eTrade 2009 Annual Report Download - page 37

growth. Option-related DARTs as a percentage of our total U.S. DARTs represented 13% and 15% of U.S.
trading volume for the years ended December 31, 2009 and 2008, respectively. Exchange-traded funds-related
DARTs as a percentage of our total U.S. DARTs represented 14% and 11% of U.S. trading volume for the years
ended December 31, 2009 and 2008, respectively.
Average commission per trade increased 2% to $11.11 for the year ended December 31, 2009 compared to
2008. The increase in the average commission per trade for the year ended December 31, 2009 was primarily due
to an improvement in product and customer mix compared to 2008, partially offset by the impact of foreign
currency exchange as a result of the strengthening U.S. dollar.
Fees and Service Charges
Fees and service charges decreased 4% to $192.5 million for the year ended December 31, 2009 compared
to 2008. The decline was driven by a decrease in account service fee and advisory management fee revenue,
which was partially offset by an increase in order flow revenue compared to 2008. The decrease in advisory
management fees was primarily due to our sale of RAA in the second quarter of 2008. Declines in foreign
currency margin revenue, fixed income product revenue and mutual fund fees also contributed to the decrease in
fees and service charges. We expect our order flow revenue, which is reported within fees and service charges, to
decrease slightly in 2010 due to an overall decline in market rates paid for order flow.
Principal Transactions
Principal transactions increased 4% to $88.1 million for the year ended December 31, 2009 compared to
2008. Our principal transactions revenue is influenced by overall trading volumes, the number of stocks for
which we act as a market-maker, the trading volumes of those specific stocks and the performance of our
proprietary trading activities. The increase in principal transactions revenue was driven by an increase in the
volume of equity shares that were traded, which was partially offset by a decrease in our average revenue earned
per share traded for the year ended December 31, 2009.
Gains (Losses) on Loans and Securities, Net
Gains (losses) on loans and securities, net were gains of $169.1 million and losses of $100.5 million for the
years ended December 31, 2009 and 2008, respectively, as shown in the following table (dollars in millions):
Year Ended December 31,
Variance
2009 vs. 2008
2009 2008 Amount %
Losses on sales of loans, net $ (12.5) $ (0.8) $ (11.7) 1496%
Gains on securities and other investments 173.2 32.4 140.8 435%
Gains (losses) on trading securities, net 7.8 (134.3) 142.1 *
Hedge ineffectiveness 0.6 2.2 (1.6) (74)%
Gains (losses) on securities, net 181.6 (99.7) 281.3 *
Gains (losses) on loans and securities, net $ 169.1 $ (100.5) $269.6 *
* Percentage not meaningful.
The gains on loans and securities, net for the year ended December 31, 2009, were due primarily to gains on
the sale of certain agency mortgage-backed securities, which were partially offset by net losses on the sales of
loans. The losses on the sales of loans were due to the sale of a $0.4 billion pool of home equity loans during the
third quarter of 2009. We purchased this particular pool of loans from the originator of the loans in a prior period.
This same originator, who continued to service the loans subsequent to our purchase, made an unsolicited offer to
34