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E*Trade Hit by Light Volume in November

E*Trade Financial's monthly trading volume plunged in November, reaffirming that U.S. equity trading volume began an early retreat this year.



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E*Trade Financial's

(ETFC) - Get Report

monthly trading volume plunged in November, reaffirming that U.S. equity trading volume began an early retreat this year.

E*Trade's monthly DARTs, or total daily average revenue trades, last month were 170,300, a decline of 13% from October and 22% from the year-earlier period. Year-to-date through November, DARTs rose 6% from the same period last year, E*Trade said.

E*Trade's brokerage accounts totaled 2.7 million at the end of November. Gross new brokerage accounts were 27,522, while net new brokerage accounts totaled 306 last month. E*Trade's total accounts ended at approximately 4.5 million as of Nov. 30.

The decline in trading volume echoes comments made by

Charles Schwab

(SCHW) - Get Report


TD Ameritrade

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, which both said that equities volume fell in November from the previous month. Schwab on Monday went so far as to warn analysts and investors that fourth-quarter earnings would come in lower, partially due to the decline in trading.

While the markets typically experience a slowdown in

trading activity

as the holiday season kicks off, this year the decline began earlier than usual as investors sit on their hands after profiting from a strong market rebound from March's lows, and concerns about the economy persist.

E*Trade is also restructuring its international activities as part of the company's turnaround strategy, it said. It is looking to exit "local market trading," in which customers residing outside the U.S. trade in non-U.S. securities. E*Trade is also planning to improve its cross-border trading line of business to obtain higher efficiency and higher margins, it said.

"Given our recapitalization and the positioning of the company for a return to long-term growth and profitability, we continue to sharpen our focus on products and markets where our business has strong margins and competitive advantage," Chairman and CEO Don Layton said. "This international restructuring is designed to improve profitability in our offshore operations and reinforces that we expect our future growth to come from our U.S. online brokerage franchise."

While E*Trade has made significant progress over the past year in dealing with troubled loans in its bank subsidiary as well as a large recapitalization plan this summer, E*Trade still has one major problem: Layton's contract expires Dec. 31 and it does not have a new CEO lined up to fill his shoes. E*Trade made no mention of a replacement in the release.

E*Trade said total early loan delinquencies (those loans 30 to 89 days delinquent) fell 3%, while total "at risk" delinquencies (those loans 30 to 179 days delinquent) fell 2% from Sept. 30 to Nov. 30. E*Trade's home equity portfolio -- the company's greatest exposure to loan losses -- saw early delinquencies fall 8%, while total delinquencies fell 5% in the same period.

Customer security holdings rose $6 billion in November, while brokerage-related cash rose $500 million. On the other hand, bank-related cash and deposits fell by $300 million as E*Trade continued to execute its ongoing strategy to reduce bank-related deposits.

Net new brokerage assets were $400 million last month. Customers were net sellers of approximately $200 million in securities in November, E*Trade said.

E*Trade shares were rising 3.1% to $1.66; Schwab's stock was up 4% to $18.05, while TD Ameritrade shares were also rising 2.5% to $18.71.

-- Written by Laurie Kulikowski in New York.