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In its monthly market activity report for Oct 2013, The Charles Schwab Corporation (SCHW - Analyst Report) reported Daily Average Trades (DATs) of 490,800. This marked an increase of 4.6% from 469,200 in the prior month and 11.6% from 439,700 in the year-ago month.

Total client assets were $2.18 trillion, up 1.5% from Sep 2013 and 14.7% from Oct 2012. However, Schwab’s net new assets – bought by existing as well as new clients – were negative $19.8 billion, compared with negative $2.4 billion reported in the prior month and $24.7 billion in the year-ago month.

In the reported month, Schwab opened 81,000 brokerage accounts, increasing 15.7% from Sep 2013 and 9.5% from Oct 2012. The company’s active brokerage accounts totaled 9.0 million, almost flat with the prior month but up 3.5% year over year.

Moreover, clients’ banking accounts were 930,000, which was in line with the prior month but up 9.3% year over year. Moreover, Schwab had 1.29 million corporate retirement plan participants, falling marginally from Sep 2013 and down 16.9% from Oct 2012.

In the reported month, the figures for total client assets and retirement plan participants have been adjusted to reflect the impact of the company’s retirement plan recordkeeping platform and resignation of certain retirement plan clients.

Performance of Other Brokerage Firms

TD Ameritrade Holding Corp. (AMTD - Analyst Report) reported a rise in average client trades per day in its Activity Report for Oct 2013. Average client trades per day were 420,000, up 7.7% from the prior month and 27.3% year over year.

Online brokerage firm E*TRADE Financial Corp. (ETFC - Analyst Report) reported a rise in its Daily Average Revenue Trades (DARTs) for Oct 2013. DARTs were 159,703, up 9% from Sep 2013 and rising 29% on a year-over-year basis.

Our Take

Increase in DATs and new brokerage accounts will be beneficial for Schwab. Moreover, the company’s low-cost capital structure is expected to boost results in the coming quarters. However, we remain concerned about Schwab’s low trading activities.

Schwab currently carries a Zacks Rank #2 (Buy). A better-performing investment broker is Ladenburg Thalmann Financial Services Inc. (LTS - Snapshot Report), which has a Zacks Rank #1 (Strong Buy).

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