Online brokerage firm,
) reported an upsurge in its Daily Average Revenue Trades (DARTs)
for Nov 2013. According to the monthly market activity report for
November, E*TRADE's DARTs were 163,411, up 2% from Oct 2013.
Moreover, DARTs increased 26% on a year-over-year basis.
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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 under review, E*TRADE's total number of
accounts came in at approximately 4.6 million, of which about 3.0
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 29,355 gross new brokerage accounts. Moreover, E*TRADE's
net new brokerage assets were $1.3 million, increasing from $1.0
billion in the prior month. Total brokerage accounts reflect the
company's ability to attract and retain customers who trade and
As of November-end, E*TRADE's customer security holdings were
$174.4 billion, up 3.0% from the prior month. The company's
brokerage-related cash increased $0.7 billion to $39.3 billion,
with customers being the net buyers of about $0.3 billion in
securities. Moreover, bank-related cash and deposits for the
company stood at $6.4 billion, unchanged from the prior month.
Total special delinquencies (30 to 89 days delinquent) decreased
1% from Sep 2013 and 7% from the prior month to $276 million in
E*TRADE's entire loan portfolio. Total delinquencies (30 to 179
days delinquent) declined 1% from Sep 2013 and 5% from the prior
month to $388 million.
Last week, another brokerage firm,
) reported a 1% fall in average client trades compared with the
prior month in its Activity Report for Nov 2013. However, average
client trades surged 22% on a year-over-year basis to 416,000.
) reported its monthly metrics for Nov 2013. The company reported
Daily Average Trades (DATs) of 467,300. This marked a decrease of
5% from 490,800 in the prior month. However, it was 8% higher
than 431,800 in the year-ago month.
Amid the challenging economy, increase in DARTs and new brokerage
accounts will be beneficial for the company. We remain concerned
about the sluggish macroeconomic environment, which might lead to
lower trading activities. Moreover, fluctuating interest rates
are expected to continuously impact the company's financials in
the near term.
However, E*TRADE's initiatives to reduce balance sheet risk
appear to be promising, although they will put near-term pressure
on the net interest margin. The company's strong capital position
and decreasing delinquencies are impressive and will likely aid
it to navigate through the current cycle.
E*TRADE currently carries a Zacks Rank #3 (Hold). The better
performing stock in the same industry includes
Ladenburg Thalmann Financial Services Inc.
) with a Zacks Rank #1 (Strong Buy).