eTrade 2005 Annual Report Download - page 12

similar to that of a specialist except that its trading activities are OTC. The majority of our share volume for market-making activities
involves bulletin board securities, which are securities that are not listed on the NASDAQ Stock Market or a national securities
exchange.
As a market maker or a specialist, we take positions in securities and function as a wholesale trader by combining trading lots to match
buyers and sellers of securities. Trading gains and losses result from these activities. Our revenues are influenced by overall trading
volumes, the number of stocks for which we act as a market maker or a specialist and the trading volumes of those specific stocks.
We also transact large block trading activity on the New York Stock Exchange (“NYSE”). In addition, we provide institutional
customers with trade execution services, including direct access to international exchanges. Our web-based platform offers real-time,
online access to statements and electronic settlement capabilities.
In addition to activities with external customers, the institutional segment includes the management of our balance sheet. The
institutional segment team manages interest rate risk through its analysis of the term, repricing and estimated payment characteristics
of our assets and liabilities. The retail segment team originates brokerage receivables and loans and gathers deposits which are
leveraged by the institutional group to enhance overall net interest income.
3

2006. EDGAR Online, Inc.