Traders took the month off at E*TRADE (NASDAQ:ETFC).
The online discount broker recorded 176,180 daily average revenue trades in July, a 3.6% dip from last year. The volume was a sharper 10.3% sequential decline from the flurry of brokerage activity in June.
Don't blame the slowdown on seasonal factors. Summer is typically quiet on the trading front, but we're also pitting one moribund July against another. If anything, it's a sobering reminder that every rally eventually loses steam. E*TRADE clients were net sellers of $800 million in securities during the month.
It's not a surprise to see volume drying up. Knight Capital (NASDAQ:NITE) and Charles Schwab (NASDAQ:SCHW) recently posted similar observations. In other words, this was expected, and E*TRADE doesn't need to check its armpits for B.O.: Everybody in the room stinks.
Still, traders didn't leave the trading floor entirely. E*TRADE closed out the month with 7,467 more brokerage accounts, enough to bump its total trading accounts to just over 2.72 million. The broker shed banking and stock plan accounts, but that's no surprise. The same E*TRADE Complete Savings account that was yielding 3.01% at the beginning of the year is now down to a negligible 0.8% rate.
As long as E*TRADE's brokerage business holds up, the discounter is on the right track. It still has banking demons to exorcise and capital concerns to tackle. It also wouldn't hurt if it joined its peers Schwab, optionsXpress (NASDAQ:OXPS), and TD AMERITRADE (NASDAQ:AMTD) as a profitable player in this space.
However, E*TRADE's stock has a lot of that risk already baked into the price. The stakes are still high, but so is the eventual payoff if the broker succeeds.
In the market for a new discount broker? The way that rates and initial deposits are bouncing around, we can't say we blame you. Check out the sponsored broker comparison table in the Discount Broker Center to see whether you can find the bargain-minded brokerage outfit that's right for you.
