UPDATE 3-Strong Q2 trading lifts TD Ameritrade shares

* Q2 earnings 23 cents per share, meets Street

* Revenue $525.5 million, down 16 percent

* Shares up 6.4 percent

* Sees thinkorswim deal closing this quarter
(Adds comments from conference call, analyst comments, updates
share movement, adds details on thinkorswim)

By Jonathan Spicer

NEW YORK, April 21 (Reuters) - TD Ameritrade Holding Corp
(AMTD.O) reported better-than-expected quarterly revenue driven
by near-record trading volumes in March, lifting its shares, but
low interest rates continued to pinch earnings.

The second-biggest U.S. discount brokerage, which needs
small investors to stay active in the markets, reported a 29
percent profit drop in the latest quarter, in line with
expectations.

The company's management acknowledged it faces "challenging
headwinds" from the ongoing recession, but declared that even
more robust volumes so far in April show that experienced
clients are not intimidated by market volatility.

"There's so much information for people to trade off," Chief
Executive Fred Tomczyk said on a conference call. "We could see
an unusual period here because there is so much news coming out,
whether from the administration in Washington, or companies, and
a lot more surprises."

The company's shares advanced 5.4 percent, better than peers
in an overall mixed stock market.

Trading revenue rose 8 percent from a year ago. However,
interest-based revenue from its managed assets tumbled 51
percent, reflecting damage from the market contraction. Tomczyk
called near-zero interest rates the "single biggest challenge."

Low rates in a slumping economy hamper TD Ameritrade's
ability to earn interest from assets. The company repeated a
less-optimistic earnings forecast it gave three months ago,
noting it continues "to plan for an economic environment that
does not improve" this year.

Still, the company managed to attract $6.4 billion in net
new assets last quarter, suggesting it continues to snap up
investment advisers and clients amid the global recession.

TD Ameritrade earned $132.0 million, or 23 cents per share,
in its fiscal second quarter, matching the average expectations
of analysts polled by Reuters Estimates. The earnings were down
from $186.7 million, or 31 cents per share, a year earlier.

Revenue fell 16 percent to $525.5 million. Analysts expected
the Omaha, Nebraska-based company to report $514.5 million in
revenue.

"It's a little stronger than expected on revenues," said
Patrick O'Shaughnessy, analyst at Raymond James and Associates.
"There were really strong trading volumes in March and it looks
to be even stronger in April so that bodes well for trading
throughout 2009."

Fee-generating trading jumped 17 percent from February to
March -- its second-best month which included the lowest point
so far in the current market sell-off, as well as a strong
rebound.

Clients have "seen tough markets and are confident and
experienced enough to continue to trade even during the down
times," Tomczyk said, adding that exchange-traded funds now
represent 20 percent of trading volumes, up from about 10
percent two years ago.

Money market funds have yielded little with interest rates
so low. The company, which also provides banking and financial
advice, began waiving fees in January.

The company leads all peers in trading but trails Charles
Schwab (SCHW.O) by a wide margin in assets under management. It
agreed this year to buy options specialist thinkorswim (SWIM.O),
which would solidify its trading business but add little to
assets.

TD Ameritrade had $225 billion in total assets at the end of
March, down about 4 percent from the previous quarter.

Management said it expects to close the thinkorswim deal by
the end of this quarter, and have it fully integrated by the end
of next year. It sees an EPS boost of up to 7 percent from the
acquisition in 2010, and up to 15 percent in 2011.

Shares of the online broker were up 97 cents or 6.4 percent
at $16.12 on the Nasdaq on Tuesday.

The earnings will contribute C$48 million to the
second-quarter net income of Toronto-Dominion Bank (TD.TO),
Canada's No. 2 bank, which owns about 45 percent of TD
Ameritrade after raising its stake from 40 percent in January.
(Reporting by Jonathan Spicer, editing by Maureen Bavdek and
Matthew Lewis)