Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Rich Repetto – Sandler O’Neill.
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Rich Repetto – Sandler O’Neill
I guess the first question is on the trading activity of just the retail side. I differ in what you said in the prepared remarks and the other e-brokers saw sequential increases as well as year-over-year increases, and I think we attribute to that because of the high volatility. Your customers don’t trade as much, and I guess the question, is that correct, is that what you attribute the modest decline in darts? And is there a positive lighting that if volatility went down, as it’s trending down a bit but no one can tell, but if it went down to say 30 or so do you think you did better than other e-brokers as volatility declined, in regards to darts?
Adam DeWitt
Sure Rich, I think you just can’t talk about kind of high volatility or low volatility in a vacuum because generally slightly elevated levels of volatility are very good for our customers. It helps them find opportunities in the market place, if they’re selling premiums it makes them more attractive. It’s usually a good opportunity for our customers, but you really have to look at the extreme volatility and market dislocation that we experienced during the fourth quarter.
And the fourth quarter is really where you kind of go back and look in time that our darts did kind of trend slower than the rest of the industry, it really started in September right when the credit prices really came into full bore. And so from that point on we really believe our customers took a more patient educated look at the markets, they didn’t panic, they weren’t rushing to sell everything, they were managing their positions in a frugal, albeit more conservative manner.
They certainly de-levered, you can see that in our margin balances, and took a cautious, what we believe, highly educated approach to what was going on with the extreme dislocation in the market place. The big payoff of that is our asset balances, which have been much stronger than everyone else in the industry, and that is where future revenue growth is generated from.
So, the biggest driver of trades across any brokerage firm is not number of accounts, its number of assets. And so when the market does turn around, when volatility does subside, we think that much higher level of assets puts us in a great position for strong growth.
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