NEW YORK, March 5 (Reuters) - Retail investors' renewed interest in stocks this year continued in February, according to comments from officials at TD Ameritrade Holding Corp and E*Trade Financial Corp.
Omaha-based TD Ameritrade will not disclose trading metrics until next week, but client trades in February tracked the volume of the broader equities and options markets, the firm's chief financial officer said on Tuesday at a conference sponsored by Raymond James.
Average daily stock trading volume on U.S. exchanges was up 2 percent last month from January, while options activity was down by the same amount, so TD Ameritrade clients likely averaged about 388,500 trades a day in February, KBW analyst Joel Jeffrey estimated in a note to investors. That would be up slightly from the 387,000 average daily trades made in January by TD Ameritrade clients, who are the most active among the three largest publicly traded discount brokers.
THEY LIKE OPTIONS
TD Ameritrade CFO William Gerber said on Tuesday that about 60 percent of client trades last month were in stocks, 32 percent in options, 7 percent in futures and 1 percent in foreign exchange. Trades in options and futures, which have higher commissions than stocks, has been expanding, although Gerber said the 40 percent mix for derivatives will probably decline to a mid-30 percent range for the full year.
Analysts closely track monthly trading metrics from retail brokerages to assess whether investors are reengaging with the stock market after three years of weak volume. TD Ameritrade clients increased their average daily trading by 17 percent in January from December 2012, when they were concerned about fiscal cliff negotiations in Washington and Eurozone issues, company officials have said.
At the same conference, E*Trade chief financial officer Matthew Audette said February trades by clients averaged 152,000, down about 1 percent from January.
"But when you look at the first two months together, it is certainly a nice pickup versus what we saw in the last nine months of 2012," he said.
E*Trade clients averaged 138,000 trades a day throughout all of 2012.
THE SCHWAB FACTOR
Charles Schwab Corp, the pioneer discount brokerage, has not yet reported its daily February volume and did not participate in the Raymond James conference.
Schwab, TD Ameritrade and E*Trade have all been trying to shed their reliance on trading by generating more steady revenue from fee-based money-management products and services. The firms continue to be stung by rock-bottom interest rates that hurt the returns they get from investing excess client cash and by waiving fees on low-yielding money-market funds to keep clients from making negative returns.
Analysts at Sanford C. Bernstein & Co upgraded Schwab to "outperform" on Monday, partly on the belief it will prosper when money-market fees are reinstated and retail investor interest returns to historical norms.
A 77 percent growth in client assets at Schwab since the end of 2008, while its stock price increased just 2 percent, also indicates Schwab can sustain itself on asset-based fees until rates rise, the Bernstein analysts said.
TD Ameritrade, Schwab and E*Trade shares were up 2 percent, 1.3 percent and 1.1 percent, respectively, in late afternoon trading, slightly ahead of 0.92 percent rise in the Dow Jones Industrial Average. (Reporting By Jed Horowitz. Editing by Andre Grenon)