Markets

TD Ameritrade's (AMTD) October Client Trades Plunge

Omaha, NE-based online broker age firm TD Ameritrade Holding CorporationAMTD came out with its average client trades per day of 437,000 in its activity report for October 2015. This slumped 2% from the prior month and 12% compared with the prior-year period.

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

As of Oct 31, 2015, TD Ameritrade reported $703.4 billion in total client assets, up 5% from the prior month and 6% year over year. Further, average spread-based balance of $102.8 was up 1% from the prior month and 8% year over year. Additionally, average fee-based balances were $157.1 million, up 3% from the prior month and 7% year over year.

Quarterly Performance

Average client trades per day in fiscal fourth-quarter 2015 increased 18.9% year over year to 478,776. For full-year fiscal 2015, average client trades per day increased 8.1% year over year to 461,541.

Further, at the end of the quarter, net new client assets stood at $16.2 billion, up 20.9% from the prior-year quarter end. For full-year fiscal 2015, the company's net new client assets were $63.0 billion, up 18% year over year. Notably, fiscal 2015 marked the "seventh consecutive year of double-digit asset gathering."

At quarter end, TD Ameritrade reported total client assets of $667.4 billion, up 2.2% year over year.

Our Viewpoint

Innovations in online trading, long-term investment in products and services, delivery of advanced customer service and creative marketing and sales are TD Ameritrade's key strategies to boost its trading and investing business. Further, we believe the company will benefit from the renewed interest of retail investors in the equity market.

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.

Amid a volatile operating environment, TD Ameritrade witnessed a continuous rise in organic client assets, which bode well going forward. However, we remain cautious as a continuous rise in expenses, a low interest rate environment and stringent regulations may weigh on the company's financials in the upcoming quarters. Moreover, fall in trades is a major concern.

At present, TD Ameritrade carries a Zacks Rank #4 (Sell).

Among other investment brokers, Interactive Brokers Group, Inc.'s IBKR Electronic Brokerage segment reported a year-over-year fall in its brokerage metrics for October 2015. Total client DARTs were 655,000, decreasing 4% from October 2014 and 1% from September 2015. Further, total customer accounts were 326,000; up 18% from the prior-year month and 1% from the preceding month.

The Charles Schwab Corporation SCHW is expected to report its monthly metrics early next 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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