E-brokers TD Ameritrade, Interactive Brokers sustained record retail trading volumes in the second quarter

  • TD Ameritrade said Tuesday it added a record 661,000 new funded retail accounts in the second quarter, surpassing the 608,000 new accounts during the first quarter.
  • The broker, which is set to be acquired by Charles Schwab, also reported a record 3.4 million daily average revenue trades — more than four times last year's levels and 62% more than the prior quarter.  
  • Interactive Brokers — which also beat on the top and bottoms lines of its earnings on Tuesday — said the broker's daily average revenue trades increased 111% since the same quarter last year.

Retail trading sustained record volumes during the second quarter, as stocks roared back from the depths of the coronavirus market rout, according to quarterly reports from online brokers TD Ameritrade and Interactive Brokers. 

TD Ameritrade said Tuesday it added a record 661,000 new funded retail accounts in the second quarter, surpassing the 608,000 new accounts during the first quarter. The broker, which is set to be acquired by Charles Schwab, also reported a record 3.4 million daily average revenue trades — more than four times last year's levels and 62% more than the prior quarter. 

The major online brokers — Charles Schwab, TD Ameritrade, E-Trade, Interactive Brokers and Robinhood — have seen new accounts and trading activity surge this year during the coronavirus recession. The brokerage industry experienced a flood of new, small investors who saw the market rout and subsequent rebound as a buying opportunity. 

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After collapsing 34% to its March low, the S&P 500 rebounded in the second quarter and is now nearly 50% off that low and positive for 2020. The comeback was led by popular technology companies like Apple and Amazon. Well-known consumer brands like airlines and cruise lines have also rallied off their worst levels as regular investors bet they can make it through the pandemic.

"Zero commissions and sustained volatility drove new and existing client engagement, leading to record trading levels," Steven Boyle, TD Ameritrade interim president and chief executive officer, said in a company release. 

TD Ameritrade was able to increase earnings year over year despite the broker's move to zero commissions, which many analysts worried would hit profits, and low interest rates, which hits net interest margins. 

TD Ameritrade — which manages about $1.5 trillion in client assets — reported earnings per share of $1.09 on revenue of $1.59 billion. Wall Street analysts expected earnings of 85 cents per share on revenue of $1.41 billion, according to Refintiv consensus estimates. 

Shares of TD Ameritrade ticked more than 1% higher in extended trading. 

Interactive Brokers — which also beat on the top and bottoms lines in its quarterly update on Tuesday — said the broker's daily average revenue trades increased 111% since the same quarter last year. Customer accounts grew to 867,000 in the second quarter. 

Interactive Brokers' financial results were helped by "higher commission revenue due to increased trading activity and a higher rate of customer accounts opened during this period," the company said in a release. 

The broker reported earnings of 40 cents per share on revenue of $539 million. Analysts had forecast earnings of 31 cents per share on revenue of $438.6 million, according to Refinitiv. 

Shares of Interactive Brokers fell more than 1% in extended trading following the report. 

Last week, Charles Schwab reported similar surges in trading activity and new accounts. 

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