Sothebys 1Q17 Earnings Call Notes

Thomas Smith – President and CEO

*The market is starting to show signs of strengthening

“So, what is the state of the market for the art and luxury goods that Sotheby’s sells? In short, the market is starting to show signs of strengthening. The message from our Hong Kong sales in April was that East and Southeast Asia’s buyers were prepared to pay top prices for excellent quality art and jewelry.”

*Purchasing power of wealthiest has grown more than price of art

“In 2006, the 201st wealthiest person on the Forbes 400 would have had to spend 10% of his wealth to purchase the most expensive piece of art sold in auction that year. In 2016, that same number was only a little over 5%. In 2006, the 201st wealthiest person on the Forbes 400 would have had to spend over 70% of his wealth to purchase all of the top 10 pieces of art sold at auction that year. In 2016, that same number was under 40%. In other words, the median member of the Forbes 400 would have seen his personal spending power to purchase art at auction, grow 75% in the past decade alone.”

Schwab (SCHW) Q3 Earnings

Schwab (SCHW) CEO Wallt Bettinger said the company sustained it’s mid single digits asset growth rate

“Schwab’s third quarter results reflect the combined power of our strategy and scale – we served more clients than ever while delivering record financial performance. Our range of full-service investment capabilities continued to attract a broad spectrum of investors and helped core net new assets total $30.0 billion in the third quarter, sustaining a solid 5% annualized organic growth rate. We ended the quarter serving 10.0 million brokerage accounts and 1.1 million bank accounts.”

Their online only robe-advisor investment offering crossed the $10 billion dollars in AUM threshold 

“Client assets enrolled in Intelligent Portfolios surpassed the $10 billion mark at month-end September, just 19 months after launching in March 2015. This digital advisory program’s combination of sophisticated, ongoing portfolio management – with no advisory fee charged and access to live support – has attracted investors of all ages and wealth levels, the majority of whom are formerly self-directed. Roughly a quarter of the assets enrolled in Intelligent Portfolios are new to Schwab, and that proportion is growing steadily.”

Schwab (SCHW) CFO Joe Martinetto said the company set a quarterly record for firm profit margins

“Schwab posted its fifth consecutive quarter of record revenues for the period ending in September, as well as a record pre-tax profit margin of 41.5%. Our prior peak margin was set in the third quarter of 2008. We have rebuilt our profitability from post-financial crisis lows by driving client asset and revenue growth with our ‘Through Clients’ Eyes’ strategy, and applying expense discipline to maintain an appropriate balance between near- term profitability and reinvestment for growth.”

Interactive Brokers (IBKR) Q2 2016 Earnings

Interactive Brokers (IBKR) CEO Thomas Petterfy said they were adequately prepared for the Brexit

The big news for the quarter was Brexit. We have begun preparing for the possible outcomes early in the year by adding the event to our evented scenarios, which are under regular evaluation by our risk committee. We started to adjust margin requirements and the relevant products first initial margins so as to prevent the establishment of risky new positions and later increased maintenance margins. Using this approach very few existing positions needed to be liquidated.”

Volume was elevated in the wake of the Brexit

“Accordingly for Interactive Brokers Brexit was business as usual, we experienced no credit losses and the increased volatility was a positive for our brokerage business. We heard that some of our brokers suffered outages in the first 2 market days following the vote. We had no such problems. Our volumes were up, but only about 40% over the usual. We generally plan for volumes max about 300% above normal run rates.”

Customer accounts are at an all time high

“During the quarter, we had again seen several new records for our brokerage business. We continue to hit all time highs in customer accounts, which were up 15% this quarter to 357,000, while margin loans were flat in the first quarter with customers reluctant to take a mortgage in the face of global economic uncertainty. Our customer equity continues to grow to a record of $74 billion.”

Their market making business had their worst performance in 8 years

“While we have been focusing on the brokerage business the world has changed and left us behind. Our profits from market making have been shrinking for several years now. 5 million profit for the quarter is the lowest number we have recorded in the past 96 quarters. This maybe an aberration the long-term trend is clear. We must undertake the project of transforming this business over the coming year and we will.”

Sales increases by geographic region

“So I can tell you that by region America is 12%, Europe is 11% and Asia is 29%.”

They are entering the business of helping investment advisors with compliance 

“For the moment it is bundled but when it’s in full force, we will charge for it but we will charge for it less than anybody else in this space, much less, just like we charge much less in commissions and provide better executions. So, the idea is that we have all this stuff automated already and we compete and we have all the data practically and we’re competing with people who has to piece the data together and so it’s going to be very-very easy for us and for other for it’s not so easy.”

Interactive Brokers (IBKR) Q1 2016 Earnings Call Notes

Interactive Brokers (IBKR) CEO Thomas Petterfly said its most profitable clients are hedge funds and traders

“Our most lucrative accounts are hedge funds and proprietary trading groups. Both of these two financially most sophisticated customer types trade and invest for their own livelihood and depend on our very low transaction cost and prime brokerage capabilities for their income. This is the reason it is so very important for us to keep on top of our order routing algorithms, not to sell our order flow, and not to get into conflicts of interest issues by trading against our customers’ orders.  Hedge funds and proprietary trading are our most important customer segment, comprising 4% of our accounts, 23% of our customer equity, and 26% of our commission income.”

Interactive Brokers clients are increasingly based abroad

“From the point of view of worldwide geographical distribution, it is notable that only 40% of our accounts and only 36% of our new accounts come from the United States. The geographic composition of our client accounts have grown from 20% to 22% in Asia and decreased from 52% to 51% in the Americas, and from 28% to 26% in Europe during the past year.”

Profitability will benefit from any further Federal Reserve interest rate increases 

“With a growing customer asset base, we continue to believe we’re well-positioned to benefit from a rise in interest rates. As noted, the Fed’s 25-basis-point increase in the Fed Funds target rate had a beneficial impact on net interest income. And based on current balances, we estimate that a general rise in overnight interest rates of another 25 basis points would produce an additional $48 million in net interest income annually.”

Sometimes customers can be just downright lazy

“Our biggest enemy is inertia. The issue is that most people with a brokerage account do not want to bother with switching it. So therefore, even if they are — even if we succeed in convincing them that they would have a financial advantage, a large financial advantage, by bringing their account to us they still don’t want to do it, because of just laziness.  And most people in Europe already have an account and most people in the United States already have a broker, right? In Asia, it’s the newly rich, the young people who open a brokerage account for the first time in their lives. So they compare the brokers. And anybody who compares brokers can blindly see that we are by far the lowest cost.”

Half of their customers have less than $24,000 in their account

“I, to tell you frankly, I haven’t been keeping track up until the last two years and it’s been holding pretty steady, because the primary cause of our closing accounts is that people run out of money. And you have to remember that, in spite of the fact that the average account size is $204,000, more than half of our customers have less than $24,000 in their accounts, and a third have less than $10,000.”

Hope to one day take care of all of their RIA’s clients compliance needs

“We are working on automating our Registered Investment Advisor compliance set of rules. Because we want to eventually offer to Registered Investment Advisors that we will take care of their compliance needs from beginning to end. We can do some of that right now and we keep growing that capability.”

TD Ameritrade FY 1Q15 Earnings Call Notes

Fred Tomczyk

We’re still seeing a wait and see attitude from the broader client base

“January month-to-date, trades are averaging 579,000 trades per day. While trading is up and the number of clients trading are as up as well, we are still seeing a wait-and-see attitude from the broader client base. Those who are trading are doing so quite actively, but the average investor is waiting to see which way this market will turn next.”

Coming into what is typically our busiest time of the year

“We are coming into what is typically our busiest time of the year and our strongest trading quarter. With so much uncertainty, we would expect economic and geopolitical news to continue to driving investor sentiment throughout the near term.”

INterest rate increase is good for earnings

“We are also quite pleased that for the first time in nearly a decade, the Fed has raised interest rates. We have operated quite well through a prolonged difficult economic environment. And while challenges and uncertainties remain, this action is a positive from an earnings perspective. ”

The presidential election will undoubtedly have its own influence

“We can’t predict what specifically the year will bring, but we would expect geopolitical and global economic uncertainty to continue and the upcoming presidential election will undoubtedly have its own influence on investor sentiment and the markets. ”

Advisors are not growing as fast as they were

“the retail asset gathering is slightly up year-over-year and the institutional side is down. The institutional side is down largely to existing advisors. They are continuing to grow, but they are not growing as fast as they did last year at the same time. ”

It’s hard to gather assets in a flat market

“With respect to sort of pipelines, the pipelines are still very full and very robust with respect to breakaway brokers and sales opportunities. We have got a National Conference coming up, which is usually a big event for us where we do gather a lot of assets in the quarter following that conference, but the sales cycle just takes a bit of time here. But it’s not surprising to me I think the market was flat last year. So, it’s just a more challenging market for people to gather assets, but we continue to do quite well in that market.”

Breakaway broker movement is a secular trend we don’t see changing

“the trend to independence has been a long and very significant secular trend we don’t see changing. And so I think that’s an upside to the breakaway broker movement from our perspective. Having said that, in down markets like this, it’s usually a time where people just hold up, talk to their clients and are less apt to make that shift.’

It’s tough to differentiate in a flat market if you’re an advisor

“In our discussions with them, it’s much more the market environment. It really is basically the market was essentially flat last year, so we target to differentiate yourself. And so it’s just a different market. The environment as I said earlier most investors are a little bit tentative right now and taking a wait-and-see attitude. So, while they maybe talking to a lot of people, taking actions just slowed down a bit here.”

We would expect volatility to continue

“so far in January, we have a very different market that has a negative tone to it. It’s been good for trading volume. But I think as we move through the quarter and the balance of the year, from our point of view, we will continue to see volatility and it will all depend on geopolitical events. The price of oil seems to be a big factor right now, the growth rate in China and certainly, actions of the Fed and the Presidential election are all going to have influences on the market from here. It’s a very difficult market to call. But as we said at the beginning of the call, we would expect its volatility to continue here.”

Steve Boyle

Margin balances have held pretty well in January, cash is up

“Margin balances have held in pretty well in January, but we would expect in this kind of environment that we would see some declines in margin balances. Stock lending is always difficult to predict. Cash levels, free credits are up significantly, so cash is up.”

TD Ameritrade FY4Q15 Earnings Call Notes

Our clients decreased equity exposure in September and are awaiting direction from markets

“So far in October, intraday volatility and the VIX have both come in and our clients have decreased their equity exposure in September per our investment movement index and are now expressing some caution as they await direction from the markets.”

Margin balances did come down

“margin balances, as you would expect in the sell-off the market did come down a little bit and so that’s built into our expectations for next year. Stock lending as you mentioned is quite situation-specific. We’ve seen some good activity early in October here but that’s something that we tend to be cautious in our outlook on since it’s very relate — the revenue in particular is very related to certain IPOs and other market events.”

Trading has become very news and event driven

“And I continue to say the Federal Reserve banks around the world in the developing — developed countries have put a lot of stimulus into the system. And we’re now at the point where even China or Europe announces similar stimulus and we have a robust trading day. And so it’s become very news and very event-driven.”

I think there’s going to be volatility as stimulus is unwound

“And I continue to believe that there is no way that the U.S. Federal Reserve unwinds some of what they’ve done with all the stimulus over seven years, almost now that basically when they start to unwind it is going to be volatile. I think that’s – I think most people would agree with that”

We’ve got an election next year

“We’ve an election going on next year. That will probably take a bigger impact later in the year than earlier in the year, but I think between an election year, Federal Reserve tempering, what’s going on in the Middle East, the Federal Reserve banks in other parts of the world”

Our clients continue to have an appetite for tech stocks

“I think in this earnings season you saw some surprises on the downside, some surprises on the upside. The tech stocks continue to do well and quite an appetite in our client base. So it definitely could go higher, but we grow our number of funded accounts.”

Margin lending fell but came back

“some of our bigger margin clients that regularly use it, who tend to be a little bit more stable. I also think you have to look at the fact that we had a correction; everything came in and then basically the market’s come back pretty much. And so, I think it definitely did come down but it started to come back a bit as the market started to recover and as people saw an opportunity.”

The US equity market is the tallest midget in the room

“I also think in today’s world, I continue to say basically, it’s not obvious where you put your money, if you had to pick from a risk/reward basis the U.S. equity market seems like the best – the tallest midget in the room, so to speak.”

RIA breakaway pipelines remain strong

“we continue to see very good trends on the breakaways. Our pipelines are good. So we haven’t seen signs of it abating…With respect to the competitive environment it’s getting more competitive. There’s no question people have noticed our success there. ”

We’re not seeing clients over-extend themselves in margin

“I’d say we’re not seeing clients overextend themselves in margin or come back a lot. I think that the margin balances as a percentage of client assets have been fairly steady over time.”

TD Ameritrade FY 1Q15 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

RIAs growing much faster than wirehouse

“the move towards the independent channel shows no sign of slowing or abating. In the last five years, asset growth for RIAs has outpaced wirehouses by more than two to one.”

Increased volatility drives increased interest

“while typically a slower trading period, investors were highly engaged in the market as volatility spiked and the S&P 500 hit record highs in the December quarter. We expect this volatility to sustain as the VIX is now hovering around 20, nearly double the six month average of 12 to 13.”

Clients holding 14% cash on average

“Client cash balances ended the quarter at 14.4% as our clients remained invested in the markets. Given that the mix of our client assets are now essentially 50-50 between the retail and institutional, the expected firm-wide cash percentage range needs to be reset based on the relative historic portions of cash.”

Retail clients tend to carry more cash than institutions

“retail clients typically carry 19% to 24% in cash and institutional clients typically carry 7% to 12% in cash.”

Manage expectations

“You sound like my Board. Every year I tell them that we’re going to be 7% to 11% and they say you’re at 10% to 12% every year and I say yes but this year is going to be harder and we put up those kind of numbers this quarter, so it’s a nice problem to have.”

Retail investors are generally bullish

“retail investors right now are generally bullish. You’ve got volatility and whenever there’s this kind of volatility and noise in the market whether it’s people having financial troubles or big events, people are much more in tune to their investing and their trading. And when you do that in our experience we tend to do well.”

Our clients are engaged and bullish

“I would say it’s really hanging in there. The logins are up regardless of which segment you look at, trades are up and logins are up. So, it’s pretty broad based.

Investor movement index is up in the month of December, and it continues to be bullish. And you’re looking at whether it’s margin loans, net buying, everything continues to say our client base is pretty A, engaged and B relatively bullish.

I think again as I think about it all – where else would you rather be than U.S. equities, right now. And if you are nervous person then you’re going to be in U.S. treasuries.”

Clients are heavy into tech and growth and have moved into oil too

“Our client base – we’ll have an orientation towards the tech and growth stocks, but also there’s been a huge – they tend to be contrarians and they moved into the oil and gas stocks with the big dividend yields and lots of capital to do dividends and buyback shares, they moved into them pretty good.”

ETF usage peaked at 12% of assets a few years ago

“t peaked a few years ago at about 12%. It’s sitting in that probably closer to 10% range now. So I would say it’s relatively flat. Certainly it add a big move and zero to 10 to 12, but it is going to settle into that low double digit range for us.”

TD Ameritrade at Barclays Conference Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Run a conservative balance sheet

” we do run a unique and differentiated business model. We are an online broker and agency broker. We really don’t carry much on our balance sheet. All you’ll see in our balance sheet is margin loans and securities lending and intangibles for the most part.”

most trades per day of anyone in the sector

“we’ve been the leader in the trading side of the business. We have the most trades per day of anyone in our sector.’

We like derivatives

“Derivatives, we like for a couple of reasons. Number one, on options in particular they tend to have a richer commission per trade. Number two, is they expire, which means that you have to continuously [ph] re-put (03:35) on your position or adjust your position. So, it has a resiliency to it that basically you don’t see in a lot of equity traders. And number three, an option trader or a futures trader can trade in almost any market.”

Unique relationship with TD Bank

“The unique relationship with TD. TD Bank owns 40% of us, and there is a shareholders’ agreement between them and the company. And the Ricketts family, who are the founders of the company, who own about 10% or 11% of the company. And so, there is an agreement there that explains how the two parties will work together, certain governance rights on the board.

But it does – we have a big relationship with them in terms of how we do our client cash strategy. So, we allocate much of our client cash to a bank deposit account on TD’s balance sheet and when it return, we do the asset liability management and we invest of to – basically, on synthetic bond letter [indiscernible] (07:03) LIBOR swap curve.

That allows us to take much of the economics of deposit banking”

Well positioned for higher rates

“we’re very well-positioned for rising rates. We gave you the disclosures in our statements here. You can see that we’re up 100 basis point parallel shift in the yield curve. In the first 12 months, that would add about $0.36 per share in earnings to our earnings level. In the second year it will be $0.44, and in the third year it’d be $0.50 as the bond ladder rolls over at higher rates.”

It would be nice to have rising rates as a tailwind

“We’ve been in a near-zero interest rate environment here for almost six years. It’d be nice to have a – it has a tailwind. It’s not a headwind anymore, but it’d be nice to see it as a tailwind”

If you want to be a big asset gatherer, you’ve got to be independent

” In the RIA channel, which is say, the fastest growth channel in wealth management. So, I think, if you want to be a premier asset gatherer in today’s world, you’ve got to be in to be independent whether as a broker, dealer or RIA. We’re purely the RIA model.”

There are really four competitors in this channel

“In that channel, [indiscernible] (18:42) really is the big vendor or ourselves, Schwab, Fidelity and Pershing”

On the RIA side our technology sets us apart

“I’d tell you in the RIA space, our value proposition has probably had more sophistication and support tools for the derivative side for overlay strategies and technology that’s more, we would call it client friendly and more advanced.”

Differences between us and Schwab

“I think I’d say, Schwab is much more of a discount full service model. So very much push you into an adviser. I’m not saying that’s wrong. I think that’s their approach to the market. And they’ve moved up market, we’re a much more online-centric, and technology and education-based. And so, it’s just different.

We will appeal to – more to self-directed investors and active traders and people that want to be engaged and want to do it themselves. I think they will appeal more to people that may have been with the wirehouse today. But we both pick up a lot of our business from the wirehouses and independent broker-dealers, because we do what they do, but in a much less expensive way”

Can’t take anything for granted on a bank transaction

“being a bank transaction, you have to get the approval of federal reserve and anybody in banking will know that basically you’re watching M&T and [indiscernible] (25:50) Hudson or whatever the one they do, but it’s sitting out there for two years, waiting for approval. So, I think there’s nothing that we’re aware of that will get in the way from an approval point of view. But I think in today’s world, getting a bank transaction approved I think you can take nothing for granted.”

We need a little bit more volatility for engagement

“You know I think we definitely saw the slowdown, particularly I’d say the last two weeks of August. And so, we will release our DARTs Wednesday. So, definitely it did slow down and it was a slower summer. I would say since then we’ve seen people come back, which is, again, not abnormal. [indiscernible] (30:11) see after the Labor Day weekend people start to get back and engage in the markets.

There’s lots of different views right now on whether the market is going to rise or something else is going on. There’s a lot of geopolitical risk. But for whatever reasons, the equity market seems to have fought through all the geopolitical risk. I’m surprised there’s not more volatility in the market personally. And if we’ve seen – relatively, I think you’ll see trading go even faster. But I think sentiment is pretty good. It’s just – we now – we need a little bit of volatility.”

TD Ameritrade 2Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

650B in client assets

“Client assets totaled $650 billion, up 24% year-over-year. Net new client assets were $13.4 billion, a 9% annualized growth rate.”

60% of retail flows to come through discount brokers or RIAs

“A recent McKinsey report predicts that nearly 60% of net flows into the $15 trillion U.S. wealth management market, over the next four years will come through the discount brokers channel or the RIA channel.”

Clients who were trading were taking bullish positions

“clients who were trading, were still taking bullish positions, and yet, even as the markets approach new highs, volatility has been relatively non-existent.”

RIAs showing strong growth

“The institutional channel had a particularly strong quarter and they’ve got very good momentum going into the fourth quarter.”

Definitely seeing an improvement in the attitude of our clients

“So we haven’t seen any change in the new clients coming in, but what we are seeing is our existing clients are definitely moving into the market with the improvement in the market and their attitudes”

People are engaged, just not trading as much

“So they’re definitely engaged, and in fact one of the things we’ve seen quarter-over-quarter, even though we’ve seen trades come down…retail logins are essentially flat, and so people are still engaged, but they just haven’t been trading as much. But on the client cache we are seeing net buys almost double year-over-year. So there’s no question people have moved into this market and remained relatively bullish based on what they are doing.”

RIA channel is definitely fully invested

“On the institutional side, I would say the same dynamics, they are even lower and so there’s no question that the RIA’s have their client’s investments pretty much fully invested here and are keeping very little in cash. So we are definitely seeing and I would say relative to history, the RIA channel is more fully invested than the retail channel on a relative basis, even though retail will normally keep a lot more in cash.”

People are bullish but it’s not obvious that they should change anything, so activity is low

“I think the people are bullish based on what they are actually doing, and the markets are at record highs. It’s not obvious what to do, where else to go…I think the thing that will be the catalyst to trading here is whether we see increased volatility or not.”

Mutual funds are still in demand

“anybody that thinks mutual funds are going away and everything’s shifting to ETFs, there’s some of that, but mutual funds are still in demand and we continue to work at making sure we are getting our fair share of the shareholder services for the work that we do for the various mutual fund platforms.”

Meeting RIA needs with technology

“I think the RIA channel is clearly the fastest growing channel in Wealth Management today, and I think we’ve done a great job at leveraging, innovative in different technology, and is being met with open arms, and some of our peers will catch up with that, and in fact that probably all of them will redesign their technology to make sure they meet that competitive advantage that we’ve had, so it won’t last forever.”

Invest here rather than maximize pretax margins

for the long-term interest of my shareholders, we should be investing here as opposed to maximizing pretax margins, so we do think there’s still some up.”

Apple is our clients’ largest holding

“Apple is the largest holding of all of our clients and the most frequently traded symbol’

It’s hard for me to believe there wont be volatility around QE exit

“I think we are in an environment where there’s a lot of monetary stimulus around the world in the market. And sooner or later one would assume that that has to start to come out, and whenever that starts to come out, I have a hard time believing we are not going to see volatility, given how much stimulus we’ve had and the longer-term nature of it”

I’ve got to believe that volatility comes back at some point

“I have to believe that my own experience in this business is that that’s going to cause some bumpiness and I would expect activity levels to pick up over time, but it’s highly dependent on when the Fed’s, the various Federal Reserve type institutions around the world start to fall back a bit and the global flow start to adjust’

RIAs seeing an increase in SEC audits and audit questionnaires

I’m not sure when any resolution is going to come, but they are definitely seeing an increase in SEC audits and SEC audit questionnaires, and I definitely heard that at our elite conference, last couple of months ago.”

TD Ameritrade 4Q13 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Retail investors making their way back into markets

“With less uncertainty in Washington, an improving macroeconomic environment and the beginning of Fed tapering, retail investors are making their way back to the markets, leaving us with a lot to feel good about.”

Seeing more risk tolerance among retail clients

“As investors re-engage more broadly with the markets, we’re seeing a rotation and interest with respect to our Amerivest portfolios. For several quarters, the Amerivest supplemental income portfolios were the most popular. Now, we’re seeing increased interest in the opportunistic portfolios which are more actively managed based on what’s happening in the markets.”

Less uncertainty leading to improved trading environment

“there is less uncertainty for investors to worry about, and as we all know, investors do not like uncertainty. As a result, the trading environment has improved. Our broader base of investors has re-engaged, boosting trading activity and contributing to the strength of our quarter

Everything trending in the right direction

“we feel good about how the year is shaping up. Virtually ever metric we measure and manage is trending in the right direction so far this year.”

Washington out of the way made a huge difference in confidence

“I do think not having an event out of Washington has made a big difference in terms of people’s confidence, and there’s no question whether you’re listening to the banks or other players in the market or companies, I think you’re seeing some consumer spending come back.”

Hopefully no more price wars on commissions. Five players left, should compete in other dimensions

“It’s hard for me—you know, whether we’re going to have another round of commission price wars, who knows? I would hope the industries all learned from the last one that basically it’s a zero sum game, and we are down now to five players in the industry and we should all just focus on competing in other dimensions, which will be much more marketing, incentive base, technology platforms, new investment products, whatever it may be. It’s a very competitive business, but to start on price any more, I think—you know, hopefully everybody recognizes it’s a zero sum game at this point of the industry maturation.”

Not surprisingly most margin growth came from most active traders

“I think that you can take away from it there’s no question in the quarter we saw the biggest percentage growth in margin balances from the more active traders.”

RIAs trading more too

“there’s no question the activity rate in the institutional channel is lower than the activity rate in the retail channel. Having said that, if you look year-over-year at increase in trades, both are up nicely year-over year, but actually the institutional channel trades per day are actually up higher—a higher percentage year-over-year than the retail side.”

Analyst Comment: Client cash at 15-20% level, lowest since financial crisis

“Client cash to total assets, it’s still within the normal 15 to 20% range but it looks like it ticked down to the lowest level since the financial crisis, which I guess makes sense just as sentiment is improving here.”

RIAs are pretty bullish

“If you went to the RIA side, they have been fully invested all the way through. They’re very low—they’re sort of the lowest client cash—allocation to client cash that we’ve seen, and again they would be fairly bullish on equities.”

It’s not raw account growth that matters, it’s quality of account

“We don’t report new accounts anymore; we just don’t think it’s as meaningful a metric as it was early in the history of the industry, and today it’s much more about getting the right type of accounts, making sure they’re either active or they have better assets—or not better assets but bigger assets. So in our view, it’s as much if not more so about the quality of the account than just raw accounts.”