TD Ameritrade's May Client Trades Down 15% - Analyst Blog

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Omaha, NE-based online broker age firm TD Ameritrade Holding Corporation ( AMTD ) stated average client trades per day of 383,000 in its Activity Report for May 2014. This figure was down 15% from the prior month and 8% year over year.

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

TD Ameritrade reported $634 billion in total client assets in May 2014, up 2% from the prior month and 19% year over year. Moreover, average spread-based balances augmented 9% year over year to $91.2 billion while it remained stable as compared with Apr 2014. Further, average fee-based balances climbed 15% year over year and 1% from the prior month to $137.9 billion.

Quarterly Performance

Average client trades per day in second-quarter fiscal 2014 (ended Mar 2014) increased 30.1% year over year to 491,963. However, net new client assets were $12.2 billion, down 5.4% from the past year.

At quarter end, TD Ameritrade reported total client assets worth $617.1 billion, up 19.4% year over year. Moreover, average spread-based balance was $91.5 billion, up 10.8% from $82.6 billion in the prior-year quarter. Average fee-based investment balance was $133.6 billion, up 20.5% year over year.

Our Viewpoint

As investors' confidence has been improving at a modest level recently, we expect firms like TD Ameritrade to benefit from the broader trend in the investment brokerage industry in the near term.

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 be a significant growth driver for TD Ameritrade's organic assets.

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 rise in brokerage metrics for May 2014. Total customer Daily Average Revenue Trades (DARTs) were 518,000, up 2% from May 2013 but down 10% from Apr 2014.

The Charles Schwab Corp. ( SCHW ) is expected to report their 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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