Recent market volatility may have scared off the less zealous from do-it-yourself investing and forced some brokers to cut costs, but TD Waterhouse Group is betting that the serious retail investors, or active traders, have not run for cover.
On Wednesday, the New York company, which is mostly owned by Toronto-Dominion Bank of Canada, unveiled a service in the United States aimed at customers who make 36 trades per quarter. Dubbed TD Waterhouse Select, the service will execute orders for as little as $9.95, compared with the usual commission of $12 a trade. It also offers streaming real-time stock quotes, account information, order status, and trading all on one screen.
The move is part of the companys ongoing initiative of customer segmentation, said a TD Waterhouse spokeswoman. The companys ultimate goal is to be the financial service provider of choice to all consumers, providing everything from online banking to the Select service for active stock traders, she said. The service was launched in Canada last year.
TD Waterhouses bid to capture active investors comes as other companies some already catering to active traders but faced with a falloff in retail investors trading online either pull back from the deep discount market or look to cut costs.
Last month, FleetBoston Financial Corp. said it will fold its deep discount unit, SureTrade Inc., into its Quick & Reilly brokerage division, though the Boston banking company has said it will continue to offer discounted trades to its higher volume customers.
Other brokerage operations that had benefited from Americas obsession with stock trading during the recent bull market have moved to cut costs. Among other measures, San Francisco-based Charles Schwab Corp. has trimmed executive pay to avoid layoffs, and Ameritrade Inc. of Omaha has cut staff in recent months.
And TD Waterhouse has not escaped market forces. Last month it said that customers opened 5% fewer new accounts in December than November. Both were volatile months for the online brokerage industry.
And in the same statement, Steve McDonald, TD Waterhouses chief executive officer, said the company would try to contain costs.
TD Waterhouse has put several cost containment measures into place, such as deferring discretionary spending and managing our hiring carefully, he said. But the company will continue to spend on technology and marketing, he said.
Kelly ODonnell, a senior consultant at Cerulli Associates of Boston, said that TD Waterhouses bid to cater to active traders exemplifies the scramble among the big online brokers for the more profitable trader in this tough market.
All of the top online brokers are trying to win day traders who are not affected by the market volatility, she said. Its a very small market, but its very profitable.
Companies like Schwab and TD Waterhouse are taking the hybrid approach, said Richard H. Repetto, an equity analyst at Putnam Lovell Securities.
They want to go after the active trader, but they also want to cater to the high-net-worth investor, he said.
Separately on Wednesday, E-Trade Group, the Menlo Park, Calif., discount broker that has avoided building a branch network to support its mainly electronic approach to brokerage, said that it would expand its offering of streaming, real-time stock quotes to customers.
The service known as MarketCaster will be available to all customers and according to a statement from E-Trade is part of its commitment to help consumers make informed investment decisions.
Access to real-time, streaming market data was previously only given to active traders at E-Trade.
Ms. ODonnell said that by making this service available to all customers, E-Trade is probably trying to stand out amongst the competition. Because of the contraction in the market theyre all vying for customers, she said.
