Saturday, December 08, 2012
Brokers: Bye Bye Europe
Schwab, E*Trade and TD Ameritrade have cut back overseas as they contend with new regulations and taxes amid thin trading.
Charles Schwab is closing the European arm of its recently acquired online options unit, optionsXpress. That follows our recent report that TD Ameritrade (ticker: AMTD) will shut its virtual doors on all types of trading in two European countries, Belgium and Italy, as well as Australia, at the end of 2012, and E*Trade’s decision to close its United Kingdom operations. It’s a sign of the troubled times in Europe and will force traders to find new online connections.
spokesperson for Schwab (SCHW) says the closure was prompted by the firm’s ongoing strategic evaluation as optionsXpress’s operations are integrated. “After a thoughtful review of the combined international businesses, we made the decision to wind down optionsXpress Europe to strengthen and focus our resources elsewhere,” says the spokesperson. By Barron’s count, fewer than 10,000 clients are affected, a tiny percentage of Schwab’s 8.7 million brokerage accounts.
Schwab’s, TD Ameritrade’s, and E*Trade’s moves appear to fall into the category of facing the reality that trading volume—both in Europe and the rest of the world—isn’t growing, especially for equities. The sovereign-debt crisis has seriously curtailed activity on the Continent.
A TD Ameritrade executive recently explained that licensing requirements in certain nations had prompted the closures. “Getting licensed and then regulated is incredibly difficult in a number of countries,” he says. Several European countries are enacting new requirements and considering new taxes as they try to raise more revenue. The added cost, in light of thin volume, made it uneconomical to continue.
OptionsXpress Europe isn’t the first piece of the firm to be jettisoned as the consolidation moves along. In May, Schwab announced it was phasing out brokersXpress, a broker-dealer that focused on registered investment advisors. An advisor Website, RIABiz, reported that brokersXpress had 35,000 accounts, most of which were expected to be folded into Schwab’s business.
WHILE RETREATING IN certain areas, Schwab is doing what most of its rivals are trying to do: seeking new customers and encouraging existing ones to trade more.
Schwab has just opened up its more sophisticated trading platform, called StreetSmart Edge, to all of its customers. Previously, only those who traded 36 or more times per year could log onto this service. Launched this past April, StreetSmart Edge is a cloud-based application, allowing customers to move easily from one computer to another and still have access to all of the necessary features and personalized tools.
StreetSmart Edge contains point-and-figure charting, CNBC video-on-demand, and a number of slick, customizable layouts. If you set up the layout that you want on your home computer, you will see the same one on your PC system at work or elsewhere.
Says Kelli Keough, a senior vice president at Schwab: “Traders want the convenience of trading from any computer, and our use of cloud technology in the brokerage space uniquely gives our clients the same trading experience, regardless of how they access it.”
FIDELITY RECENTLY UPDATED its mobile apps, allowing customization of the home screen for iPhone, iPod Touch, and Android owners. The screen is set up with nine tiles, which you can move around as desired, displaying key market data, personal watch lists, gainers/losers, and account data. Rotating the device to landscape mode allows access to interactive charting, including the ability to overlay technical indicators or perform comparisons between two stocks. In addition, you can now manage alerts from your phone, and be notified when a trade is executed.
The iPad app was also updated, and now includes Trefis Research tools, which are designed to identify the “drivers” of a company’s growth. Another new feature for the iPad, which kept me amused for quite some time, is the new Watch List Visualization, which lets you look over the historical performance of stocks on your watch list. You set the period you want to explore, and dive into the data. You can also compare price/earnings ratio, market cap, and other measures. It is definitely worth the update.
Published in Barron’s, December 3, 2012.