Commodity price volatility and the positive market over the past two years is driving trading volumes higher among both longer-term and more active retail traders, says Richard Repetto, a principal at Sandler O’Neill + Partners, L.P.
“Equity volumes have been somewhat subdued, but have been a little bit better recently. On the retail side the retail trading activity has been relatively very strong,” Repetto said. “And so the key drivers for overall volumes, the industry volumes, derivative volumes or futures and options, it’s certainly been the recent volatility — that’s one thing that’s driving the strength of volumes.”
Repetto points to TD Ameritrade (AMTD) as his top pick in the online trading space. He says AMTD has the potential for continued earnings growth, it outperforms its peers and it has a longer-term strategy that may incorporate M&A.
“It’s a perfect example of buying on fundamentals and getting an option, so to speak, on consolidation,” Repetto said. “We think the company will be returning capital to shareholders in return of a buyback, and we think that it could even be more aggressive over the next year and up until the time E*TRADE (ETFC) deal or some other transaction surface.”
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