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E*TRADE Financial (ETFC) Witnesses Y/Y Rise in August DARTs

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E*TRADE Financial has reported a rise in Daily Average Revenue Trades (DARTs) for August. According to its monthly-market activity, the company’s DARTs came in at 1,037,532, up 2.4% from the previous month but more than 256% up on a year-over-year basis. Notably, derivatives comprised 28% of DARTs in the reported month.

Broker performance is generally measured through DARTs that represent the number of trades from which brokers can expect commission or fees. The rise in DARTs primarily reflects investors’ willingness to invest in equity markets.

At the end of August, E*TRADE’s total number of accounts were 8.1 million, comprising 6 million retail accounts, 2 million corporate services accounts and 0.1 million advisor services accounts.

E*TRADE’s total accounts included 97,859 net new accounts for the reported month. The total number of brokerage accounts highlights the company’s ability to gain and retain customers who trade and invest.

Moreover, E*TRADE’s net new retail assets came in at $4.1 billion against a negative $0.4 billion reported last month. Net new advisor service assets were $0.1 billion.

At the end of August, E*TRADE’s customer security holdings were $385.6 billion, up from the $347.6 billion witnessed in July. The company’s brokerage-related cash came in at $93.2 billion compared with the prior month’s $91.4 billion. Additionally, on-balance sheet customer cash and deposits for the company totaled $60.9 billion compared with the $57.3 billion recorded in July.

Our Viewpoint

Though the uncertain macroeconomic environment might result in volatile trading activities, growth in DARTs and new brokerage accounts will prove beneficial for the company.

Peer Performance

LPL Financial Holdings Inc.’s (LPLA - Free Report) total brokerage and advisory assets of $823 billion at the end of August grew 3.9% from the prior month and 15.6% year over year. Of the total assets, brokerage assets were $412.2 billion and advisory assets totaled $410.4 billion. This rise resulted from improved equity markets.

The Charles Schwab Corporation (SCHW - Free Report) reported the monthly activity report for August, which shows decent results compared with the prior month. Total client assets came in at $4.49 trillion, up 5% from the prior month. Net new assets increased 79% sequentially to $20 billion.

Interactive Brokers Group (IBKR - Free Report) recently released the Electronic Brokerage segment’s performance metrics for August 2020. The segment, which deals with clearance and settlement of trades for individual and institutional clients globally, reported a substantial surge in DARTs on a year-over-year basis. This can be attributed to a significant rise in trading activities owing to the coronavirus pandemic.

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