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Schwab's August DARTs Decline

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In its monthly market activity report for Aug 2013, The Charles Schwab Corporation (SCHW - Free Report) reported Daily Average Trades (DATs) of 467,300. The figure marked a 6% decline from 498,900 in the prior month but was up 24% from 375,900 in the year-ago month.

Total client assets were $2.08 trillion, down 2% from Jul 2013 but up 12% from Aug 2012. Further, Schwab’s net new assets – bought by existing as well as new clients – were negative $2.4 billion, compared with $8.8 billion reported in the prior month and $6.9 billion in the year-ago month.

Schwab opened 78,000 new brokerage accounts in the reported month, increasing 4% from Jul 2013 and 8% from Aug 2012. The company’s active brokerage accounts totaled 9.0 million, almost stable compared with the prior month but up 3% year over year.

Moreover, clients’ banking accounts rose 1% from the prior month and 11% year over year to 926,000. Moreover, Schwab had 1.29 million corporate retirement plan participants, down 19% from Jul 2013 and 16% from Aug 2012.

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

Performance of Other Brokerage Firms

Last week, TD Ameritrade Holding Corporation (AMTD - Free Report) reported a rise in average client trades from the prior year in its Activity Report for Aug 2013. Average client trades were 382,000, up 26% year over year. Further, TD Ameritrade reported $538.4 billion in total client assets, up 17% year over year but down 1% from the prior month.

Online brokerage firm E*TRADE Financial Corporation (ETFC - Free Report) is expected to report its monthly Daily Average Revenue Trades (DARTs) by this week.

Our Take

Schwab’s low-cost capital structure will likely aid in improving results in the upcoming quarters. Moreover, the synergy from the acquisitions and stable capital position will boost the company’s financials going forward. However, we remain concerned about Schwab’s low trading activities and reduced interest rate yields.

Schwab currently carries a Zacks Rank #3 (Hold). A better-performing investment brokers is BGC Partners, Inc. (BGCP - Free Report) , which has a Zacks Rank #2 (Buy).

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