday | -0.6% | -2.8% |
| Trailing P/E at Friday close | 20.3 times | 39.4 times |
Revenue increases, interest income shares and stock fluctuations are based on reported numbers. The stock price comparison reflects Schwab’s closing price on Monday and Interactive Brokers’ closing price on Tuesday.
Schwab posted revenue of $7.07 billion and adjusted earnings per share of $1.62. The company raised its projected 2026 revenue growth to between 17.5% and 18.5%. Management expects the full-year net interest margin to range from 3.00% to 3.10%, citing lending as a supporting factor.
Interactive Brokers posted revenue of $1.90 billion and earnings per share of $0.69. Commissions were up 30% and net interest gained 23%. Customer margin loans rose 67% to $108.5 billion.
The disparity in valuation intensified the reaction. Shares of Interactive Brokers closed Friday 2.8% lower compared to their level before the report on Tuesday. The company’s trailing P/E was close to 39, while Schwab’s was about 20.
Interest rates will be in focus again next week as the Federal Reserve convenes on Tuesday and Wednesday. The central bank’s policy statement is scheduled for release at 2 p.m. EDT on Wednesday.
Advance GDP data, along with June personal income and spending numbers, are scheduled for release on Thursday at 8:30 a.m. EDT. The June Employment Cost Index is set to be published on Friday.
For Schwab, attention will be on margin balances and sweep cash levels. For Interactive Brokers, the main metric to monitor is customer leverage. Trading activity benefits from volatility, while declining rates may weigh on asset yields.
Risks persist. A market downturn may reduce both assets and margin balances. Leveraged long-short portfolios are also challenging to liquidate. While Schwab’s 30% cap curbs concentration, it does not eliminate market risk.
