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REUTERS: " Ameritrade deal could increase pressure on rivals"By: livingstonecatabbi 23 Jun 2005, 11:59 AM EDT Msg. 1008601 of 1008607 Jump to msg. # REUTERS Ameritrade deal could increase pressure on rivals [FFQGBFV] NEW YORK, June 20 (Reuters) - Ameritrade Holding Corp.'s deal to buy rival TD Waterhouse USA, announced on Wednesday, could add pressure on other online brokerages to consolidate, as the sector's players look for added heft to cut costs to offset slipping trading volumes. Online brokerages have suffered from a fall in trading by individual investors, who had their fingers burnt in the dot-com crash of 2000. That has ushered in price cuts and consolidation -- seen in deals such as Ameritrade's 2002 buy of online broker Datek Online Holdings Corp, and E*Trade's acquisition of online brokerage Tradescape. Among the best-known names in the retail brokerage market are Ameritrade; Charles Schwab Corp.; E*Trade Financial Corp.; the brokerage arm of mutual fund company Fidelity Investments; privately held Scotttrade; and TD Waterhouse USA, a division of Canada's Toronto-Dominion Bank. Some experts thought Ameritrade's deal would put more pressure on rivals to do deals -- such as E*Trade, which was also pursuing a deal with Ameritrade. "E*Trade probably feels significantly greater pressure to consolidate -- now you will see E*Trade approach other firms and other firms approach E*Trade. You will see some immediate posturing among some of the larger firms," said David Kalt, chief executive of Chicago-based OptionsXpress Holdings Inc., an online brokerage. Some facts about the retail brokerage industry: -- Overall retail trading peaked in 2000, the height of the dot-com bubble. Retail trading is 21 percent below the 2000 peak, according to Celent, a research and advisory firm focused on financial services. -- Online retail traders account for around 10 percent of the trading volume on the NYSE and Nasdaq -- against its peak in early 2000 when online retail traders accounted for nearly one-third of volume. -- The number of daily average revenue trades (DARTs) has declined substantially since the 2000 peak and the average price paid per trade has also declined, according to Celent. -- Retail investors have been steadily reducing their holdings in individual equities, and turning instead to mutual funds, savings accounts and mortgages. Fixed income securities, foreign deposits, Exchange Traded Funds and options are also growing more popular, according to Celent. -- The trends saw brokers slash prices. Among those who cut were Fidelity, Schwab and E*Trade. -- There are two factors driving consolidation -- the potential for cost-saving by sharing technology and advertising, and the possibility of increasing traffic over brokers' networks without substantially increasing cost. -- The way the industry has evolved has helped the individual investor, who benefits from lower fees, lower commissions and higher execution speed. (C) Reuters 2005. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world. 22Jun05 21:47 GMT Symbols: ca;TD de;AMT de;AMTF de;AMTS de;AMTX de;ETR de;OEP de;TDB de;TDBF de;TDBX jp;8640 us;AMTD us;ET us;OXPS us;OYN us;SCH us;TD us;YZK Source RTRS Reuters News Categories: BNK BUS FIN FUND IDS/TEXT IND INTEREST/ABN INTEREST/DNP INTEREST/E INTEREST/PCO INTEREST/RBN INTEREST/RNP INTEREST/U MAC MRG PKG/TDWPS PKG/USCO PKG/USMKT RTI US MST/I/BAN MST/I/BNK MST/I/FIS MST/I/ITC MST/I/MAC MST/I/MFN MST/I/SCR MST/I/SVC MST/I/VEN MST/L/EN MST/R/US MST/S/MRG TGT/RON - - - - - < EOM > |
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