Brokerages Firms 2013 Resolution - Let's Adapt or Be Broke

          Brokerages Firms 2013 Resolution - Let's Adapt or Be Broke

  PR Newswire

  LONDON, January 15, 2013

LONDON, January 15, 2013 /PRNewswire/ --

Brokerages and money managers, which include E*Trade Financial Corp. , The
Charles Schwab Corp., Morgan Stanley and TD Ameritrade Holding Corp., have
roared out of the gates thus far in 2013, propelled by renewed investor
confidence in the direction of the global economic recovery. Volumes are still
lagging behind though as average investors still appear hesitant to jump
completely back into trading. According to the NYSE Euronext, trading volumes
in both the European and U.S. equities markets fell on both a year-over-year
and sequential basis. These declines were also confirmed in independent market
researcher ITG's latest volumes report. The company reported December U.S.
trade volumes of 3.6 billion shares with an average daily volume of 182
million shares. These figures fell from November's total of 4.0 billion shares
with an ADV of 188 million. However, ITG did report that these figures were a
slight improvement over the year ago period. See how these companies in this
industry performed in the past years and how they are expected to perform in
2013. Talk to our analysts, sign up now for free at   

Broader volumes may have declined but some brokerages managed to see some
gains in the past few months. E*Trade Financial Corp. (NYSE: ETFC) recently
released its daily average revenue trades (DARTs) data for the month of
November. DARTs came in at 130,202 for the month of November marking a 5%
improvement from the month prior but a year-over-year decline of 8%. Sign up
today and get insight from our financial experts on E*Trade at

Despite a better economic outlook, several brokerages have been anything but
complacent through the first two weeks of the year. Renewed emphasis on
innovating and taking new approaches to trading could lift the industry even
higher. TD Ameritrade (NYSE:AMTD) provides a good example of this trend. Today
it will introduce a new behavior-based index to better track investor
sentiment. The novel index will track all trades to get a better sense of
investors' moods while buying, selling and trading. The service, dubbed the
Investor Movement Index, will give TD Ameritrade a better idea of what its
investors are doing and therefore give it more information to better tailor
its offerings to its customers. TD Ameritrade is on our analysts' list of
stock to follow, sign up to talk to them now at

The above sentiment tracking index also reflects an industry-wide shift to
greater transparency. It appears that many throughout the financial sector are
gaining a better appreciation for investor confidence and are taking steps to
preserve and increase it whenever possible. The trend could also be considered
a preemptive move to placate regulatory bodies which favor greater
transparency. The Charles Schwab Corp. (NYSE: SCHW) joined a growing list of
U.S. money market fund managers that have all agreed to publish daily fund
asset values. Prior to this, fund managers typically posted monthly values and
even those were on a 60-day delay. 

The movement towards greater transparency also illustrates an increased
willingness on behalf of the financial sector to address regulatory issues
before they become problematic. The threat of further regulatory changes will
always loom over the financial sector and investors would be wise to closely
follow any potential adjustments. 

Efforts to become efficient and shed underperforming assets are also still
ongoing for many companies within the industry. Morgan Stanley (NYSE: MS)
announced this week that it plans to reduce its Asian investment banking
workforce by around 15%. The move to reduce its workforce in the region could
be in response to its declining position in certain areas of the Asian
markets. A slowing Chinese economy could also be behind the company's
decision to dial back its employee count in the region. 

Moving forward, if trade volumes can bounce back, brokerages and money
managers may be in-line for substantial gains this year. Even without a
significant improvement, the outlook for the industry is currently positive
because the economy keeps moving in a forward direction while internal efforts
to improve are also ongoing. Another round of fiscal cliff concerns could
certainly undo some of the industry's progress though. 

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