TD Ameritrade's (AMTD) August Client Trades Decline 6% - Analyst Blog

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Omaha, NE-based online broker age firm TD Ameritrade Holding Corporation ( AMTD ) came out with its average client trades per day of 381,000 in its activity report for August. This declined 6% from the prior month, but remained almost stable compared with the prior-year period.

Broker performance is generally measured through monthly average client trades per day. It represents the number of trades from which brokers earn commissions or fees.

As of Aug 31, 2014, TD Ameritrade reported $665.5 billion in total client assets, up 3% from the prior month and 24% year over year. Further, average spread-based balance of $93.6 increased 2% from the prior month and 6% year over year. However, average fee-based balances remained stable with the prior month while it increased 19% year over year to $143.5 billion.

Quarterly Performance

Average client trades per day in third-quarter fiscal 2014 (ended Jun 2014) increased nearly 1% year over year to 401,468. Further, as of Jun 30, 2014, net new client assets stood at $13.4 billion, up 24.1% from the prior-year quarter end.

At the quarter end, TD Ameritrade reported total client assets of $650.2 billion, up 24.2% year over year. Moreover, average spread-based balance was $91.2 billion, up 7.7% year over year, while average fee-based investment balance increased 17.3% to $138.5 billion.

Our Viewpoint

With gradually improving investors' confidence, firms like TD Ameritrade are expected to benefit. Also, the broader trend in the investment brokerage industry should help drive growth.

Innovations in online trading, long-term investment in products and services, delivery of advanced customer services, creative as well as cost-effective marketing and sales, along with prudent expense management, are TD Ameritrade's key strategies to boost its trading and investing business.

Further, the company's association with The Toronto-Dominion Bank ( TD ) provides an opportunity to cross sell its products. This is expected to significantly drive organic growth.

However, mounting expenses, a volatile operating scenario and stringent regulations may pose challenges to the company's financials in the long run.

At present, TD Ameritrade carries a Zacks Rank #3 (Hold).

Among other investment brokers, Interactive Brokers Group, Inc.'s ( IBKR ) Electronic Brokerage segment recorded a year-over-year increase in brokerage metrics for Aug 2014. Total customer Daily Average Revenue Trades (DARTs) were 495,000, up 5% from Aug 2013 but down 6% from Jul 2014.

The Charles Schwab Corporation ( SCHW ) is expected to report its monthly metrics later this week.

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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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