U.S. Markets

TD Ameritrade says blockchain, cannabis shares help drive trading surge

NEW YORK (Reuters) - Heavy investor trading in blockchain and cannabis stocks in December helped push TD Ameritrade Holding Corp's AMTD.O quarterly profit higher, the online broker's chief executive said on Tuesday.

The sign for a TD Ameritrade branch is seen in New York, U.S., October 24, 2016. REUTERS/Shannon Stapleton

“Everybody was talking just before Christmas and at holiday parties about, ‘Blockchain - what do you think?’” Hockey said in an interview. “That drove a significant level of activity.”

Daily average trades were 726,000 for the quarter ending Dec. 31, up 49 percent from a year earlier, with trades related to the blockchain and cannabis sectors feeding between 6 percent and 9 percent of daily activity, Hockey said.

The surge of interest and wild price moves in bitcoin and other cryptocurrencies supported by blockchain has spurred a corresponding rush of investors into funds with exposure to the technology.

Meanwhile, the debut of a U.S.-listed exchange-traded fund tracking the nascent marijuana industry, ETFMG Alternative Harvest ETF MJX.P, drew attention to the sector during the typically slow trading period between Christmas and New Year's.

TD Ameritrade said on Monday evening that its fiscal first-quarter profit rose to $297 million, from $216 million a year earlier, on strong client activity and revenue as well as new accounts brought on by the acquisition of Scottrade.

General investor enthusiasm rolled over into 2018, with the online broker averaging 975,000 trades daily so far in January.

But the share of trades in blockchain have dropped by a few percentage points, Hockey said, as the price of bitcoin BTC=BTSP has fallen from nearly $17,235 on Jan. 6 to a low of $9,222 on Jan. 17.

New accounts from clients aged 35 or younger spiked 72 percent last quarter.

Hockey said one driver behind January’s high engagement has been that those new clients, who may have joined based on their interest in bitcoin and blockchain, continue to invest and are making trades this month broadly across markets.

Hockey said he is not worried about an eventual drop off in client activity.

“We don’t need to maintain (this high client activity), nor do we plan to maintain it,” Hockey said. “It’s at an extraordinary level.”

TD Ameritrade has around 11 million client accounts and $1 trillion in assets. It has the highest average daily retail trades of any discount broker, a category that also includes Charles Schwab Corp SCHW.N and E*TRADE Financial Corp. ETFC.O

E*Trade is expected to report earnings on Thursday after U.S. markets close.

Reporting By Elizabeth Dilts; Editing by Meredith Mazzilli