Last week, TD Ameritrade Holding Corporation ( AMTD - Analyst Report ) , an online brokerage firm, reported a 1% rise in average U.S. trades compared with the prior month in its Activity Report for the month of July 2012. However, U.S. trades dropped on a year-over-year basis.

For the reported month, Daily Average Revenue Trades (DARTs) were 332,000, down 9% year over year. The dip in DARTs largely resulted from the uncertain economic recovery and investors’ reluctance to invest in the equity markets.

Broker performance is generally measured through the DARTs that represent the number of trades from which brokers can expect commissions or fees.

For the month, TD Ameritrade reported $449.3 billion in total client assets, up 9% year over year and 1% from the prior month. Moreover, average spread-based balances increased 14% year over year to $74.7 billion. Further, these balances upped 1% from June 2012.

At July-end, average fee-based balances were recorded at $90.7 billion, rising 8% year over year and 3% from the prior month.

Quarterly Performance

As of June 30, 2012, DARTs were 355,000, down 4% year over year. Net new client assets reported were $9.7 billion in the quarter, reflecting an annualized growth rate of 9%.

For the quarter, TD Ameritrade reported $445 billion in total client assets, up 8% year over year. Moreover, average spread-based balances increased 18% year over year to $73.8 billion. Average fee-based balances were recorded at $88.2 billion, up 8% year over year.

Our Viewpoint

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

Development of innovative ways for online trading and long-term investing products and services, delivery of advanced customer service, creative and cost-effective marketing and sales, as well as expense discipline can be considered as key factors in executing TD Ameritrade’s strategy of boosting its trading and investing business.

Amidst a volatile operating environment, TD Ameritrade portrays organic client asset growth. Although, the company reported slightly improved trading volumes, significant turnaround remains elusive. Further, a low interest rate environment also remains a matter of concern.

TD Ameritrade currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

Later this week, among TD Ameritrade’s peers, Charles Schwab Corp. ( SCHW - Analyst Report ) and E*TRADE Financial Corporation ( ETFC - Analyst Report ) are expected to release their Monthly Activity Report for July.