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TD Ameritrade Saw Higher Daily Trades in 2Q16 due to Volatility

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Daily trades

TD Ameritrade (AMTD) reported an average of 509,000 daily trades in fiscal 2Q16, up 7% on a year-over-year basis. In April, month-to-date, the daily average trades fell to 454,000. Derivatives accounted for 44% of the average trades per day as compared to 42% in the prior year’s quarter. Derivative trades rose by 2% on a year-over-year basis. The trading activity through the mobile platform contributed a record 18% of the total trades.

The trading in futures benefited from volatility in commodities. The company saw higher trades on increased volatility across the asset classes including equities, foreign exchange, and commodities. The trend has been strong across the industry as wild swings occurred during the beginning of 2016.

Here’s how a few of TD Ameritrade’s peers in the brokerage industry have fared in terms of revenues in the last 12 months:

  • Interactive Brokers Group (IBKR): $1.1 billion
  • E*TRADE (ETFC): $1.8 billion
  • Charles Schwab (SCHW): $6.2 billion

Together, these companies form 1.3% of the Financial Select Sector SPDR Fund (XLF).

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Average commissions

TD Ameritrade’s average commission per trade declined marginally in fiscal 2Q16. In 2Q16, the company earned an average commission per trade of $11.60 compared to $11.90 in the previous quarter and $12.23 in the prior year’s quarter. Commissions across the industry are declining due to increased competition and technology across the platforms. The trend is expected to continue over the next few quarters.

The company’s commissions and transaction fees in the second quarter were $360 million. This compares to $328 million in the prior quarter and $350 million in the second quarter of 2015. Higher trading activity in the overall market led to a rise in revenues. The US markets witnessed higher volatility in the March 2016 quarter, which resulted in higher trades.

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