TD Ameritrade introduces flat-rate fee for online equity trades

Source: TD Ameritrade

TD AMERITRADE Holding Corporation (NASDAQ:AMTD) has unveiled expanded offerings for all retail client segments of its brokerage subsidiary, including a straightforward, flat-rate price of $9.99 for online equity trades.

The new offerings will immediately benefit clients through the following:

  • $9.99 pricing for all online equity trades, regardless of the number of shares traded or the order type ($0.75 per contract fee still applies to all options trades)
  • No account maintenance fee or annual IRA fee
  • 24/7 client service
  • Access to a nationwide network of over 100 branches
  • Personal guidance from Investment Consultants
  • Amerivest, a powerful online portfolio investment advisory service, offered through our affiliated RIA, Amerivest Investment Management LLC
  • Referral to an independent advisor through AdvisorDirect
  • A vast range of investment vehicles, from fixed income products to more mutual funds, including about 1,300 NTF (no transaction fee) funds and
  • Broader, third-party research including content from Morningstar and Standard & Poor's

"Online stock trades are $9.99 - period - no strings attached. This is only part of the value proposition, though. From trading tools to investment planning, clients can tailor the level of service that fits their needs," said Joe Moglia, chief executive officer. "As we develop these new offerings, we believe we have a unique opportunity to leverage the core strengths that made us a leader with active traders and apply those to the long-term investor and advisor segments."

In addition to the benefits listed above, active traders will enjoy fast access to markets; insight into market moves with innovative tools to help spot and seize potential opportunities faster; and outstanding support - from ideas to act on to personal service. Long-term investors will benefit from a wide range of investment product choices, portfolio reviews, retirement planning and service that's personal and flexible.

Independent Advisors already benefit from an offering and pricing that is comparable to the Company's retail value propositions. Additionally, the Company's advisor services offering lacks the conflicts of interest that are prevalent at some financial services firms. It also includes dynamic technology, outstanding service and backing from TD AMERITRADE on important industry issues.

Separately, TD AMERITRADE Holding Corporation (NASDAQ:AMTD) today announced that its acquisition of TD Waterhouse is immediately accretive and that it realized the second best quarter in Company history.

Quarterly Results

Following are results for the quarter ended March 31, 2006. These metrics reflect combined results following the close of Ameritrade Holding Corporation's acquisition of TD Waterhouse Group, Inc., on Jan. 24, 2006, through the end of the fiscal quarter.

  • Record net income of $173 million, or $0.30 per diluted share ($0.22 per diluted share excluding a one-time gain realized on the sale of the Company's investment in Knight Capital Group, Inc.)
  • Non-GAAP EPS of $0.26
  • Record pre-tax income of $282 million, or 57 percent of net revenues ($203 million, or 41 percent of net revenues, excluding the gain on Knight)
  • Record operating margin of $251 million, or 50 percent
  • Record EBITDA of $324 million, or 65 percent ($246 million, or 49 percent, excluding the gain on Knight)
  • Record net revenues of $497 million
  • Average client trades per day of approximately 254,000
  • Annualized return on equity of 34 percent for the quarter, excluding the gain on Knight
  • Client assets of approximately $262.9 billion, including $36.6 billion of client cash and money market funds
  • Liquid assets of $374 million; cash and cash equivalents of $483 million
  • 140,000 new accounts at an average cost of $339 per account, 61,000 closed accounts, 6,070,000 Total Accounts, 3,293,000 Qualified Accounts and
  • Average client margin balances of approximately $6.8 billion. On March 31, 2006, client margin balances were approximately $7.8 billion.

"The TD Waterhouse deal is already accretive, and today we reach a milestone in our integration efforts as we launch our new value propositions and brand," said Joe Moglia, chief executive officer.

New Value Propositions Launched

As was detailed in a separate news release distributed today, the Company has announced new value propositions for the retail client base of its brokerage subsidiary. While management is confident that the simple, straightforward pricing schedule will help with account growth and retention, it has not included any of these potential benefits in its new guidance. The quantifiable impact of these changes was factored into the updated Outlook Statement.

"Over the last few years, as we have rolled out new initiatives, we have consistently not provided the positive impact until we started to see progress on our assumptions. In a similar manner, the guidance we have provided assumes none of the expected benefits from incremental accounts, trades or assets. As we see results, we will provide an update," added Moglia.

Outlook Updated

The Company has adjusted its fiscal 2006 and 2007 Outlook Statement. The midpoint for fiscal 2006 is increasing $0.03 per share to $0.94, and the midpoint for fiscal 2007 is $1.06, a $0.09 decrease. The principal changes include the effect of the new value propositions, the two recent increases in the Fed Funds Rate and the actual results for the March 2006 quarter.

Joe Moglia Renews Commitment

Joe Moglia has agreed in principle to a new five-year contract, of which over 90 percent is performance-based, that includes an initial three-year term and an automatic two-year extension, extending his employment as CEO until 2011. Under the agreement, Moglia will receive:

An annual base salary of $1 million and an annual $9 million performance-based bonus, $3 million of which is in cash and $6 million in an equity award; and
An up-front $10 million performance-based equity award, which will cliff vest in three years.

"I am very excited about what I believe we can do for clients and shareholders over the next five years. Since March 2001, our stock has outperformed the S&P 500 by more than 250 percent. Our shareholders have benefited from our growth and were additionally rewarded this year with a $6 dividend - one of the largest paid in U.S. history," Moglia continued.

Other Corporate News

Executive Vice President and Chief Strategy Officer Phylis M. Esposito has decided not to renew her contract in order to pursue other opportunities in the financial services industry. Managing Director William Murray will oversee investor relations functions and serve as a liaison with government and regulatory agencies. He will report directly to Chief Financial Officer and Chief Administrative Officer Randy MacDonald.Download the document now 46.9 kb (Adobe Acrobat Document)

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