Ameritrade Continues To Grow In February; Price Drop In Commissions To Affect Top Line

TD Ameritrade’s (NASDAQ:AMTD) positive start to the year continued, as the brokerage saw impressive growth in its key metrics in February. Despite a fairly volatile trading period in February last year due to an economic slowdown and oil price rally, the daily trading volumes grew by over 5%. The company decided to slash its  commission per trade from $9.99 to $6.95 following the price cut by rivals such as Charles Schwab and Fidelity. Since the company generates over 40% of its revenue from trading commissions, the price cut will likely have a significant impact on its top line. However, the acquisition of Scottrade should offer some respite and help in offsetting price competition.

Interest earning assets, which contribute around 50% of the brokerage’s revenues, grew by 12% in asset volume. This surge in volumes has likely been driven by both the rate hike in December of 2016 and the anticipation of another possible hike in the coming few weeks.

Assets under management (AUM) have also continued to grow, and the brokerage’s digital advisory business and focus on newer investment products are likely to drive further AUM growth and consequently, higher investment product fees.

Please refer to our complete analysis for Ameritrade.

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