Online Brokerages Growth Falls Off Record Pace; Average Daily Trades Up A
Modest 8.2% In Q2 1999
Business Editors
MINNEAPOLIS--(BUSINESS WIRE)--Aug. 4, 1999--
Sluggish Trading Volumes Do Not Deter Account Growth as the
Industry adds 1.4 Million New Accounts in Second Quarter
According to the U.S. Bancorp Piper Jaffray Latest Online
Brokerage Survey
The online trading industry suffered its first reality check in
second quarter 1999, as the market for technology stocks (particularly
Internet issues) softened considerably in May and June. After
expanding at a record pace of 49 percent last quarter, online trading
volumes fell back to earth as online traders processed only 8.2
percent more trades/day in the June quarter. While trading activity
showed signed of slowing down, account growth continued to be robust.
The industry added 1.4 million new accounts, up 17.7 percent from the
previous quarter. In addition, the amount of assets held in online
brokerage accounts grew by 15.5 percent from the previous quarter to
over $608 billion.
These are a few of the findings found in the forthcoming report
on electronic financial services by Stephen C. Franco, senior research
analyst of Electronic Commerce at U.S. Bancorp Piper Jaffray. Other
significant findings in the update include:
-- Schwab maintained its No. 1 position, but continues to lose
market share to its lower cost competitors;
-- While the top six rankings remained the same as last quarter,
Ameritrade Holding+ (Nasdaq:AMTD-2- 3/16 ) and E.Trade+
(Nasdaq:EGRP-24 5/16) both gained more than 1 percent market
share, while Datek and Waterhouse also expanded their share of
online brokerage at the expense of Schwab and Fidelity;
-- Ameritrade continues to outperform its competition, as it posted
yet another strong quarter. Ameritrade's trades per day were up
24.4 percent, nearly three times the industry average.
-- The industry did get a boost as asset growth was up 15.5 percent
topping the $608 billion mark, a key statistic as many online
brokers try to diversify their revenue mix and move away from
their heavy dependence on trading volumes;
-- Customer acquisition costs remained in check signifying that the
market has yet to reach its saturation point;
-- Online trading volumes accounted for 37 percent of all retail
trades for the first half of 1999, up from 30 percent in the
second half of 1998.
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*T
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Broker Trades/Day Market % Change Accounts Assets
Share (Q/Q) (M) (MM)
----------------------------------------------------------------------
----------------------------------------------------------------------
Schwab 136,700 25.0% -0.5% 2,800 $251,000
----------------------------------------------------------------------
----------------------------------------------------------------------
E.Trade 76,570 14.0% 16.4% 1,241 $26,000
----------------------------------------------------------------------
----------------------------------------------------------------------
Fidelity 64,100 11.7% 7.1% 2,789 187,000
----------------------------------------------------------------------
----------------------------------------------------------------------
Waterhouse 64,000 11.7% 10.7% 770 47,000
----------------------------------------------------------------------
----------------------------------------------------------------------
Datek 57,655 10.5% 14.5% 254 6,200
----------------------------------------------------------------------
----------------------------------------------------------------------
Ameritrade 51,297 9.4% 24.4% 505 $22,600
----------------------------------------------------------------------
----------------------------------------------------------------------
DLJ Direct 21,201 3.9% 11.2% 277 $13,300
----------------------------------------------------------------------
----------------------------------------------------------------------
Suretrade 12,500 2.3% 4.2% 150 $1,700
----------------------------------------------------------------------
----------------------------------------------------------------------
Discover 12,000 2.2% -13.3% 155 $6,600
----------------------------------------------------------------------
----------------------------------------------------------------------
NDB 6,500 1.2% -1.2% 148 $7,800
----------------------------------------------------------------------
----------------------------------------------------------------------
Others 45,000 8.2% 7.1% 650 $39,000
----------------------------------------------------------------------
----------------------------------------------------------------------
TOTAL 547,523 100% 8.2% 9,739 $608,200
----------------------------------------------------------------------
*T
Source: Piper Jaffray, Company and Industry Sources
"The slowdown in trading volumes in the quarter reflects the
unavoidable vagaries of the market and are to be expected over time.
Investors must not ignore the continued strong growth in accounts and
assets as longer-term support for the strong fundamental demand of
online trading," said Franco. "When the market's waters calm, these
empowered accounts and assets will dive back in and continue to drive
record growth, as this industry remains far from any peak"
Institutional investors may contact their U.S. Bancorp Piper
Jaffray representative after August 18, for a copy of Stephen C.
Franco's new electronic financial services report. The report also
will be available on U.S. Bancorp Piper Jaffray's electronic commerce
dedicated Web site ecinvestor.com.
U.S. Bancorp Piper Jaffray, a subsidiary of Minneapolis-based
U.S. Bancorp, provides a full range of investment products and
services to businesses, institutions and individuals. The company's
investment banking business has grown exponentially in the last
several years by focusing on the needs of growth companies in the
health care, technology, financial institutions, consumer and
industrial growth sectors. U.S. Bancorp Piper Jaffray has a national
reputation for its expertise in fundamental research and equity and
debt financing. U.S. Bancorp offers a comprehensive range of financial
solutions through U.S. Bank, First American Asset Management, U.S.
Bancorp Libra Investments and U.S. Bancorp Piper Jaffray. For more
information, visit our Web site at www.piperjaffray.com.
NOTE TO EDITORS: + Denotes a pound sign that indicates U.S. Bancorp
Piper Jaffray Inc. makes a market in the company's securities.
NOTE TO EDITORS: The company name E.Trade referred to in this news
release, contains an asterisk between E and Trade. This symbol may
not appear properly in some systems.
--30--mb/ms*
CONTACT: U.S. Bancorp Piper Jaffray, Minneapolis
Elizabeth Child
Media Relations Consultant
(612) 342-6594
KEYWORD: MINNESOTA
INDUSTRY KEYWORD: BANKING
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