Online brokers welcome low volatility

|By:, SA News Editor

“The smaller firms are not as driven by turnover as they are by asset level values,” says Portales Partners analyst Charles Peabody, trying to explain why low volatility - hitting hard the revenues of the trading departments of the big banks - is helpful to online players like Schwab (SCHW -0.7%), E*Trade (ETFC +0.1%), and Ameritrade (AMTD +0.4%).

"Volatility terrifies retail investors," says fund manager Chad Morganlander. It all adds up to earnings growth, with E*Trade's adjusted profit expected to grow 55% this year and Schwab's 24%. This compares to projected declines at the big banks.