E*TRADE Sees Improved Activity - Analyst Blog

Online broker E*TRADE Financial Corporation (ETFC) released its Monthly Activity Report for April 2010 on Wednesday, recording a 17.0% sequential gain in average U.S. trades.

For the month of April, 2010, Daily Average Revenue Trades (DARTs) were 181,556, up 17.0% sequentially, but down 14.0% on a year-over-year basis. DARTs represent the number of trades from which brokers can expect commissions or fees. Broker performance is measured through DARTs.

At the end of the month, total accounts were approximately 4.3 million, including more than 2.6 million brokerage accounts, 1.0 million stock plan accounts and 0.6 million banking accounts. Total brokerage accounts include gross new brokerage accounts of 45,744 and net new brokerage accounts of 17,627 during the month.

Till date, net new brokerage assets were $2.9 billion, of which $0.7 billion was recorded in April. Total brokerage accounts and net new brokerage accounts indicate the company’s ability to attract and retain trading and investing customers.

During April, customer security holdings were $110.9 billion, up 4.0% sequentially, while brokerage-related cash was down 1.4% sequentially to $21.5 billion, as customers were net buyers of approximately $1.3 billion in securities in April.

Bank-related cash and deposits declined 3.6% sequentially to $10.7 billion in the reported month.

The competitive position in the market for brokerage business depends on trading customers, predominantly active traders. As the long-term investing customer group is less developed compared with trading customers, there is an opportunity for future growth as and when the long-term customers expand.

Development of innovative online trading and long-term investing products and services, delivery of advanced customer service, creative and cost-effective marketing and sales, and expense discipline can be considered as key factors in executing ETFC’s strategy to profitably grow trading and investing business.

During March 2010, ETFC sold $1 billion of savings accounts to Discover Financial Services (DFS), which enabled the company to grow brokerage business as the savings accounts sold were primarily with customers and were not allied with an active brokerage account.

Last week, ETFC’s closest competitor The Charles Schwab Corporation (SCHW) released its monthly activity report for April, which recorded net new assets of $3.8 billion, exceeding ETFC’s assets by $0.9 billion.