Online brokerage firm,
E*TRADE Financial Corporation
) reported a decline in its Daily Average Revenue Trades (DARTs)
for the month of Feb 2013. According to the monthly market
activity report for Feb, E*TRADE's DARTs were 152,154, decreasing
1% from Jan 2013 and 10% from Feb 2012.
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Broker performance is generally measured through the DARTs that
represent the number of trades from which brokers can expect
commissions or fees. The fall in DARTs largely resulted from the
uncertain economic recovery and investors' reluctance to invest
in the equity markets.
At the end of the month, E*TRADE's total number of accounts came
in at approximately 4.5 million, of which about 2.9 million are
brokerage accounts, 1.2 million are stock plan accounts and 0.4
million are banking accounts.
For the reported month, E*TRADE's total brokerage accounts
included 31,123 gross new brokerage accounts and net new
brokerage accounts of 9,941. Moreover, E*TRADE's net new
brokerage assets were $0.9 billion, falling from $1.0 billion in
the prior month. Total brokerage accounts and net new brokerage
accounts reflect the company's ability to attract and retain
customers who trade and invest.
During the month, E*TRADE's customer security holdings were
$144.9 billion, up 0.8% from the prior month. However, E*TRADE's
brokerage-related cash was in line with prior month and stood at
$34.2 billion, with customers being the net buyers of about $0.9
billion in securities. Moreover, bank-related cash and deposits
for the company remained stable from Jan 2013 and ended the month
at $6.9 billion.
For the month under review, total special mention delinquencies
(30 to 89 days delinquent) fell 9% from Dec 2012, and 2% from the
prior month to $312 million in E*TRADE's entire loan portfolio.
Total "at risk" delinquencies (30 to 179 days delinquent) fell 8%
from Dec 2012 and 4% from the prior month to $466 million.
Performance of Other Brokerage Firms in the Same
TD Ameritrade Holding Corporation
) - an online brokerage firm - reported marginally lower U.S.
trades in its Activity Report for the month of Feb 2013.
Moreover, the U.S. trades were down 6% on a year-over-year basis.
For the reported month, DARTs were 386,000, down from 387,000
recorded in the prior month. The fall in DARTs largely resulted
from lower trading in equity markets.
Amid the challenging economy, expanding DARTs and new brokerage
accounts will be favorable for E*TRADE. However, the sluggish
macroeconomic environment might lead to lower trade activities.
Moreover, fluctuating interest rates are expected to adversely
affect the company's financials in the near term.
E*TRADE's initiatives to lessen balance sheet risk appear to be
promising, although it might put near-term pressure on the net
interest margin. Moreover, the company's cost control initiatives
and better capital position are impressive and will likely aid
the company navigate through the current cycle.
E*TRADE currently retains a Zacks Rank #3 (Hold). Other brokerage
firms in the same sector with a better rank include
Evercore Partners Inc.
Knight Capital Group, Inc.
), which currently hold a Zacks Rank #1 (Strong Buy).