TD Ameritrade FY 3Q16 Earnings Call Notes

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TD Ameritrade Holding (AMTD) Fredric John Tomczyk on Q3 2016 Results

Tomczyk’s last call

“today will be my last earnings call. Our CEO, transition has gone well. As of July 1, Tim Hockey has assumed oversight of all business and functional units, and has been engaged in lending our planning for 2017.”

Expect continued volatility

“after a volatile start to the calendar year, the markets in the June quarter were relatively toughened. That was of course until the historic Brexit poll at the end of June, which assured an about a volatility to close the quarter. This is a trend we would expect to continue. With heavy monetary stimulus from central banks and much of the world, we have record levels for both the equity and the fixed income markets at the same time, which is unusual. That said, the U.S. economy continues to progress, UK’s decision to exit their relationship with European Union, does have the potential to influence future Fed policy regarding rates.”

Timothy D. Hockey – President and Director, TD Ameritrade Holding Corp

News has been driving increased activity

“Traders increased their equity exposure throughout the period. For example on June 24, the day following the Brexit vote, was one of our strongest trading days ever. In advance of the vote, we prepared content and education to help investors understand its impact on the markets, which was helpful as request for education and guidance outpaced any other service need that day. The news also promoted an elevated interest in derivatives, which for the quarter were 44% of DARTs. A record 95,000 DARTs came from mobile devices in the quarter, comprising 21% of total DARTs. On June 24, that number was at even higher 172,000. Mobile volumes for futures and forex on that day were each more than double what we typically see. We believe we will continue to see more of these days, where news and events drive significant market activity.”

There are a lot of forces that are compressing margins generally

“there’re a lot of forces here that are compressing margins generally. And the RIAs aren’t immune to that. I can tell you that there is a lot of interest in how they can react and continue to offer great client experiences and grow in a post DOL world. And for example, our referrals for breakaway brokers were up 75% year-over-year, so we think there is lots of upside. But there are – like I said earlier, we’re all trying to figure out what’s the best to do in this new world as well.”

Stephen J. Boyle – Executive Vice President & Chief Financial Officer

Securities lending is at a low ebb, margin balance is towards a high

” I’d say securities lending is at a low ebb – certainly was in a low ebb during the quarter. And so again, hard to predict, but if you revert it to the norm, you might expect to see some increases there. Margin balance is – we’ve had pretty good margin balance growth over time. We hit a high towards the end of last year. So I think we’ll see that come back and forth. ”