Ameritrade (NYSE:AMTD) has announced the addition of new features to its trading platform, Trade Architect.  These enhancements are directed towards improving customer experience, facilitating clients to comprehend and act on the broad range of information at their disposal. By providing real time screens defined by the client, ready access to premium investment research by such third parties as Standard and Poor’s and investor communities to follow other members, their ideas and strategies, the company plans to build an end to end platform for research and trading decisions. In the current tough economic conditions where increased market volatility has finally led to a decline in trading, retail brokers are competing to provide a holistic investment experience to customers. Other brokers as Charles Schwab (NYSE:SCHW) and E*Trade Financial (NASDAQ:ETFC) are ramping up efforts to evolve similar platforms.
E*Trade detailed a plan to advance its market position in the retail brokerage segment by developing its trading platform.  Schwab has also introduced upgrades to its platform for active traders, StreetSmart Edge®.  These capabilities are aimed at making trading decisions and execution efficient and easy.
As investors become more of a ‘global trader’, as termed by TD Ameritrade’s chief derivatives strategist, we think that providing such comprehensive platforms for investment decision making might help brokers gain and retain their customers.  We also believe that this year trading revenues will be the savior for brokers who are struggling with the prevailing low interest rate scenario, with income from net interest remaining at ultra-low levels. Earnings reported in the third quarter by these brokerages was buoyed by trading commissions, as market instability due to Europe and U.S. sovereign debt downgrade led to record high average daily trades.
We have a price estimate of $22 for Ameritrade, implying around 40% premium to the current market price.Notes:
- TD Ameritrade Enhances Trade Architect® Trading Platform, TD Ameritrade Newsroom [↩]
- E*TRADE Financial Corporation, Goldman Sachs US Financial Services Conference 2011, E*Trade News Release [↩]
- Schwab Enhances Order Entry Capabilities and Adds Market Monitoring Tools for Active Trading Platform, Schwab Press Release [↩]
- In Euro Era, Opening Bell Is a 2:30 A.M. Alarm, New York Times [↩]