E*TRADE Reports 12% Sequential Decline in DARTs

May 16, 2018 — 12:35 PM EDT

E*TRADE reported this week that daily average revenue trades (DARTs) during the month of April declined 12% from March. However, on a year-over-year basis, DARTs were up 28%.

In a press release, the New York-based online brokerage said that derivatives accounted for 36% of DARTs during April. While customers reigned in trading during April, E*TRADE Financial Corporation (ETFC) was able to add 188,056 gross new brokerage accounts and as of April had 3.9 million brokerage accounts, an increase of 155,634 from March. The online brokerage's acquisition of Trust Company of America added 145,891 to its gross new brokerage accounts during the month. Last fall, E*TRADE paid $275 million for TCA, which has more than 180 active registered independent advisers and $17 billion in institutional assets under custody.

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Meanwhile, E*TRADE said that net new brokerage assets came in at $18.2 billion for April. Brokerage-related cash remained flat sequentially in April, ending the month at $51.9 billion. E*TRADE credited its purchase of TCA for $18.4 billion in net new brokerage assets. Margin balances decreased during the month, but customers were net buyers of about $0.9 billion in stocks, with TCA accounting for $0.6 billion of that.

While the discount brokerages had weathered the mid-February market correction, posting strong first quarter results, they are painting a different picture for the current quarter. With volatility back in the market and fears of rising inflation worrying all sorts of investors, concerns have been abounding that brokerages are going to see a decline in trading and new customers.

For example, earlier this month, TD Ameritrade announced that its Investor Movement Index (IMX) declined for the fourth month in a row in April, dipping 8% from March. In a press release at the time, the Omaha, Nebraska-based discount brokerage said that the index came in at 4.79 in April, lower than the 5.22 score in March. The IMX is a proprietary, behavior-based index created by TD Ameritrade Holding Corporation (AMTD) to take a pulse of investors' sentiment and how they are positioned in the markets. The brokerage blamed volatility for the decline in client exposure to the equity markets.

Furthermore, Charles Schwab recently reported a 12% increase in total client assets in April on a year-over-year basis, but the level was flat with March. Core net new assets brought into The Charles Schwab Corporation (SCHW) from new and existing clients reached $9.9 billion at the end of April, which excluded expected outflows of $9.5 billion from certain mutual fund clearing services clients. Net new assets excluding the mutual fund clearing were $8.8 billion.