| NEW YORK, March 14
NEW YORK, March 14 The three biggest U.S.
discount brokerage firms said their stock trading volumes jumped
in February from a year earlier, an indication that confidence
by small investors in the stock market is continuing to gain
after being fairly moribund in 2013.
Charles Schwab Corp, the biggest of the three,
trailed its competitors in monthly gains, though all three had
double-digit increases in February compared with the same month
in 2013. San Francisco-based Schwab, however, saw trading by its
9.1 million brokerage account holders fall by 5 percent in
February from January, to a daily average of 556,000, it
reported on Friday.
That compares with a 1 percent monthly gain from TD
Ameritrade Holding's 6.0 million account holders, who
averaged 501,000 daily trades in February. It was the first time
in TD Ameritrade's history that trades breached the 500,000
E*Trade Financial Corp on Friday said its 3 million
brokerage account clients averaged just over 201,000 trades in
February, up 2.8 percent from January.
Institutional investors monitor the ups and downs of trading
volume by retail investors as a barometer of market confidence -
which they can bet against or with, depending on their analysis
of small-investor sentiment - as well as of the health of the
All three firms have signaled that small-investor confidence
at the start of 2014 is strong after many sat out 2013, when the
Standard & Poor's 500 index gained about 30 percent.
Compared with February 2013, average daily trades by Schwab
investors last month gained 10 percent. At TD Ameritrade and
E*Trade, February trading volume soared 30 percent and 32
percent, respectively, from a year earlier.
The S&P 500 was up 4 percent in February, bringing its gains
for the first two months of the year to 23 percent.
Schwab's chief financial officer, Joe Martinetto, said in a
commentary on the firm's website that raw trading data "tell
only a fraction of the (customer) engagement story," noting that
a growing number of customers are paying Schwab fees for broad
advice about achieving their financial goals instead of seeking
direction on pure stock and bond trading.
As a general rule, TD Ameritrade and E*Trade clients are
more active traders than Schwab, said analysts and a Schwab
Schwab disclosed another indicator of growing investor
interest in stocks. After a year in which brokerage firms of all
types saw rising cash balances in client accounts, Schwab
clients poured a net $3.3 billion into stock and bond mutual
funds offered by the company while withdrawing $318.4 million
from money-market funds, which are nearly equivalent to cash.
For a second straight month, international mutual funds
attracted more money from Schwab clients - $2.5 billion in
January and February - than any other category. Taxable bond
funds were the second biggest gainers, with net inflows of $2.3
Firms such as Schwab, TD Ameritrade and E*Trade that attract
many self-directed investors looking for low commissions began
the year stronger than some of their full-service competitors.
Last month the head of Wells Fargo Advisors, the third
largest U.S. firm by number of brokers, said clients were
keeping near-record amounts of cash in their accounts while the
firm was behind budget in trading commissions.