Online Brokers that are Brokered Online

Joel Anderson  |

It would most likely be redundant to espouse the expansion of online trading to you, dear reader, as the fact that you're reading this on a website dedicated to following the markets most likely indicates that you're already in the know.  However, in a fabulously self-reflexive exercise, one could even begin investing in online brokerages online. Three of the biggest players in the online brokerage market are publicly traded and available to buy or sell regardless of whether you're using their platform or not, and all three had a significant bump in share price on Wednesday.

The Charles Schwab Corporation (SCHW)

The Charles Schwab is the largest online broker with a market cap of over $15 billion. Schwab, unlike the other two companies listed, remains a two-pronged company with successful online and brick-and-mortar brokerages. Founded in 1971 by, get this, Charles R. Schwab, the firm changed its name to The Charles Schwab Corporation in 1973 and started offering discount brokerage in 1975. Since then, Schwab has remained on the forefront of technological advances, establishing the industry's first 24-hour quotation service in 1980 and then the first to offer 24-7 order entry and quote service in 1982. Now, Schwab boasts 7.9 million members and over 500,000 total client trades in October of this year. Schwab's taken a beating over the course of the year, though, with shares losing over 30 percent of their value since January on declining earnings.

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 TD Ameritrade Holding Corp. (AMTD)

With a market cap of just under $9 billion, TD Ameritrade is one of the most prominent online brokers available today. Beginning in Omaha, NE in the 1980s, Ameritrade steadily grew by becoming one of the first brokers to offer online trading, including the "Accutrade for Windows" System in 1996 that was the first online investing system that let individuals partake in program investing and basket trading. The company changed its name from Ameritrade to TD Ameritrade after acquiring TD Waterhouse USA from TD Bank Financial Group. Now, with 6.2 million members, TD Ameritrade is the second largest American online broker behind Charles Schwab. Like, well, everyone, TD Ameritrade's shares took a nosedive in early August, but the stock shows signs of a possible recovery. With a PEG of 0.96 and and Price to Earnings Ratio of 14.86, TD Ameritrade may be poised for a recovery.

E TRADE Financial Corporation (ETFC)

Founded in 1991 by William Porter using seed money pulled from his other company, TradePlus, Porter began offering online trading services through America Online (AOL) and Compuserve that year. The service took off like a shot and revenues grew from $850,000 in 1992 to $11 million in 1994. E Trade has 4.3 million users, matching the privately owned but trailing well behind the top players. It has been a rough year for E*Trade as a company as it still struggles to recover from a $2.2 billion write down it was forced to take on toxic assets during the 2007 housing crisis. In 2011, shares have lost over 40 percent of their value, plunging in early August and continuing to suffer into the fall. However, EPS growth this year is at nearly 100 percent.

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