TD Ameritrade CEO says its clients more bullish

NEW YORK Wed Jun 5, 2013 7:13pm EDT

NEW YORK (Reuters) - In a view that contrasts with pessimism at full-service brokerage firms, TD Ameritrade Holding Corp's (AMTD.N) chief executive said small investors are returning to trading stocks and options.

"Our clients are turning increasingly bullish," CEO Fred Tomczyk said at Reuters Wealth Management Summit on Wednesday. "Things are on a good trend, and I think they will continue."

The Omaha, Nebraska-based TD Ameritrade, which executes more trades per day than rivals Charles Schwab Corp (SCHW.N), Fidelity Investments and E*Trade Financial Corp (ETFC.O), plans to unveil its monthly trading statistics for May early Thursday morning.

Tomczyk would not comment directly on the numbers, but said TD Ameritrade's "active trader" clients have been particularly busy trading options and futures.

Despite a 14 percent jump in the Dow Jones industrial average and a 12.8 percent rise in the Standard & Poor's 500 index so far this year, equity trading volume remains low in part because individual investors remain reluctant to put funds into stocks, wealth management executives at Wells Fargo & Co (WFC.N), Bank of America's Merrill Lynch (BAC.N), and UBS Wealth Americas said earlier at the Reuters summit.

"There's still a pretty vivid memory of what happened in 2008, 2009, and the impact to people's portfolios," said John Thiel, head of Merrill Lynch Wealth Management in an earlier interview.

Even Tomczyk tempered his optimism.

"Things are on a good trend," he said, "but they could change at the drop of a hat."

He also noted that while clients' cash levels at the brokerage have been falling - a sign they are gaining more confidence - their cash holdings remain high.

About 22 percent of assets on client accounts opened directly with TD Ameritrade are in cash, though independent advisers who manage investments through the firm have generally brought their clients' holdings bellow 10 percent, said Thomas Bradley, president of retail distribution.

Trading at discount brokerage firms generally appeared to have risen faster last month than in the stock market as a whole, Richard Repetto, an analyst at Sandler O'Neill & Partners, wrote in a report to clients. He said he expects daily average revenue-generating trends at TD Ameritrade to be up 5 percent from April, when they beat analysts' expectations.

"Given that the markets have been working pretty well and that TD Ameritrade has a lot of active traders, you would expect April's trading trends to continue," said Christopher Shutler, an analyst at William Blair & Co in Chicago.

Shares of TD Ameritrade, which are up 33.7 percent year-to-date, fell by 2.38 percent on Wednesday to $22.49 a share.

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(Reporting by Jed Horowitz, Ashley Lau, Peter Rudegeair and Beth Pinsker; Editing by Phil Berlowitz)