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US retail brokerages expect higher trading levels post election
November 5, 2012 / 9:12 PM / 5 years ago

US retail brokerages expect higher trading levels post election

* Political, economic uncertainty takes toll on retail trading

* Trading usually picks up in post-election years - Schwab CEO

* TD Ameritrade sees return to normal trade climate in new year

By John McCrank

NEW YORK, Nov 5 (Reuters) - Retail brokerages Charles Schwab Corp and TD Ameritrade both expect trading volumes to improve following the U.S. presidential election as focus shifts to dealing with issues such as the fiscal cliff of spending cuts and tax rises.

Trading levels among U.S. Main Street investors have fallen to multi-year lows in 2012 amid political and economic uncertainty in the United States and Europe.

“The uncertainty hanging over everybody right now is just unbelievable,” Walt Bettinger, chief executive of Schwab, one of the largest U.S. brokerages, said during the company’s interim business update on Monday.

The U.S. Congress has until Jan. 1 to reach a deal on fiscal issues to prevent enactment of $600 billion in government spending cuts and higher taxes that could push the U.S. economy back into recession.

In election years, trading volumes usually decline in the second and third quarters and then increase into the following year, Bettinger said, adding that he expects a “modest increase” from current levels.

TD Ameritrade, the No. 1 U.S. discount brokerage by trading volume, averaged around 360,000 client trades per day in its fiscal year ended Sept. 30.

That number will likely climb by a 30,000 trades a day, on average, in the year following the election, Fred Tomczyk, TD Ameritrade’s CEO, said in an interview. He added that was a conservative estimate.

The trading environment will not likely get back to normal until January or February, after the new session of Congress begins, said Tomczyk, who described himself as “cautiously optimistic” about the U.S. economy.

“They have to get through the lame duck period and get the fiscal cliff dealt with, which we are optimistic will be dealt with. It may not be on time, but it will be dealt with in one shape or form,” he said.

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