18-Jul-2017 TD Ameritrade Holding...

Corrected Transcript

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18-Jul-2017

TD Ameritrade Holding Corp. (AMTD)

Q3 2017 Earnings Call

TD Ameritrade Holding Corp. (AMTD) Q3 2017 Earnings Call

Corrected Transcript 18-Jul-2017


2 Copyright © 2001-2017 FactSet CallStreet, LLC

CORPORATE PARTICIPANTS

Jeffrey Goeser Director, Investor Relations, TD Ameritrade Holding Corp.

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp.

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp.

................................................................................................................................................................................................................................

OTHER PARTICIPANTS

Devin P. Ryan Analyst, JMP Securities LLC

Richard Henry Repetto Analyst, Sandler O'Neill & Partners LP

Christopher Shutler Analyst, William Blair & Co. LLC

Sharon Leung Analyst, Nomura Securities

Michael Carrier Analyst, Bank of America Merrill Lynch

Conor Fitzgerald Analyst, Goldman Sachs & Co.

Chris M. Harris Analyst, Wells Fargo Securities LLC

Daniel Thomas Fannon Analyst, Jefferies LLC

Michael J. Cyprys Analyst, Morgan Stanley & Co. LLC

Brian Bedell Analyst, Deutsche Bank Securities, Inc.

Kyle Voigt Analyst, Keefe, Bruyette & Woods, Inc.

Brennan Hawken Analyst, UBS Securities LLC

Patrick J. O'Shaughnessy Analyst, Raymond James & Associates, Inc.

Doug R. Mewhirter Analyst, SunTrust Robinson Humphrey, Inc.





MANAGEMENT DISCUSSION SECTION

Operator: Good day, everyone, and welcome to the TD Ameritrade Holding Corporation's June Quarter

Earnings Results Conference Call. This call is being recorded. With us today from the company is President and

Chief Executive Officer, Tim Hockey; and Chief Financial Officer, Steve Boyle.

At this time, I would like to turn the call over to Jeff Goeser, Director of Inves tor Relations. Please go ahead, sir. ................................................................................................................................................................................................................................

Jeffrey Goeser Director, Investor Relations, TD Ameritrade Holding Corp.

Good morning, everyone, and welcome to our Third Quarter Fiscal 2017 Conference Call. You can find everything

related to this morning's announcement on our corporate website, amtd.com, including our press release and the

related presentation slides. Just click on Investor Relations. These slides include our Safe Harbor statement and

the reconciliation of certain non-GAAP financial measures to our most comparable GAAP financial measures.

Information about relevant risk factors can be found in our Form 10-Q and Form 10-K, which are also available

online.

This call is intended for investors and analysts. Questions from reporters can be directed to our media relations

team, or you can follow our Twitter handle @TDAmeritradePR, which will be live tweeting this morning's call. We

have a large number of covering analysts, so for those of you planning to participate in the Q&A, we ask that you

limit your questions to two, so that we can get to as many of you as possible.

And now, I'd like to turn the call over to TD Ameritrade President and CEO, Tim Hockey. Tim? ................................................................................................................................................................................................................................


Thanks, Jeff. Well, good morning, everyone. I think there used to be a saying around here, it's something like

summers are slow so that sell in May and go away, something like that. This is my second summer here at TD

Ameritrade and I have to say anything – there is nothing slow about the summer. So our momentum from the

second quarter has carried over into the third quarter. Investor engagement has been resilient, with high trading

volumes despite ongoing low volatility. We're seeing very healthy trends in new, funded account growth and asset

inflows from both new and existing accounts. Asset gathering itself is a quarterly record and we've already met

our previous fiscal year record for net new assets with nearly a quarter yet to go. The Fed raised interest rates for

the third time this fiscal year, and the fourth since the financial crisis, providing additional tailwinds and obviously

a boost to revenue. We believe we are close to receiving final regulatory approvals for the Scottrade acquisition,

and we hope to make everything official in the coming weeks.

Our teams are eager to move from planning to execution, but we have an existing business to run as well, and

planning for fiscal 2018 is well underway. We'll have updates for you on all of these fronts in October.

But for now, let's continue talking about the quarter we just finished with our financial summary on slide 6. There

is a lot to like about this slide. We're reporting strong financial results all around, including $0.44 in EPS. This

compares to $0.45 a year ago, a quarter that included FX and tax benefit. Our clients average 510,000 trades per

day, even as the historic stretch of low intraday volatility has persisted. We earned record net revenues of $931





million, up 11% from last year. We're particularly proud of this, given the fact that this is the first full quarter since

we lowered pricing for clients.

Net new client assets, as I mentioned earlier, are another new quarterly record at $22 billion, that's up 62% from

last year, thanks to strong retail inflows, plus outstanding performance from the institutional channel. We ended

the quarter with $882 billion in total client assets. We're also closing in on $200 billion in fee-based investment

balances, up 18% from last year, and interest rate-sensitive balances were $120 billion, even as clients were

aggressive net buyers in the market. For more color on these results, we'll start with asset gathering on slide 7.

With $22 billion in net new client assets, we set a new quarterly record for asset gathering. Year-to-date, we've

brought in $63 billion in net new client assets. Retail net new client assets were up nicely from the same quarter

last quarter.

With a market rally and broader investor engagement, there were many opportunities to capture money in motion.

Our marketing team took advantage of that to bring more prospects into our account opening funnel with relatively

flat spend. Website visits, account starts and opens were all up nicely over last year. Client acquisition is

extremely strong.

In fact through the first three quarters, we have already opened the same number of new accounts that we did all

of last year. And our retail net advocate customer satisfaction scores were a new record high. But growth wasn't

limited to new business. Inflows from new and existing accounts were strong in the quarter. Increased activity

from our sales teams was a key contributor to this money movement. Guidance solutions and enhancing the

client experience remain our focus and clients have responded positively to ongoing upgrades across our long-

term investing continuum. Goal planning conversations are up, as our digital guidance sales. We set a new third

quarter record for combined TD Ameritrade Investment Management sales, with Essential Portfolios representing

about a third of that activity.

More platform upgrades are on deck for the coming quarter, which we hope will further encourage client

engagement and satisfaction. Our development pipeline is filled with projects moving more efficiently towards

completion. We were able to roll out several enhancements in the quarter that address client irritants and improve

the mobile and Web-based client experience, more on these in a few minutes. On the institutional side, you really

couldn't ask for a better year, that isn't until next year. After another record quarter of asset gathering, the

momentum shows no signs of slowing down. Growth is coming from all corners of the channel, new versus

existing, sales-driven versus organic, all are contributing nicely, and our sales pipelines remain robust.

Our value proposition and the strength of the advisor business model continues to resonate with advisors and

their clients. Net advocate and client SAT scores remain near record levels. We held our annual Elite LINC

summit in June, hosting our top RIA clients for a few days of networking, education and practice management

support. We had 140 RIA firms in attendance, collectively managing $170 billion in total firm assets. We look

forward to this event every year because of its intimacy. We can talk to our clients and gather meaningful

feedback about their experience as well as their thoughts and viewpoints on the industry.

One thing that we continue to hear from RIAs and see in our own pipeline is that the DOL Fiduciary Rule is driving

a lot of momentum. The rule is resulting in greater awareness of the fiduciary model. We're hearing from brokers

in our own breakaway pipeline that it's much more attractive now to break off and embrace the independent

model. Our sales teams are quite busy.





We continue to win business and we're focused on the trend, shaping the future of wealth management. We're

making every effort to stay one step ahead of advisors and offering them the service and support they need to run

efficient and successful practices. RIAs today are looking for seamlessness and automation. They want to spend

less time doing administrative work and more time one-on-one with their clients. That's the kind of thinking driving

our institutional product development pipeline.

Let's take a look at trading now on slide 8. Our 510,000 DARTS, while slightly down from our record second

quarter, were up 10% from last year. Despite persistently low intraday volatility and the aftereffects of lowering

prices for clients, our trading volumes continue to hover around the 500,000 mark, even into July, where we are

currently averaging 498,000 per day. In fact, our core trading clients were even more engaged than they have

been in recent quarters. Clients grew more bullish over the course of the quarter and after five consecutive

months of net buying, the June Investor Movement Index hit an all-time high. We saw an increase in trading

across all client segments. This broader participation tends to result in a greater preference for equities. Despite

that, derivatives still made up a healthy 42% of DARTS, with our option DARTS up 12% from last year. Futures

continue to trend around 9% to 10% of DARTS and mobile continues to play a major role in client engagement,

particularly when it comes to trading. Mobile logins across all apps were up 10% from last year. We introduced

some order ticket enhancements on our TD Ameritrade Mobile App, specific to options that have resulted in some

nice upticks in trading. For more on that, let's move to slide 9.

As we mentioned last quarter, throughput continues to improve. Agile development teams now support nearly

50% of our targeted development areas, allowing us to turn up the dial on upgrades to the client experience. We

launched a redesigned trade ticket for our TD Ameritrade Mobile App, enabling clients to more easily construct

complex option strategies. We made deposits and transfers easier to do to our main client trading site, simplifying

money movement for clients.

We also launched personalized performance videos for clients with Essential and Selective Portfolios. These

videos share quarterly individual account performance and insights about the underlying portfolios' performance.

It's a great interactive feature and it has been well received. And we've armed our sales and service teams with

tools to help educate clients following the first-phase rollout of the DOL Fiduciary Rule, including a new fee

comparison tool.

We're actively engaged in planning for the second phase of the Fiduciary Rule's rollout, currently set for January

next year. For our advisor clients, work continues on Veo One which, as a reminder, takes the concept of Veo

Open Access one step further by integrating all of the third-party technology solutions an advisor might use into

one consolidated dashboard. The open access concept has been a key differentiator for us for several years, but

the seamlessness Veo One provides is a new client experience win.

Additional institutional enhancements in the quarter were a continuat ion of ongoing efforts to automate manual

processes for advisors. For example, we enhanced the process for check deposits and introduced an IVR for

advisor and clients. And our new account wizard is yet another addition that will help reduce data entry and

automate account openings for advisors and their clients. Each of these are examples of how we are upping our

innovation quotient to make inroads on improving the client experience. A lot of that work takes place internally,

but we're also keenly focused on innovation outside of the company as well. For example, we just held our Eighth

Annual Tech Summit with some of the biggest developers in advisor technology. Staying close to client feedback

and broader fintech trends will remain important as we continue work to re-imagine investing for our clients.

Now with that, I'm going to pause and turn the call over to Steve for a financial review. Over to you, Steve. ................................................................................................................................................................................................................................





Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp.

Thank you, Tim, and good morning everyone. We had a strong quarter that included many records. We're

pleased with the results and our future prospects. The quarter exceeded our expectations in several regards and

we look forward to the anticipated completion of the Scottrade acquisition in the September quarter. In advance of

closing the deal, we took advantage of the favorable capital markets in April, issuing $800 million of debt and

increasing our revolvers to $900 million.

With that, let's begin with the year-over-year comparisons on slide 11. This was the first full quarter reflecting our

lowered commission rate pricing. We were able to absorb and still achieve record revenue. GAAP earnings per

share were $0.44, down 2%, primarily due to favorable tax items of $0.06 in this quarter last year and Scottrade-

related expense items of $0.02 in the current quarter.

Transaction revenue decreased $12 million year-over-year, or 3%, due to a decline in base commission rates,

primarily due to the impact of rate cuts as well as one less trading day. This was partially offset, however, by

48,000 more trades per day. Asset-based revenue was up $100 million or 21% due to IDA and margin average

balance growth as well as higher net rates. Operating expense was up $47 million including incremental spend

related to technology and Scottrade-related expense.

Let's move to the next slide to review the linked-quarter comparisons. Transaction revenue was down $30 million

primarily due to a decline in base commission rates due to the impact of rate cuts. Asset-based revenue was up

$47 million, primarily due to rates and margin balance growth, somewhat offset by IDA balance declines. Finally,

operating expenses were down due to seasonally lower advertising spend.

Let's move to the next slide. Our significant earnings power on cash balances is reflected on this slide. IDA

revenue was $286 million, up $52 million or 22% year-over-year, due to balance and net rate growth. Average

balances were up nearly $9 billion or 11% year-over-year. Sequentially, balances declined 3% due to record net

buying activity in the quarter as clients engaged the market. Net rates increased 10 basis points for the second

consecutive quarter. Floating rate balances benefited from the Fed moves, while extensions were placed on the

ladder at higher rates than balances rolling off. In the quarter, we extended over $4.3 billion in balances at an

average net rate of 144 basis points as compared to $2.5 billion in maturities at an average net rate of 138 basis

points. Deposit betas have been lower than our expectations to-date. We will continue to monitor client and

competitor behavior closely.

Let's move on to the next slide. Net interest revenue for the quarter was $175 million, up $32 million or 22% from

last year, due primarily to the benefit of rate hikes and margin balance growth. Net stock lending revenue was $34

million, up $3 million year-over-year and sequentially due to stronger demand. Margin revenue was up $14 million

year-over-year as we hit record levels during the month of June. Sequentially, margin revenue increased $12

million. Margin rates were up 14 basis points following the March Fed move. After the June Fed move, we

increased margin pricing by 25 basis points on all borrowers. We would expect to see these changes reflected in

the financials beginning with next quarter.

Let's move to the next slide. Fee-based revenue was $112 million for the quarter, up $16 million year-over-year.

Advised balances, or the combination of Essential Portfolios, Selective Portfolios and AdvisorDirect, were up 17%

year-over-year.





Let's move to the next slide. Interest rate-sensitive asset balances were $120 billion at period end, up $7 billion or

6% from last year. Cash as a percentage of total client assets ended the period at just under 13%, down from last

quarter as client net buying was a record and investments appreciated significantly. Duration at quarter end was

2.2 years, up 0.1 years from last year end.

Let's move to the next slide for a deeper dive on expenses. Expenses in the quarter were in line with our expected

range of $530 million to $540 million. Let's begin with the year-over-year comparisons. Expense growth of $47

million included an $11 million increase in technology investments and $14 mi llion of Scottrade-related items.

Sequentially, the primary changes were due to seasonally lower advertising costs. The level of expenses going

forward will largely depend on the amount of growth in technology investments as well as Scottrade-related items.

We will continue to invest in technology to drive productivity and customer experience benefits. Regarding

Scottrade, we remain comfortable with firm-wide expense synergy levels as outlined in our deal announcement

deck last fall, although some will likely occur earlier and some later than anticipated. With an anticipated close in

the September quarter, we would include Scottrade-related assumptions in our annual guidance to be released

with our October call. This will include a more definitive view on the benefit of interest rates.

And now I'll turn the call back over to Tim. ................................................................................................................................................................................................................................


Thanks, Steve. Well, obviously it was a great quarter. Fundamentals remain strong throughout t he company.

Momentum has carried over from last quarter and continues to build, a great place to be as we finalize plans for

fiscal 2018. With a market rally and broader investor engagement, there were many opportunities to capture

money in motion. Our marketing efforts were efficient and effective, driving new business to the firm with relatively

flat spend.

Trading remained strong despite persistently low intraday volatility. Asset gathering surpassed a new quarterly

record of $22 billion, thanks to strong retail inflows and record asset gathering from RIAs. We continue to improve

our speed to market with more agile development teams and a robust technology pipeline. Clients are already

benefiting from an enhanced experience and we're close to finalizing the acquisition of Scottrade.

Planning has been underway for some time and our teams are ready to turn the corner. We cannot wait to

introduce Scottrade clients to everything we love about TD Ameritrade; you can expect a full update when we

meet again in October. With less than a quarter to go, we haven't quite closed the books on fiscal 2017, but we're

looking ahead. We're optimistic about our prospects, but as always, we have so much work left to do.

And now, we'll open up the call for Q&A. Operator, over to you.





QUESTION AND ANSWER SECTION

Operator: [Operator Instructions] Your first question comes from Devin Ryan from JMP. Your line is open. ................................................................................................................................................................................................................................

Devin P. Ryan Analyst, JMP Securities LLC Q Hey. Good morning, guys. ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A Hi. ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Good morning. ................................................................................................................................................................................................................................

Devin P. Ryan Analyst, JMP Securities LLC Q Maybe starting here just one on kind of the cash management strategy with a bit of decline in the quarter, some of

the duration increase looks like it's because of the floating IDA balance has declined. And so just curious, do you

want to build that floating piece back up and with the flattening in the yield curve, I guess particularly, how are you

thinking about that and especially with Scottrade cash coming on, does it maybe make sense to keep more in

floating, so you're not locking in low rates for longer? ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes, Devin. So we tend to try to stay pretty consistent. We're right around our target duration now of 2.2 years. As

you mentioned, when Scottrade closes, that will actually bring on a lot of floating rate balances, so we'll be

working to extend those over the few months after we close that transaction. So we're comfortable that we have

enough exposure to floating rates right now. ................................................................................................................................................................................................................................

Devin P. Ryan Analyst, JMP Securities LLC Q Okay. All right. That's great. And then maybe just a follow-up here on the commentary around deposit betas,

obviously had been low and that's been good for you guys. How are you thinking about the competitive dynamic

there? Are you looking at just the spread where you are relative to the upper end of maybe competitors or is it – if

customers start asking for higher rates there, how should we think about that backdrop and how you guys are

managing that? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A Devin, it's Tim. So generally, the competitive pressures on deposit pricing or merger price, for that matter, have a

lot to do with clients and what their expectations are. So we watch it pretty closely, but I would say that our

expectation is – has been higher for a beta than we've seen to-date, clients have just not been as interested in





rates at the levels that they currently are. And so, we'll continue to watch it pretty carefully and we think that

changes essentially for every step along the Fed rate, as rates go up, clients tend to get more sensitive obviously

to those moves. ................................................................................................................................................................................................................................

Devin P. Ryan Analyst, JMP Securities LLC Q Got it, okay. Thanks, Tim. ................................................................................................................................................................................................................................

Operator: Your next question comes from Rich Repetto from Sandler O'Neill. Your line is open. ................................................................................................................................................................................................................................

Richard Henry Repetto Analyst, Sandler O'Neill & Partners LP Q Yes, good morning, Tim. Good morning, Steve. And I guess my question is sort of related to the first question. But

on the Scottrade investment in cash and their IDA. So we're running numbers and again we're going back to – I

think it was $154 million you talked about initially, but at current rates and I'm trying to see whether you'd still

invest parallel or similar to the Ameritrade portfolio coming up with over $300 million in incremental IDA from

Scottrade, and an IDA spread of over 110 basis points, is that similar to the numbers that you'd expect to get once

the deal closes? ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. So, we're going to give formal guidance next quarter, Rich. Obviously some of this is going to depend on

where we actually strike the tractors and rates have been bouncing around about 5 basis points a day here, it

seems like, but I think you're on the right track that rates are significantly higher than when we modeled and will

yield a significant benefit to us when we do publish that. ................................................................................................................................................................................................................................

Richard Henry Repetto Analyst, Sandler O'Neill & Partners LP Q Okay. And I guess the next question is sort of longer ranging, but for Tim. We're seeing – and you said in your

prepared remarks, you pay attention to the Fintech trends and we're seeing automation impact industries, a wide

range of industries. And I guess you've upped the investment spending and focused on client enhancement, and

you'd mentioned a lot of examples. So the question is, what enhancements do you, over the next two to three or

four years, what enhancements do you see that could really change the experience of online trading? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A Great question, Rich. I'm obviously not going to tell you what our development plans are. You'll have to wait till

next quarter. But having said that, one of the reasons why we are investing, A, more dollars, and B, in our

capabilities to become just more capable of reacting quickly to market forces is, as you and I've discussed before,

there were pretty significant technological forces that will come into play, notably through much more human

interaction, voice response, for example, is something that's become very, very popular, and advanced in the last

few years.

And let's face it. Trading is quite a technical interface right now and that is – we know that's an impediment to

clients who wish to participate in the markets. They can be daunted by the complex screens that they see. So





technology tends to make things easier and simpler over time. And so, I think there will be a pretty large-scale

shift into that direction. ................................................................................................................................................................................................................................

Richard Henry Repetto Analyst, Sandler O'Neill & Partners LP Q Yes, just I'm a late adopt, but I got my Amazon Echo on Amazon Prime Day last week. So... ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A There you go. ................................................................................................................................................................................................................................

Richard Henry Repetto Analyst, Sandler O'Neill & Partners LP Q Thank you, thanks. ................................................................................................................................................................................................................................

Operator: Your next question comes from Chris Shutler from William Blair. Your line is open. ................................................................................................................................................................................................................................

Christopher Shutler Analyst, William Blair & Co. LLC Q Hi, guys. Good morning. ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A Hi. ................................................................................................................................................................................................................................

Christopher Shutler Analyst, William Blair & Co. LLC Q So first question on Scottrade. Has Scottrade treated the, I guess, deposit betas same way as you and can you

just give us a sense of how they're, I mean, without going into too much detail, how their metrics have trended

over the last six or nine months, so NAA, total assets, et cetera? ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. We're not going to give any significant details out on Scottrade. I think their business model is very similar to

ours. When we disclosed the deal initially, they kept their interest rate sensitivity a little bit shorter than ours. And

so, I would expect that they'd be managing consistently with that. I think their clients have been very loyal and we

would expect that they're seeing good growth along with the industry. But we'll give all the details when we close

the transaction. ................................................................................................................................................................................................................................

Christopher Shutler Analyst, William Blair & Co. LLC Q Okay. And Tim, little bigger picture question. How are you measuring progress against kind of your growth

objectives for TD Ameritrade Investment Management? It seems like part of the business where there should be a

lot of opportunity, so kind of looking out five years, how would you ideally like the revenue mix of the company to

look?





Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A Don't have specific targets on that front. Obviously, as we've long stated and my predecessor before me, having a

revenue mix that is less reliant on commission trades, obviously, although that was largely impacted in the move

a few months ago. So want that number to get bigger. Don't have any specific targets to share with you at this

point, though. ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A I would say, Chris, just the – already we're seeing that the commissions as a percentage of revenue are down.

And if you look at commissions excluding order routing revenue, they'd be only about 27% of our revenue. And

with this latest Fed increase, we'd expect that to continue decline going forward. ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A But in terms of your – if your question is, what are we expecting from advised assets, I think we were up 25%

year-over-year. We've had the new Essential Portfolio in for less than a year now, we think that's gaining some

momentum. So we'll continue to build out the capabilities and the products on that front to broaden out our

revenue stream. ................................................................................................................................................................................................................................

Christopher Shutler Analyst, William Blair & Co. LLC Q Okay. Thanks, guys. ................................................................................................................................................................................................................................

Operator: Your next question comes from Steve Chubak from Nomura. Your line is open. ................................................................................................................................................................................................................................

Sharon Leung Analyst, Nomura Securities Q Hey, this is actually Sharon filling in for Steve this morning. My question is kind of, as a follow-up to Devin's. As

we think about the cash from Scottrade, given the flattening yield curve, how should we be thinking about like the

targeted pace for deployment there? ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. So, we'd like to spread that out over probably three to six months or around the close, just to make sure that

we don't get locked into one specific date. And we'll look at rates to see whether we think they're anomalous at

any given point in time, but I'd say that's a pretty good sort of rule of thumb. ................................................................................................................................................................................................................................

Sharon Leung Analyst, Nomura Securities Q Okay. Cool. And then yes, sorry... ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A





I was just going to say, and I think we're going to – our plan is to look at it just like our own balance sheet. As

we've studied their deposits, we think they're extremely similar to ours, so we'll probably have a target duration

around 2.2 for them as well. ................................................................................................................................................................................................................................

Sharon Leung Analyst, Nomura Securities Q Okay. And then now that we're one full quarter out from the price wars, it doesn't look like, given the strong asset

trends and the strong DARTS that you're seeing very much impact other than the declining average commission

per trade. Would you think that's fair or like kind of what are you seeing there? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A I think that's absolutely fair. Obviously almost all of the price impact was overcome with the higher trading level.

It's tough to say at this stage, but it certainly feels like the retail engagement was higher, you just can't tell whether

that's as a result of the overall lower prices. My gut will tell me, no, I didn't think a couple of dollars difference in

the cost per trade would bring many more clients into the marketplace. But our retail acquisition, as we said, is up

pretty significantly. Pretty surprised that here we are three quarters into the year and we did all of last year's new

account production. So, lots of engagement. ................................................................................................................................................................................................................................

Sharon Leung Analyst, Nomura Securities Q Okay. Great. Thanks so much. ................................................................................................................................................................................................................................

Operator: Your next question comes from Mike Carrier from Bank of America. Your line is open. ................................................................................................................................................................................................................................

Michael Carrier Analyst, Bank of America Merrill Lynch Q Thanks, guys. Hey Tim, just on the net new assets. So overall, another strong quarter. You mentioned a split, say,

80% on the institutional, 20% on the retail. So when we think about the retail part of the business, part of it's client

mix. But just wanted to get your sense. When you think over the next couple years, what are you guys working on

to try to drive that higher or a bigger portion of the overall net new asset growth maybe for that to be more of the

growth engine? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A Yes, so a few things. Obviously next year in particular, the largest determinant of course is our integration with

Scottrade. And so we will be combining our forces and obviously hugely increasing our branch network. And so

as you heard me say before, it will be the, hopefully, the combination of high-tech and high touch and the best on

the street. So, that's largely targeted towards a retail offering, as you know. So the combination of our additional

investments in new technologies that, as I said earlier to Rich, will be helpful in making it easier for our clients to

do business with us, as well as larger distribution being a focus for us. I think there's going to be a great shift. At

the same time, we have to continue to build out on the advisory continuum so that we have a better set of

products available for those clients who need it. So lots of opportunities for great growth, I think. ................................................................................................................................................................................................................................

Michael Carrier Analyst, Bank of America Merrill Lynch Q





Okay, thanks. And then just a quick follow-up for Steve. I guess, first just on the other revenue line, I don't know if

there was anything in there, that's always a little volatile, but seemed a little elevated. And then just on the spread

revenue in terms of the outlook. When we just – and this is just the near-term outlook like when I think about cash

balances being a little bit lower, you get the June hike, and then the curve flattening, like anything that when

you're looking at how that's impacting the outlook, that would be more unusual than what we would typically

expect? ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. So on the first question, other revenue, as you said, was elevated a little bit. This quarter's the quarter where

we tend to get high proxy income and that was a little bit stronger this year than it was last year. We also now

have a little bit bigger securities portfolio and so, those are all mark-to-market. And so we had a slight favorable

mark on that this quarter. In terms of the rate environment, we tend to stick pretty close to our asset liability

management strategy. I wouldn't expect anything to change significantly then. ................................................................................................................................................................................................................................

Michael Carrier Analyst, Bank of America Merrill Lynch Q Okay. Thanks a lot. ................................................................................................................................................................................................................................

Operator: Next question comes from Conor Fitzgerald from Goldman Sachs. Your line is open. ................................................................................................................................................................................................................................

Conor Fitzgerald Analyst, Goldman Sachs & Co. Q Good morning. Tim, you talked about the DOL driving some of the money in motion this quarter and some of the

things you're doing to automate the workflow of advisors so they can focus on their core business. I guess just

two questions on that. One, just any color you could give on where the market share gains from the DOL are

coming from. And then second, on the points that you're trying to solve on the pain points for the advisors, is that

more on the back office side, are you focused more on asset allocation, portfolio risk management or things like

recordkeeping? Just be curious where you think the main pain points are? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A Yes. So on the second question first, I think the answer to the question is yes. We're investing across the

experience continuum, both in the back office, both at the advisor experience itself as well as frankly at the end

client. There is lots of opportunities. Tom Nally who runs that business is keen to say, it's a largely manual

business. And so any opportunities to automate is a win-win because we get an opportunity to improve the client

experience as well as lower our expense base on a large set of assets obviously. So, I'd say it's broad-based.

On the first point from a DOL point of view, it's really early to tell. We don't get good market share data, as you

know, intra-quarter. You heard me say a year ago that I thought that the net DOL benefit would accrue to e-

brokers. It might be that that's in fact been the case. I mean, you certainly see the flows coming into the advisor

channel being elevated. There is not a week or two that goes by. Back in June, certainly they didn't talk about the

impact of DOL and educating retail investors on what fiduciary actually meant. So all of those things are trends

that are contributing, but it's tough to pinpoint specifically where the share is coming from. ................................................................................................................................................................................................................................





Conor Fitzgerald Analyst, Goldman Sachs & Co. Q That's helpful, thank you. And then, Steve, in the release, you talked about your strategic flexibility improving for

fiscal 2018, just given the strong start to the year. Any preliminary thoughts on how you would think about using

that strategic flexibility or maybe kind of what's on your strategic flexibility to-do list? ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. I think we're, as Tim mentioned, we're really keen to continue to invest in technology, both to improve our

longer term productivity as well as to improve the client experience. And I'd say those would be the major things.

We continue to evaluate acquisitions but nothing I think new on that front. ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A All right. Thanks for taking my questions. ................................................................................................................................................................................................................................

Operator: Your next question comes from Chris Harris from Wells Fargo. Your line is open. ................................................................................................................................................................................................................................

Chris M. Harris Analyst, Wells Fargo Securities LLC Q Thanks, guys. Another one on institutional, I mean the growth is really just quite phenomenal there and it seems

like you guys are really growing much faster than your peers that offer similar services. So just wondering, as you

guys speak to your advisor clients, why do you think that is? I mean, what is Ameritrade's really value proposition

here to drive much faster growth than the peers? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A I could probably ramble on for about 45 minutes, but if I had to pick the two biggest differences, I'd say, first again,

relative to the overall focus on client experience of the firm, our institutional business is really focused on that,

both at the advisor end as well as ultimately through to the end client. So, not only offering bespoke service to our

RIA advisors, but constantly focus, as I said a few minutes ago, on those things that can make – just remove the

day-to-day irritants, and there's obviously things that we can do on that front.

I'd say the second major contributor is focus on our open architecture technology. The – Veo first and now Veo

One is really a step that helps advisors integrate their existing choices of technology platforms into our own and

makes it easier for them to operate across platforms. The combination of those things together I think are

probably the two biggest determinants. ................................................................................................................................................................................................................................

Chris M. Harris Analyst, Wells Fargo Securities LLC Q Okay. Great. And then just a quick follow-up here on Scottrade. As you guys think about your budgeting for that

transaction, are you guys planning on investing and modernizing the branches? And if you are, do you have an

idea of – about how much that might – that expenditure might be? ................................................................................................................................................................................................................................





Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A So, at this stage, we're still actually calibrating exactly how many branches we will be keeping open and so that's

the first question and then we'll be doing an assessment of next stage, obviously staffing, and then the

requirements, if any, to upgrade them. So, nothing to talk about further and we'll disclose more next year if we

have anything material to announce. ................................................................................................................................................................................................................................

Chris M. Harris Analyst, Wells Fargo Securities LLC Q Okay. Thank you. ................................................................................................................................................................................................................................

Operator: Your next question comes from Dan Fannon from Jefferies. Your line is open. ................................................................................................................................................................................................................................

Daniel Thomas Fannon Analyst, Jefferies LLC Q Thanks. Good morning. I guess, maybe if you could talk about your appetite for M&A kind of post the Scottrade

deal closing and how we should think about a resumption of maybe buybacks as well versus other uses of

capital? ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes, so Dan I think, maybe I'll hit the buyback one first and I'll let Tim talk about acquisition. So, on the buybacks,

I think that we're not doing any buybacks currently. We would think that after the conversion, we'll start to see the

biggest lift in synergies and I think we'll reevaluate buybacks at that point in conjunction with our board. ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A And on the M&A front, well, obviously as you intimated, we're quite busy with the Scottrade integration for some

time. But post that, I could give you the standard answer that we'll do any acquisition that makes sense both

financially and strategically.

But I think just to give you a little bit more color on that, post-Scottrade, we will have significant scale. And as

we've seen in the last year or so, we've been ramping up our investments in our base capabilities. I think it's

incredibly important to continue to stay nimble to move faster than your competitors and to make sure that you've

got the right investments that you need to satisfy your clients. And so I don't feel in any way strategically imperiled

with our scale that we'll have post Scottrade and so we'll have to take all that into consideration in years to come. ................................................................................................................................................................................................................................

Daniel Thomas Fannon Analyst, Jefferies LLC Q Great. And then Steve, just to follow up on the annual impact to EPS from higher rates, I think it came down a

penny in the range and can you talk about just the differences between now and last quarter? ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A





Sure. So I think that really reflects sort of a range of like a 10% to 25% beta, so pretty wide range. I think that it's

always been our assumption that as rates get higher, more will be passed on to the clients until we will see higher

betas. To date, the betas have been quite low and we'll continue to reevaluate that as we go forward. But we

would expect that they would start to get higher over time. ................................................................................................................................................................................................................................

Daniel Thomas Fannon Analyst, Jefferies LLC Q Got it. Thank you. ................................................................................................................................................................................................................................

Operator: Your next question comes from Michael Cyprys from Morgan Stanley. Your line is open. ................................................................................................................................................................................................................................

Michael J. Cyprys Analyst, Morgan Stanley & Co. LLC Q Hi, good morning. Thanks for taking the question. Just on the client cash levels that seems to continue to drift

lower, I think you mentioned it's about 12.9% of client assets. Just curious where you see clients putting money to

work, whether it's single stocks or it's ETFs or it's other instruments. Just any color you can share about that and

just any color you could share also about the composition of the $882 billion in client assets, I don't think you

break it out across single stocks versus ETFs and other instruments, but maybe if you could share that would be

helpful. ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. So we have seen both this quarter was sort of the perfect storm in terms of those numbers, right? So we saw

our clients with net buying activity, so cash was down linked-quarter and then we saw very strong returns in the

market, so the denominator is up, so I think that's why you're seeing that percentage decline so significantly. We

are seeing this quarter very broad-based engagement in the market. So everyone from brand-new customers

opening their first account to very active traders seem to be engaged in the market.

We saw good activity across pretty much all of our products, our futures were down a little bit year-over-year

because we had such a strong comparable. In terms of holdings, we are still seeing the trend where ETFs are

increasing a bit as a percentage of assets. We continue to see good holdings in mutual funds and really across all

of the products that we typically see. ................................................................................................................................................................................................................................

Michael J. Cyprys Analyst, Morgan Stanley & Co. LLC Q Okay. Just a follow-up on a strong trading activity. I think you had mentioned on one of the slides that it seemed

to be trending up about 10% year-over-year, activity rates as well also pretty strong, I think about 7.1% in the

quarter. So just curious anything you could share there in terms of what's driving the greater activity that's been

trending up for the past couple years? How much of that is a share gain, would you say, versus how much – to

what extent is coming from greater activity from mobile, which has been ramping higher for you guys and just how

are you thinking about the outlook for activity levels trending, let's say, over the next three to five y ears? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A Yes. So it's actually a bit of a conundrum. On the one hand, we've got broader retail engagement, generally as we

say. If you look June quarter after June quarter after June quarter, the engagement rates of our clients are up,





their trading levels annualized are up, as we said, their activity rate. And part of that is a shift to mobile. We know

we get a lift in trading when a client becomes mobile-active, again, easier for them to do that business.

So, on the other hand, the conundrum part is, as we said, we're at multi-decade lows in the VIX, which tends to

drive more trading activity. So if you do get a bump in VIX, then with that broader-based trading, it will be

interesting to see whether you get a real spike or not. But it's sort of steady drumbeat of a higher growth rate in

clients with slightly more trading levels even over and above the fact that we have volatility that's quite low. ................................................................................................................................................................................................................................

Michael J. Cyprys Analyst, Morgan Stanley & Co. LLC Q And just any sense on that activity rate where you kind of see that over the next three to five years and just how

much overall lift or bump you get from mobile? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A We don't project it out. But again, as I was saying earlier, if you can imagine that access to markets and trading

becomes less complex because of the inexorable trend in the last few years, of course that it's tended to become

more complex from, call it, 10, 15, 20 years ago. As technologies enable us to provide easier interfaces for

clients, then I think you might see an uptick in overall activity level at the retail side. ................................................................................................................................................................................................................................

Michael J. Cyprys Analyst, Morgan Stanley & Co. LLC Q Okay. Thank you. ................................................................................................................................................................................................................................

Operator: Your next question comes from Brian Bedell from Deutsche Bank. Your line is open. ................................................................................................................................................................................................................................

Brian Bedell Analyst, Deutsche Bank Securities, Inc. Q Just wanted to drill down a little bit more into the institutional retail mix, either Tim or Steve, if you can comment

on some of the economics on the institutional client base on a go-forward basis? Because particularly in pricing,

so we're – obviously, you're talking about deposit beta remaining pretty low. Do you see the institutional client

base being a little bit more, I guess, aggressive in looking to raise those deposit rates and I guess the same thing

on the margin yield side versus retail? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A Yes. So generally, institutional, the overall – we don't disclose obviously the breakdown. But everybody would

know that the revenue level basis points for assets is lower, but so is the cost to grow it. And the sensitivity of the

advisors on behalf of their clients is a little higher. So you expect higher betas and that's anticipated in our overall

beta range. ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. And I guess the flipside of that is that we think of that as more of a floating rate book. And so, the advantage

of the Fed rates has a bigger impact on the institutional portfolio. ................................................................................................................................................................................................................................





Brian Bedell Analyst, Deutsche Bank Securities, Inc. Q Right, right. So less yield curve-sensitive on that side, essentially. ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. ................................................................................................................................................................................................................................

Brian Bedell Analyst, Deutsche Bank Securities, Inc. Q Yes. Okay. And then just a follow-up, Tim, maybe you talked a lot about the technology enhancements. How do

you think about the adoption of those enhancements in terms of the strategy of either advertising that or rolling

out that out to the client base? As you continue to develop that, should we expect the incremental potential

revenue from that to come in sort of over time or do you think the adoption is really moving up quite rapidly? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A I think this is an incremental thing. As I said many times, it's speeding up the metabolism of the firm generally in

terms of releases, whether they be incremental releases from a client experience point of view, whether they be

improvement in our operating efficiency inside the firm or frankly, whether they be some step function rollouts of

net new function to clients or to new markets. You can't do any one of those three things. I believe you have to do

all three of these things in conjunction and they'll be rolled out as ideas come to fruition. ................................................................................................................................................................................................................................

Brian Bedell Analyst, Deutsche Bank Securities, Inc. Q Okay, great. Thank you. ................................................................................................................................................................................................................................

Operator: Your next question comes from Kyle Voigt from KBW. Your line is open. ................................................................................................................................................................................................................................

Kyle Voigt Analyst, Keefe, Bruyette & Woods, Inc. Q Just one for Steve, a follow-up. I think you mentioned the Scottrade cost synergies, some may come earlier, some

may come later than previously expected. Just wondering if the year two $450 million of run rate synergies

guidance there still holds. ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. So in general, I'd say yes, that's a short answer. I'd say we're likely going to see a conversion probably a bit

earlier that than we had talked about. We talked about a conversion a year after the announcement or the close

date. And then I think we're going to make sure we take our time, particularly on our retail synergies to make sure

that we're providing a great client experience. So I think you'll see those ramp in over time rather than happening

immediately after conversion. ................................................................................................................................................................................................................................

Kyle Voigt Analyst, Keefe, Bruyette & Woods, Inc. Q





Okay. Fair enough. And then, just one more follow-up on the IDA balances. I know that the floating rate balances

were, I think, 18% of the total IDA at the end of the quarter, which is the lowest since 2013, and I get that

Scottrade will bring on floating balances immediately and then you'll have to extend those. I'm just trying to make

sure that, as we model into next year, should the floating rate percentage be closer to the historical level of 25%

to get to that targeted low-2s duration or has that percentage shifted for some reason maybe because of the

dynamics with the really strong growth in margin lending balances, which have a shorter duration? ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. I think the 25%-75% is a pretty good rule of thumb. There were, as you mentioned, a few things this quarter

that made that a little bit different, but I wouldn't expect to deviate from that too much long-term. ................................................................................................................................................................................................................................

Kyle Voigt Analyst, Keefe, Bruyette & Woods, Inc. Q Okay. Thank you. ................................................................................................................................................................................................................................

Operator: Okay. Your next question comes from Brennan Hawken from UBS. Your line is open. ................................................................................................................................................................................................................................

Brennan Hawken Analyst, UBS Securities LLC Q Good morning, thanks for taking the questions. The price cuts seem to have driven a decent amount of money in

motion. Do you have any updated thoughts on whether the price cuts are going to result in higher-than-expected

churn for the Scottrade accounts? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A I'm not sure it was price cuts that drove all that money in motion. As we said earlier, it could have been the model

announcements done in the spring at some of the wirehouses in anticipation of the DOL rule change. It's tough to

tease it out. Having said that, we, notwithstanding that we're not closed yet and we're still competing, our

expectation is that Scottrade continues to participate in many of the retail trends that we've just talked about and

so we expect those same forces to continue to play at our combined institution when we close in the next few

weeks hopefully. ................................................................................................................................................................................................................................

Brennan Hawken Analyst, UBS Securities LLC Q Okay. So... ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A I think it was a higher level of investor engagement too. People are thinking more about their investments and so

that's creating more inflows and more outflows. ................................................................................................................................................................................................................................

Brennan Hawken Analyst, UBS Securities LLC Q Okay. So, paraphrasing, no change in expected churn on Scottrade side. ................................................................................................................................................................................................................................





Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A No. ................................................................................................................................................................................................................................

Brennan Hawken Analyst, UBS Securities LLC Q Okay. Great. Thank you. And then question on the investments I think that you highlighted in preparation for the

year-end fiduciary rule deadline, want to know like how much of that is still going to be valuable, given that

changes to the rule are actually codified in the most recent final version of the rule. So of the investments that

you're making, how much are narrowly specific to how the rule is defined now versus being broad based and

would still be applicable if we end up seeing a rather materially different rule, as been pretty clearly signaled? ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A Well, first of all, the investments we're making in preparation for the DOL is quite a small amount relative to our

overall spend. But I'd also say that whether the rule gets a continuance or not in January as to delay, some of

these enhancements are actually helpful for clients anyway, just as the things we did in anticipation for the June

rollout were as well. So, I don't see them as "wasted investments" should the rule be delayed. ................................................................................................................................................................................................................................

Brennan Hawken Analyst, UBS Securities LLC Q Thanks a lot. ................................................................................................................................................................................................................................

Operator: Your next question comes from Patrick O'Shaughnessy from Raymond James. Your line is open. ................................................................................................................................................................................................................................

Patrick J. O'Shaughnessy Analyst, Raymond James & Associates, Inc. Q Hey, good morning. So, question is, how would you evaluate the competitive landscape for millennials right now?

I imagine they're not a big revenue opportunity today, but 10 or 15 years from now, they probably will be. And it

seems like there is some unique business models out there trying to target those investors. ................................................................................................................................................................................................................................

Timothy D. Hockey President & Chief Executive Officer, TD Ameritrade Holding Corp. A Yes, so it's Tim. First of all, if you go back and look at the percentage of our accounts acquired in the millennial

camp over the last number of years, it's basically been about the same. So that would highlight that it hasn't

exemplified or amplified in terms of the competitive nature for millennials. That's the first point.

Second point is, millennials are always going to be your – the younger investor is always going to be your future.

And as you alluded, you have to balance the profitability of the existing clients with large assets and large trading

levels versus those that are just starting out. So my view is, we have to continue to offer those things that will

continue to be appealing to investors at all ages and then your millennials will continue to grow into your offering.

Having said that, there are a few new models out there, notably around, again, easier-to-use, mobile-dominant,

low-price trading platforms and we take them very seriously and we make sure that we are competitive for the

offering for that segment. ................................................................................................................................................................................................................................





Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes, I think I'd add too that our very low marginal costs allow us to bring in lower dollar accounts or lower revenue

accounts today and still be profitable with those accounts. So I think it's an area where we can grow faster than all

other competitors. ................................................................................................................................................................................................................................

Patrick J. O'Shaughnessy Analyst, Raymond James & Associates, Inc. Q All right. Thanks, guys. ................................................................................................................................................................................................................................

Operator: [Operator Instructions] Your next question comes from Doug Mewhirter from SunTrust. Your line is

open. ................................................................................................................................................................................................................................

Doug R. Mewhirter Analyst, SunTrust Robinson Humphrey, Inc. Q Hi. Good morning. Just on the commissions, the revenues, obviously you've maintained a pretty healthy DART

volume despite the low volatility and it seems that despite the price cuts that you still had, what I would say, better

than expected revenue per trade, again despite the price cuts and despite the sequential decline. Was that also a

little bit better than your internal expectations and, if so, was that due to a better mix or just a higher average

revenue per ticket? ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. So it's pretty much in line with our expectations, Doug. So we talked last quarter about $1.10 to $1.30 sort of

estimated decline. And if you look back and compare with the December quarter, which would have been the last

quarter that we didn't have any impact of the commission rate cuts, we're down about $1.23 per trade. So pretty

consistent, but as we've mentioned already, a fairly modest number, something that we have been able to absorb.

So feel good about that. ................................................................................................................................................................................................................................

Doug R. Mewhirter Analyst, SunTrust Robinson Humphrey, Inc. Q Thanks. My follow-up, just quickly on the – you did a notes offering earlier in the quarter and part of that was in

preparation for the Scottrade financing. Are you sort of basically done on the liability side of your balance sheet in

preparation for Scottrade or are you going to bump up your credit line a little bit more before closing or is that you

pretty much set up there now in terms of your debt levels? ................................................................................................................................................................................................................................

Stephen J. Boyle Chief Financial Officer & Executive Vice President, TD Ameritrade Holding Corp. A Yes. We've pretty much had ourselves offset in case the deal closed a little bit earlier and so we're ready to go. ................................................................................................................................................................................................................................

Doug R. Mewhirter Analyst, SunTrust Robinson Humphrey, Inc. Q Okay, thanks. That's all my questions. ................................................................................................................................................................................................................................

Operator: [Operator Instructions] Okay. At this time, we do not have any questions.






Great, well. Thanks, operator, and thanks everybody for being on the call. Appreciate it, and we'll see you at year-

end in October. Take care. ................................................................................................................................................................................................................................

Operator: This concludes today's conference call. You may now disconnect.

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