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E*TRADE’s Daily Average Revenue Trades Are Consolidating

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Daily average revenue trades

E*TRADE (ETFC) reported DARTs (daily average revenue trades) of $170,000 during the quarter—an increase of 1% from the prior quarter and a decrease of 14% compared to the same quarter a year ago. Options formed 23% of the total trading activity—this is in line with trends over the past couple of years.

Margin balances, as of March 31, 2015, grew by $500 million to $8.2 billion. Margin balances were lower during the first month of the quarter—as represented in the average balance of $7.9 billion. However, the balances rebounded steadily in the later half of the quarter. The DARTs were down by 6% in April 2015. This reflects lower trading activity in the US economy.

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Average commissions

E*TRADE’s average commission per trade has increased continually over the past few years. In 1Q15, the company earned an average commission per trade of $10.94—compared to $10.84 in the prior quarter and $10.64 in 1Q14. In the first quarter, the company’s commissions, fees and service charges, and other revenue were $176 million. This was on par with the prior quarter and down from $187 million in 1Q14. Average commissions per trade increased, but lesser trading activity in the overall market led to the decline in revenue. E*TRADE will benefit more from long-term assets, especially in the stock markets that have lower trading activity.

Here’s how a few of the firm’s peers in the brokerage industry fared in terms of revenue in the last 12 months:

  • Interactive Brokers (IBKR) – $1.1 billion
  • TD Ameritrade Holding (AMTD) – $3.1 billion
  • Charles Schwab (SCHW) – $6.2 billion

Together, these companies form 1.26% of the Financial Select Sector SPDR Fund (XLF).

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