The largest stock broker by market share: Part 1 – the US

I’ve seen several hits from searches like stock broker market share lately. And since you’re asking, I might as well try to answer.

So I’ve pulled together some data on the top stock brokers in three different markets – the US, the UK and Singapore. (I tried Hong Kong as well, but I couldn’t get any data.)

Of course, this is completely different to who the best stock broker is – in fact, in each case the top five includes firms I wouldn’t go near. If that’s what you’re looking for, see the guide to the five best international stock brokers.

Otherwise, to see who the number one stock broker is in each country, read on.

US stock brokers market share

I began with the US, figuring it would be the easiest – and it was. It helps that most of the big US brokers are public companies and disclose much of the data in their investor filings. A quick search turned up a Forbes article citing numbers from consultants Aite Group on total client assets for Fidelity, Charles Schwab, TD Ameritrade and E*Trade as at end 2010.

That doesn’t include the other member of the top five, Scottrade. It’s privately owned and doesn’t disclose so much detail about its business. But in a Reuters news story, the chief executive said that its assets are no more than E*Trade’s US$190bn – so we’ll take it as being a close number five.

So putting this all together, we have Fidelity leading the pack, with market share of 41% of assets, based on Aite’s overall estimate of US$2.5trn in online brokerage accounts in America.

BrokerageMarket share
by assets (2010)
Charles Schwab27%
TD Ameritrade11%

For context, that online total is almost 20% of total individual client investment assets in the US, behind the big four wirehouses (traditional brokers attached to investment banks) at 38% of assets – but with the online brokers still gaining market share.

The US data is easy enough to find that we could look at this another way – and since one very obvious name is missing from the list, we probably want to do so.

Apart from client assets, we can look at trading activity. Again, the listed brokers disclose this on a regular basis, under the name of daily average revenue trades (DARTs).

I took the Q2 2011 figures for most of them. For Scottrade, again the Reuters interview has the CEO saying that Q1 DARTs were more than E*Trade’s 177,000 – obviously E*Trade has done rather worse in the latest quarter, but let’s assume Scottrade is around 180,000. Fidelity discloses this data with more of a lag, but press releases indicate that first half DARTs would be up around 10% on last year’s 257,355.

BrokerageDARTs (Q2 2011)
Interactive Brokers408,000
Charles Schwab397,100
TD Ameritrade370,000
FidelityEst ~280,000
ScottradeEst ~180,000

On this metric, Interactive Brokers comes out top. And it does so on a much smaller asset base – US$25.7bn in net client assets and 176,000 accounts (versus around 10 million at firms such as Schwab and Fidelity).

Obviously, this is not at all like-for-like. Interactive Brokers has many professional trading clients and the typical user is highly active, while the average Fidelity client might only trade a couple of times a quarter.

Smaller firms in a similar market to Interactive Brokers are similarly high-turnover. Tradestation saw 85,611 DARTs on US$2.4bn assets, while optionsXpress saw 32,200 on US$8.4bn.

That’s it for the US. Read on for stock brokers in the UK and Singapore.

Or go to the US online stock broker guide to see which of these firms is the best place to have your brokerage account.

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