Monday April 10, 5:14 pm Eastern Time
Stock trading explosion to benefit Web brokers
By Jack Reerink
NEW YORK, April 10 (Reuters) - The wild swings in the U.S. stock market this year have spooked individual investors and brokers alike, but the second group made a mint out of the volatility.
Internet brokers and other financial middlemen are emerging as the winners from this year's rollercoaster ride in technology shares. They are expected to report record first-quarter results later this week.
The biggest reason is record stock trading volumes. Investors in the first quarter funneled more than 1 million stock trades a day through the Internet, up 50 percent from the fourth quarter, and opened record numbers of new Web accounts in the first quarter, industry analysts say.
``Growth is just unprecedented. In the last two quarters (online brokers) doubled their transactions,' said analyst Scott Appleby of investment bank Robertson Stephens. ``We're going to see big upsides in account growth and earnings.'
The record trading volumes will translate into record results for the big Web brokerages Charles Schwab Corp. (NYSE:SCH - news), E*Trade Group Inc. (NasdaqNM:EGRP - news), TD Waterhouse Group Inc. (NYSE:TWE - news) and AmeriTrade Holding Corp. (NasdaqNM:AMTD - news), analysts said. U.S. investment banks, including Morgan Stanley Dean Witter & Co. (NYSE:MWD - news), last month reported record brokerage commissions in their retail operations.
``It was a great quarter for the online brokers,' said analyst Greg Smith of investment firm Chase Hambrecht & Quist. ``The only major risk factor for the stocks is a huge market correction that results in lower volumes.'
Schwab, the No. 1 online brokerage, said last week it expected to nearly double its quarterly profits due to frenzied customer stock trading.
Share volume on Nasdaq, which trades shares of many of America's best-known technology companies, rose nearly 75 percent in the first quarter to 108 billion shares. |
