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TD Ameritrade's July Average Client Trades Increases 8%

Zacks Equity Research

Omaha, NE-based online brokerage firm TD Ameritrade Holding Corporation (AMTD) came out with its average client trades per day of 405,000 in its activity report for Jul 2014. This figure increased 8% from the prior month and 9% 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.

As of Jul 31, 2014, TD Ameritrade reported $644.4 billion in total client assets, up 1% from the prior month and 18% year over year. Average spread-based balance of $91.7 billion remained almost stable with the prior month while it grew 4% year over year. Further, average fee-based balances increased 1% from the prior month and 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

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.

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 an increase in its brokerage metrics for Jul 2014. Total customer Daily Average Revenue Trades (DARTs) were 528,000, up 7% from Jun 2014 and 14% from Jul 2013.

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

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