eTrade 2011 Annual Report Download - page 50

Trading and investing commissions increased 1% to $436.2 million for the year ended December 31, 2011
compared to 2010. This increase in commissions was primarily the result of an increase in DARTs of 5% to
157,475 for the year ended December 31, 2011 compared to 2010.
Trading and investing fees and service charges decreased 8% to $128.0 million for the year ended
December 31, 2011 compared to 2010. This decrease for the year ended December 31, 2011 was driven primarily
by the elimination of all account activity fees, which took effect in the second quarter of 2010.
Trading and investing principal transactions increased 2% to $105.4 million for the year ended
December 31, 2011 compared to 2010. The increase in principal transactions revenue was driven by a favorable
mix of trading volume and revenue earned per share, as well as a continued focus on expanding our external
customer base, when compared to 2010.
Trading and investing operating expense increased 10% to $825.9 million for the year ended December 31,
2011 compared to 2010. The increase for the year ended December 31, 2011 was driven primarily by a reserve of
$48 million related to an offer to purchase auction rate securities held by customers of E*TRADE Securities
LLC, as well as former customers who purchased auction rate securities through E*TRADE Securities LLC. This
reserve relates primarily to our estimate of the securities’ current fair value relative to their par value and
includes penalties and other estimated settlement costs. In addition, compensation and benefits expense increased
8% to $245.8 million as a result of increasing our financial consultants by 42%.
As of December 31, 2011, we had approximately 2.8 million brokerage accounts, 1.1 million stock plan
accounts and 0.5 million banking accounts. For the years ended December 31, 2011 and 2010, our brokerage
products contributed 69% and 67%, respectively, and our banking products contributed 31% and 33%,
respectively, of total trading and investing net revenue.
2010 Compared to 2009
Trading and investing segment income decreased 5% to $721.8 million for the year ended December 31,
2010 compared to 2009. We generated new brokerage accounts, ending the year with 2.7 million accounts. Our
brokerage related cash increased by $4.1 billion when compared to 2009.
Trading and investing net operating interest income increased 9% to $763.0 million for the year ended
December 31, 2010 compared to 2009. This increase was driven primarily by a decrease in yields paid on
customer deposits and an increase in the average balance of margin receivables during the period.
Trading and investing commissions decreased 21% to $431.0 million for the year ended December 31, 2010
compared to 2009. The decrease in commissions was primarily the result of a decrease in DARTs of 16% to
150,532 and a decrease in the average commission per trade of 1% to $11.21 for the year ended December 31,
2010 compared to 2009. The slight decrease in the average commission per trade was due primarily to the
elimination of the $12.99 commission tier and the per share commission applied to market trades larger than
2,000 shares, which became effective in the second quarter of 2010, partially offset by an improvement in the
product and customer mix when compared to the same period in 2009.
Trading and investing fees and service charges decreased 25% to $139.1 million for the year ended
December 31, 2010 compared to 2009. The decreases were primarily due to lower order flow revenue and the
elimination of all account activity fees, which became effective in the second quarter of 2010.
Trading and investing principal transactions increased 17% to $103.4 million for the year ended
December 31, 2010 compared to 2009. The increase in principal transactions 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, 2010.
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