TD Ameritrade FY4Q15 Earnings Call Notes

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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.”