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E*TRADE’s Response to TD Ameritrade’s 24-Hour Trading

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Mar. 27 2018, Published 2:04 p.m. ET

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On February 20, E*TRADE Financial Corporation (ETFC) announced that its customers would now be able to trade in the markets 24 hours a day. However, this facility excludes the days when markets are closed. Moreover, this facility is currently available only for select ETFs.

E*TRADE’s move of allowing 24-hour trading to customers could be a response to its competitor (XLF) TD Ameritrade Holding Corporation (AMTD). TD Ameritrade announced this move in January 2018, which would help the company see strong trading volumes and improve trading revenues. E*TRADE’s move could have attracted some attention from market participants, as TD Ameritrade saw. Now E*TRADE customers can track the markets any time.

While E*TRADE’s return on equity stood at 10.18% on an LTM (last-12-month) basis, peers TD Ameritrade Holding Corporation, Charles Schwab Corporation (SCHW), and Interactive Brokers Group (IBKR) saw 13.85%, 13.74%, and 24.52%, respectively on LTM basis.

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Management viewpoints

According to E*TRADE’s management, this step was needed as certain events might significantly impact the markets at any time. Moreover, sometimes investors are unable to place their strategies, as they would prefer to work in their free time, which impacts their portfolios.

E*TRADE is expected to benefit from this move, which could prompt investors to trade in the markets, and the company might witness a rise in brokerage accounts, which would lead to a rise in trading volumes.

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