See, you told somebody--I was looking for 5 fathoms-
Online Brokerages Suffer First Decline Average Daily Trades Down 7.8% In Third Quarter of 1999, Says U.S. Bancorp Piper Jaffray Report
Business Wire - November 04, 1999 12:18
MINNEAPOLIS--(BUSINESS WIRE)--Nov. 4, 1999--
Account Growth Not Affected By Seasonal Slowdownas the Industry
adds 1.1 Million New Accounts in Third Quarter According to
the Latest U.S. Bancorp Piper Jaffray Online Brokerage Survey
The online brokerage industry suffered its first sequential decline in trading volumes in the third quarter of 1999, as average online trades per day fell 7.8 percent. After a period of unprecedented growth, the online brokers were unable to grow through the summer slowdown as their behavior began to reflect the behavior of the major exchanges (trading volumes on the NYSE and NASDAQ were both down 2 percent). The picture is not exactly bleak for online brokers however, as the industry added 1.1 million new accounts, up 11.5 percent from the previous quarter, and $648 billion in assets, up 6.6 percent.
These are a few of the findings found in the forthcoming report on online 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; its leadership
position has diminished from 27.9 percent just six months ago to
23.3 percent in the current quarter.
-- E.Trade(1) (Nasdaq:EGRP, 27 1/2) continued its impressive account
growth, adding 310,000 new accounts with the cost to acquire a
new account coming in at a mere $198. This was the most accounts
acquired by any broker during the quarter the first time E.Trade
has surpassed Schwab in this regard. While E.Trade's trading
growth volume was flat, it managed to gain market share as the
industry as a whole was down 7.8 percent;
-- Newcomer to the top 10, Cybercorp bucked the industry down-trend
as it increased its average daily online trades 67 percent.
Cybercorp, which specifically targets day traders, was the only
online broker surveyed to post trading volume gains during the
quarter.
-- Asset growth (at 6.6 percent) lagged behind account growth (a
robust 11.5 percent) as many new investors went online. We
believe assets levels will continue to grow as new investors
become comfortable with the online medium.
"The Online brokerage industry finally showed that it is not immune to the seasonal slowdown of the overall market, as trading volumes fell for the first time ever," said Franco. "Nonetheless with 1.1 million new accounts added in the September quarter and an improved outlook for trading activity heading into the busiest season, we believe this quarter will prove to be a brief respite on the way to a continued growth trajectory."
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Broker Trades/Day(a) Market % Change Accounts Assets
Share (Q/Q) (Thous) (Millions)
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Schwab 117,800 23.3% -13.8% 3,000 $263,600
E.Trade 76,333 15.1% -0.3% 1,551 $28,000
Waterhouse 61,031 12.1% -4.6% 877 $52,700
Fidelity 60,013 11.9% -6.4% 3,060 $202,000
Datek 53,840 10.7% -6.6% 290 $7,000
Ameritrade(a)(a) 46,199 9.2% -9.9% 560 $22,900
DLJ Direct 19,200 3.8% -9.4% 302 $14,200
Discover 10,000 2.0% -16.7% 175 $7,500
Cybercorp 9,231 1.8% 66.9% 1 $112
Suretrade 9,200 1.8% -26.4% 184 $1,600
Dreyfus 7,092 1.4% -10.3% 65 $6,470
NDB 6,300 1.2% -3.1% 164 $7,752
Others 28,392 5.6% -8.0% 626 $34,274
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TOTAL 504,631 100% -7.8% 10,855 $648,108
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(a) Data represents domestic online trading activity excluding IVR or
broker assisted trades
(a)(a)(Nasdaq:AMTD, 16 13/16)(1)
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Source: U.S. Bancorp Piper Jaffray, Company and Industry Sources
Institutional investors may contact their U.S. Bancorp Piper Jaffray representative after December 10, 1999, for a copy of Stephen C. Franco's new online financial services report. The report also will be available on the U.S. Bancorp Piper Jaffray 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.
Nondeposit investment products are not insured by the FDIC, are not deposits or other obligations of or guaranteed by the U.S. Bank National Association or its affiliates, and involve investment risks, including possible loss of the principal amount invested. Securities products and services are offered through U.S. Bancorp Piper Jaffray Inc., member SIPC and NYSE, Inc., a subsidiary of U.S. Bancorp.
(1) U.S. Bancorp Piper Jaffray Inc. makes a market in the company's
securities. |
