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E*TRADE Financial (ETFC) January DARTs Jump 19% Q/Q

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Online brokerage firm, E*TRADE Financial CorporationETFC reported a rise in its Daily Average Revenue Trades (DARTs) for January 2016. According to the monthly market activity report for January, E*TRADE's DARTs were 175,346, up 19% from the prior month and 1% on a year-over-year basis.

Broker performance is generally measured through DARTs that represent the number of trades from which brokers can expect commissions or fees. The rise in DARTs largely reflects investors' keenness in investing in equity markets.

At the end of the month under review, E*TRADE's total number of accounts came in at approximately 4.98 million, of which about 3.22 million are brokerage accounts, 1.42 million are stock plan accounts and 0.34 million are banking accounts.

For the reported month, E*TRADE's total brokerage accounts included 29,666 gross new brokerage accounts. Notably, net new brokerage accounts were 4,815. Total brokerage accounts reflect the company's ability to attract and retain customers who trade and invest.

Moreover, E*TRADE's net new brokerage assets were $1 billion, down from $1.3 billion in the prior month.

As of January-end, E*TRADE's customer security holdings were $190.4 billion, down 6.6% from the prior month. The company's brokerage-related cash decreased by $0.7 billion to $41.0 billion, with customers being the net buyers of about $1.2 billion in securities. Moreover, bank-related cash and deposits for the company stood at $5.3 billion, down from $5.5 billion in the prior month.

Peer Performance

Among other investment brokers, Interactive Brokers Group, Inc.'s IBKR Electronic Brokerage segment reported total client DARTs of 830,000 for January 2016, reflecting a 32% improvement from the prior month and 23% year over year. Further, total customer accounts were 335,000, up 1% from the prior month and 17% from the prior-year month.

Online brokerage firm - TD Ameritrade Holding Corporation AMTD came up with average client trades per day of 565,000 in its activity report for January 2016. This increased 29% from the prior month and 15% from the prior-year period.

Our Viewpoint

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. We remain encouraged by the brokerage firm's restructuring moves and several other efforts including revamping its brand, launching new products and services and improving its technology space to offer a better digital experience to customers.

E*TRADE currently carries a Zacks Rank #3 (Hold). A better-ranked investment broker with a Zacks Rank #2 (Buy) includes KCG Holdings, Inc. KCG .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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