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TD Ameritrade Holding Corporation (AMTD - Analyst Report) – an online brokerage firm – reported higher client trades in its Activity Report for the month of May. Moreover, on a year-over-year basis, the U.S. trades were up 13%.

Daily Average Trades were 417,000 compared with 383,000 in the prior month. The rise in Daily Average Trades was primarily attributable to higher trading volumes in the equity markets.

Broker performance is generally measured through Daily Average Trades from which brokers can earn commissions or fees.

TD Ameritrade reported $530.9 billion in total client assets in May, up 23% year over year and 1% from the prior month. Moreover, average spread-based balances rose 14% year over year to $83.8 billion. Further, it nudged up 1% from Apr 2013.

At the end of May, average fee-based balances came in at $119.9 billion, up 37% year over year and 3% from the previous month.

Quarterly Performance

As of Mar 31, 2013, Daily Average Trades fell 2% year over year to 378,096. Net new client assets were $12.9 billion, up 19% from $10.8 billion a year ago.

At the end of the quarter, TD Ameritrade reported $516.8 billion in total client assets, up 14% year over year. Moreover, average spread-based balance was $82.6 billion, up 11% from $74.1 billion in the prior-year quarter. Average fee-based balance was $110.9 billion, up 31% year over year.

Our Viewpoint

The competitive position of brokerage business in the market depends on trading customers, especially active traders. As the long-term investing customer group is less developed compared to trading customers, there is an opportunity for future growth with the expansion of the long-term customer base.

Innovations in online trading, long-term investment on products and services, rendition of advanced customer service, creative and cost-effective marketing and sales, along with expense control are the key factors behind the boost in TD Ameritrade’s trading and investing business.

Amid a volatile operating environment, the company witnessed a rise in organic client assets. However, low interest rates coupled with stringent regulations are likely to be dampeners.

TD Ameritrade currently carries a Zacks Rank #3 (Hold). Better performing financial stocks include LPL Financial Holdings Inc. (LPLA - Snapshot Report), Investment Technology Group Inc. (ITG - Snapshot Report) and Ladenburg Thalmann Financial Services Inc. (LTS - Snapshot Report), all of which carry a Zacks Rank #1 (Strong Buy).

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