Online Brokerage Review: Day Traders Haven’t Avoided Market Malaise (ETFC, AMTD, SCHW)

We now have all three of the large online brokerage giants out with their monthly metrics for Janury.  We wanted to compare E*TRADE FINANCIAL Corporation (NASDAQ: ETFC), TD AMERITRADE Holding Corporation (NASDAQ: AMTD), and The Charles Schwab Corporation (NASDAQ: SCHW).  We did a basic apples-to-apples comparison where available, and we also included the Daily Average Revenue Trades, or DARTs, along with assets and numbers of accounts.

E*TRADE FINANCIAL Corporation (NASDAQ: ETFC):

• Opened 75,141 gross new retail accounts in January, with net new retail accounts of 22,275 with total retail accounts now at a record 4.555 million.
• DARTs increased 2.8% sequentially to 184,158, but were down 8.8% year over year.
• Security holdings $76.373 billion, doen 4.5% sequentially and down 44.1% year over year; but total retail customer assets were $108.974 billion, down 2.9% sequentially and down 35.7% year over year.

TD AMERITRADE Holding Corporation (NASDAQ: AMTD):

• 306,000 DART’s in January, up 1% sequentially and down 8% year over year.
• About $224 billion in total client assets as of Jan. 31, 2009, down 4% sequentially and down 22% year over year.
• Average spread-based assets of $26.4 billion, up 2% sequentially and up 5% year over year.
• Average fee-based investment balances of $60.8 billion, roughly flat sequentially and up 3% year over year.

The Charles Schwab Corporation (NASDAQ: SCHW):

• Net new assets of $12.1 billion to total $1.1037 trillion, down 3% sequentially and down 21% year over year.
• Added 64,000 new brokerage accounts to end with some 7.415 million active retail brokerage accounts (banking and corporate listed separately).
• DARTs were 328,400, down 9% sequentially and down 11% year over year.

While there was a mixed bag sequentially in DARTs, there is a very obvious marked trend from last year.  The DARTs are declining.  It is impossible to call all of those day traders, but a large portion of this decline from last year is from day traders according to our contacts.  We have spoken with several day trading firms in the last few weeks and they are noticing a drop off either in volume or in numbers of traders.  In fact, many traders who have been in the business for years have been hanging their hats up or walking away for the time being.

JON C. OGG