Good day everyone and welcome to the TD Ameritrade Holding Corporation’s December Quarter Earnings Results Conference Call. This call is being recorded. With us today from the Company is President and Chief Executive Officer, Tim Hockey; and Chief Financial Officer, Steve Boyle. At this time, I would like to turn the call over to Jeff Goeser, Director of Investor Relations. Please go ahead, sir.

Good morning everyone and welcome to our first quarter fiscal 2017 conference call. You can find everything related to this morning’s announcement on our corporate website amtd.com including our press release and the related presentation slides, just click on Investor Relations. These slides include our Safe Harbor statement and a reconciliation of certain non-GAAP financial measures to our most comparable GAAP financial measures. Information about relevant risk factors can be found in our Forms 10-Q and 10-K, which are also available online. This call is intended for investors and analysts. Questions from reporters can be directed to our media relations team or you can follow our Twitter handle @TDAmeritradePR which will be live twitting this morning’s call. We have a large number of covering analysts. So for those of you planning to participate in the Q&A, we ask that you limit your questions to two, so that we can get to as many of you as possible. And now, I’d like to turn the call over to TD Ameritrade President and CEO, Tim Hockey. Tim?

Thanks, Jeff and good morning, everyone. Well, what a quarter. In my first 90 days as CEO of TD Ameritrade, we’ve experienced some things that I would have expected to see over the course of years, not just weeks. First, we announced plans to acquire Scottrade, the largest transaction in our history. Then, we had another Fed interest rate increase, now with 12 months coming and anticipated by nearly every economist out there, but it’s still a welcome boost for our business model. And we witnessed one of the most contentious presidential elections in U.S. history with an outcome that sent the markets into rally mode. It was a quarter of significant change. We found opportunities to deliver a strong quarter with record net revenue and EPS of $0.41 per share. It is also strong quarter for organic growth. Trading and asset gathering picked up as invested reengaged with the markets post-election. This growth plus the December Fed move and steepening yield curve have made a very positive impact on our business. Now, the pressure is on us to make sure the organic growth continues. So, how will we do that? By continuing to deliver on our core strategic initiatives and building out a robust meaningful client experience. Our acquisition of Scottrade fits into those plans as well. With the first regulatory milestone out of the way, integration planning is now in full force. There is a lot to be proud of but there is even more to do. So, let’s turn to slide six and our quarterly financial results. As you can see, all of our key metrics have increased from last year. EPS was up 5% from the same quarter last year and trading activity was up 11%. We earned a record $859 million in net revenue, up 6% from last year and we gathered $18.7 billion in net new client assets. This was our second best quarter for NNA growth, up 7% from last year and a 10% annualized growth rate. Total client assets ended the quarter just shy of the $800 billion mark, up 15% from last year. Fee based investment balances were up 11% to a $174 billion and interest rate sensitive assets grew by 14% to a $125 billion. Now, let’s turn to slide seven. Net new client assets of $18.7 billion put us right back into double-digit annualized asset growth, a great place to be. The results did skew a bit higher on the institutional side with an 80-20 split for the quarter but we saw positive trend in both channels. So, let’s start with retail. Overall client call volumes since the election were up 17% from last year, which on its own is a healthy increase but new client calls were up 37%. Call topics were overwhelmingly market related, a great opportunity to educate, provide guidance and introduce helpful solutions to our clients and our teams delivered. Asset inflows were up 6% from last year and new funded accounts were up more than 20%. Retail net advocate scores, one of the ways we measure our impact on the client experience were up 4 percentage points from last year. Scores for clients with branch and private client service relationships were even higher which speaks to the value of the one-to-one relationship model that we’re expanding across the firm. Asset outflows however were also up as more clients decided to move money out of the market for other things, like real estate, gifting and business opportunities. Our institutional channel had a record quarter for asset gathering. Momentum is high in every facet of our distribution, new advisors; breakaway brokers; existing RIAs is contributing to growth. The sales pipeline is filled with healthy activity. Just as retail investors have reengaged, brokers that have been on the sense about embracing the independent model are now ready to make a move. Conversations about the DOL Fiduciary Rule are encouraging broader discussions about the value of being an RIA. So, our institutional teams are fast at work on new programs to help these brokers make the transition and technology that will make it easier for all RIAs to serve their clients. It’s a move towards automation. For example, we launched Phase 1 of our new account wizard, which streamlines and digitizes the client onboarding process. Since the launch, we’ve reduced new account processing time by nearly 40% per application. Our sales pitch to existing and new RIAs is an ever-improving client experience that will free them of administrative burden, so that they can spend more time delivering value they are uniquely positioned to provide, the personnel, financial life coach relationships they build with their clients. Now let’s cover trading on slide 8. Our 487,000 DARTS were a December quarter record and the third best quarter in our history. January trades to-date are averaging 508,000 per day. The story here is also one of reengagement. We had a long unconventional and at times uncertain election cycle. The outcome brought more investors back to the markets to adjust their portfolios and align them with the promises of being coming administration. You can see the trade differential pre and post-election, 451,000 DARTS before and 514,000 DARTS after. So, what specifically were our clients doing? Long-term investors sold [ph] long-held positions, as the markets rally. Traders continue to seek opportunities via effective rotation or trading on volatility and widely held symbols, namely in the finance, tech and infrastructure spaces. We said for years that news drives trading, and today, more often than not, social media is breaking that news. We launched our Social Signals tool a year ago because of that shift. Clients can use the tool to see Twitter activity in real time related to the symbols they care about to give them a broader consumer-oriented view of the securities they are interested in trading. There are insights that can be gathered about the performance of the given company based on what’s being said in social channels. And it couldn’t have come at a better time. Now, we have a truly social President-elect with the willingness to make news with each Twit. In December, following one Twit about Boeing, trading in the symbol went up 93% from its previous 15-day average. It happened several times more since then, each time, it’s a new market event and a potential trading opportunity for our clients. Like everyone else, we’re watching it with interest, because while this hyper activity is good for business, it also underscores the fact that there is a lot of noise out there for our clients to sift through. Offering a broad selection of products, education and technical analysis tools that makes the trading experience easier is critical. That’s why our derivatives offering is so important. At 43% of DARTS, they up make a significant portion of our clients trade, but the big story this quarter was the role futures played as our clients reacted to the election. For many of these clients, futures, which trade 24/5, have been a way to hedge their portfolios or be opportunistic when breaking news hit after hours. November 8, was a record day for futures trading, with 60% of those volumes coming from after the equity and options markets closed as the returns were coming in. This compares to 10% to 15% on a typical day. Interest in futures accounts and education is growing. So, you can expect the derivative trading experience to remain a key focus, the same is true for mobile. One in five trades now comes from a mobile device and 30% of our daily client log-ins are mobile. Mobile adoption continues to grow with record unique user each day of more than 275,000 and record DARTS in the quarter. Flexibility and choice that’s what our clients want and that’s the value we deliver to them. Let’s continue the client experience discussion on slide nine. Last quarter, I shared with you our strategic goals for 2017. We talked about achieving differentiation through the client experience and the initiatives we had in place to do that. Now, I can update you on our progress. First, let’s talk functionality. We soft launched our robot-advisor, Essential Portfolios. The offering includes five model portfolio strategies as well as embedded goal planning and tracking tools. With an investment minimum of $5,000 and a flat rate fee of 30 basis points, we believe it’s an attractive offering. And initial results indicate that it’s attracting new assets, which is even better. We will begin marketing Essential Portfolios this month under a new master brand for our client advice solutions, TD Ameritrade Investment Management LLC. This new offering includes solutions like Essential Portfolios and Selective Portfolios which is the new name for what was formally known as Amerivest. Next, we were the first online broker to launch the Skill for Amazon’s Alexa, virtual assistant. Today, the Skill will give you a market update or tell you how a specific security is doing. The work is only in its infancy but we are diving deeper to give it true meaning for our clients. We see local interfaces as a functionally that will increasingly become a key part of our daily lives, much like smartphones did for the adoption of mobile communications 10 years ago. We’re energized by its potential for our clients and business. For our advisors, we launched Veo One, the next generation of our Veo Open Access concept. Advisors can still work with multiple technology providers, but now they can do so in a completely integrated way with one login and client data that flows seamlessly from application-to-application. It’s mobile responsive, it’s customizable, it includes advance alerts and triggers to help automate daily tasks, and it minimizes manual entry when updating client data. Right out of the gate, we’ve integrated with 14 of the most widely used open access vendors with more to come. Veo One is the cornerstone of an advisor experience that truly speaks to eliminate friction points. We’re very excited about it. And for our traders, our latest thinkorswim release included a new crowd-sourcing tool that helps our clients identify potential trading opportunities for companies about to release earnings. We’ve coordinated with a platform called Estimize, which aggregates estimates for more than 2,000 listed securities from more than 3,000 buy and sell side analysts, private investors and students. Together, we’re making it easier for retail traders to sift through the data and develop disciplined strategies. All of this work is the product of good progress on our core strategic initiatives. We talked already about TD Ameritrade Investment Management. Our anticipated integration with Scottrade will fit into those plans nicely as we expand our distribution capabilities. Everything is proceeding according to schedule. With one of our early regulatory milestones, approval under the Hart-Scott-Rodino Antitrust Act out of the way, integration planning has begun and will continue until the deal closes, hopefully later this year. Work also continues to comply with the DOL rule. We believe that we’re in a good position to meet the April 10th deadline, but we’re also monitoring what is happening in Washington. While delays or changes are certainly possible, we remain focused on our readiness for April, because regardless of what happens, our ultimate objective is to make investing and trading and enjoyable and meaningful experience for our clients. We want to innovate for them. We want to deliver new solutions to them faster. We want to educate and help them when and how they want it. We want to give them the best experience. Now with that, I’m going to pause and turn the call over to Steve for a financial review. Steve, over to you.

Thank you, Tim, and good morning everyone. We’re providing some additional information throughout the material that should help you with your models. At the same time, we’re also trying to simplify some of the views. As it relates to the quarter, we had strong organic growth in net new assets, rate sensitive assets and accounts that coupled with emerging tailwinds should provide a strong base for earnings growth going forward. With that, let’s begin with the year-over-year comparisons on slide 11. Earnings per share was up 5%. Transaction revenue increased $27 million or 8% due to $49,000 more trades per day, as activity increased post-election, partially offset by $0.25 decline in commission rates. The decline in commission rates was 2% year-over-year, consistent with the long-term trend we’ve been experiencing. Asset-based revenue was up $17 million or 4% due to high balance growth of 10%, primarily in the IDA. Operating expense is up $37 million. The large increase is primarily due to low initiatives spend and clearing costs in the prior year quarter. Finally, average share count is down 10 million driving $0.01 lift in earnings per share as we bought back 12 million shares in fiscal 2016 at an average price of $29.40. Let’s move to the next slide to review linked quarter comparisons. Earnings per share is up $0.06 or 17% on record revenue and lower expense. Transaction revenue is up $19 million due to 43,000 more trades per day. Asset-based revenue was up $11 million on balance growth, again primarily due to the IDA, which grew $6 billion over the quarter. Expenses are down sequentially as they were elevated in the September quarter of 2016. Let’s move to the next slide. Net interest revenue for the quarter was 151 million, down $3 million or 2% from last year due primarily to weakness in net stock lending, offset by higher revenue related to segregated and corporate cash balances. Margin revenue was relatively flat as re-pricing from the December 2015 rate increase was largely offset by unfavorable mix as balances skewed towards higher balanced year borrowers. Net stock lending was $33 million in the quarter, down $8 million year-over-year and $4 million sequentially as there was light demand on a quiet IPO market. With the December 2016 Fed move, we increased margin pricing by 25 basis points on borrowers with negotiated pricing that left all other margin pricing intact. Benefits will begin to flow through the financials next quarter. Let’s now move to the next slide. IDA revenue was $245 million, up $18 million or 8% year-over-year due to balance growth. Average balances are up $13 billion or 16% year-over-year due to new account growth, net new asset growth and lower net buying activity, a significant increase. Net yields were flat sequentially as the steepening yield curve mitigated the expected compression from maturities. Interest rates increased significantly, post-election, with the 10-year treasury up 54 basis points. In fact if you look at our rate charts in the appendix, the long end of the yield curve is above the high end of our guidance ranges for the year. This means that extensions on the latter are being placed to yields higher than we planned even as the best case scenario. The full benefit of these extensions takes time to be reflected in the net IDA rate but we do expect to begin to see increases next quarter. Due to the significant IDA inflows, we have not yet extended all of the growth but you should expect our consolidated duration to move back towards 2.2 years over time. The December Fed move only impacted the IDA for a couple of weeks in the quarter as it increased the net IDA rate on floating balances. With that move, floating balances received an incremental 20 basis-point lift as the management fee to TD increased by 5 basis points to 25 basis-point cap. Before we move on, please see slide 23 in the appendix. To help with your modeling, we have laid out how the IDA mechanics work. The table shows the net IDA rate for key maturities. Let’s walk through it. The published three-month LIBOR swap rates are in the first column but they need to be converted to one-month terms to derive the adjusted growth rate. The management fee to TD is 25 basis points across the entire portfolio. The FDIC insurance rate is currently 12 basis points. This gives you the net IDA rate excluding the client pay rate. Based on this example, assuming our historic float versus mix of 25-75, it would equate to 93 basis points for new growth after we have invested it across the latter. As fixed balances mature, we generally reinvest them at the seven-year point on the curve. That is currently a net IDA rate of 161 basis points. Over the next 12 months, we have $8.1 billion in balances maturing at an average net IDA rate of 143 basis points. So, reinvestments at a 161 basis points would provide a positive lift, as would movements from float to fix to get back to our duration target. The forward curve would indicate that future roles and float balances should be at still higher rates, providing incremental benefit. Let’s move on to slide 15. Fee based revenue was $94 million for the quarter, up $2 million year-over-year as balance growth was coming from lower yielding products. Advised balances, the combination of Essential, Selective and AdvisorDirect are up 10% year-over-year. Let’s move onto the next slide. Interest rate sensitive asset balances were again a record at a $125 billion, up $15 billion or 14% from last year, creating substantial earnings power. Cash as a percentage of total client assets ended the period at slightly under 15%, consistent with historic levels. The benefit from the market increasing the rates in the December quarter is likely to exceed the $0.08 to $0.10 annual impact guidance that we provided due to a steeper yield curve and lower pay rates than anticipated. Although we expect to earn more on this rate move than originally expected, the next move may have less benefit, depending on competitive pricing. Let’s move onto the next slide to discuss expenses a bit more. Expenses are down sequentially due to notable items in the prior quarter. This quarter includes $3 million of Scottrade related expenses. The timing of spending last year was shifted towards the last half of the year, whereas this year the plan is smoother, except for normal seasonal trends of advertising. The year-over-year increase in the quarter was due to the timing of technology projects, which began in earnest towards the end of last fiscal year. Given the lift in revenue expected with market increases -- market rates, we would expect modest incremental technology and marketing investments above and beyond our original plans for this fiscal year. And now, I’ll turn the call back over to Tim.

Great. Thanks, Steve. Well, clearly, the first quarter was a pretty busy one. We recorded some early wins supporting key corporate initiatives like our advice build out and improving the client experience. The rise in interest rates gives us a little extra cushion that we’ll use to reinvest in some of those initiatives. And with approvals coming along integration planning for Scottrade is well underway. We’ve still got a lot of work to do, but we’re energized by what we’ve accomplished and seen us far, and we are not sitting still. And now, we’ll open it up to the questions. Operator, over to you.

[Operator Instruction] Your first question comes from Michael Carrier, Bank of America. Your line is open.

Hi. Thanks a lot guys. I guess for either of you, just the guidance on the IDA is helpful in terms of the updates, given the move in rates. I’m just wondering to see if you can provide maybe an update on the guidance related to Scottrade just in terms of whether it’s the cash monetization or the accretion, just given that same move in rates that we’ve seen since the deal is announced?

Yes. So, Michael, you should be able to use the exact same table; we’re going to move most of the balances of Scottrade into the IDA at close. So, if you look towards when we expect to close which we are still using our guidance of our fiscal year-end as sort of the best date to use. If you look to that forward curve and you fill in that 25-75 mix on the IDA, I think that will give you a good idea of what Scottrade will be earning going forward. The original modeling we use to a shorter duration for Scottrade, which would have about a four-year lateral and a year and half duration. And at close, we’ll make the call as to whether we want to extend longer than that. But as we view the Scottrade deposits, they seem to be very similar to our own. So, we feel comfortable extending to our 2.2 duration.

And then, just as a follow-up. It looks like the fee-based revenues were a little lighter. And it seems like, Tim, you mentioned some of the initiatives that are going on, on the fee base is in the advisory offerings. So, just wanted to get a sense, like a lot of that occurring this quarter and that’s what lowered the fee rate or should we expect more that trend going forward in terms of a lower fee rate, and how do you think about maybe the offset in terms of the asset growth? So, just the outlook just given that there is a little bit of pressure this quarter?

So, Michael, this is Steve. There is a number of things that go into that line item and/or some positives and negatives in the quarter. So, we’re generally seeing a still solid growth in balances that includes mutual funds, as well as advice products. But on the mutual fund side, we continue to see the trend towards less trailer based fees and that’s what we include in that balance number there. It’s just the mutual funds with trailers. And then on the advised asset side, we’re phasing out the rebate on Amerivest when those portfolios were negative for the quarter. But we did have a few bond [ph] portfolios that were negative, given the rise in rates. And so, there was a very modest reserve there compared to a very modest reserve release in the prior quarter last year. So a lot of it’s just timing.

Your next question comes from Rich Repetto with Sandler O’Neill. Your line is open.

I knew you’re asset sensitive, but now I know -- I guess you’re Twit sensitive as well. I guess, the first question is a follow-up on good question on Scottrade and the IDA, what their pro forma say IDA yield. Steve, you mentioned something about 93 basis points for new growth. And I was just trying to see what you meant there. Because when we do similar curves we’re coming up with that 93 to 100 basis points, if you put Scottrade’s $28 billion pretty much mimicking the way you’re investing now on the IDA?

Yes. So, 93 would be a current rate. So, if you use the forward curve and you looked at what we would expect the rates to be at close, you’d have a higher number. I think that’s probably the difference.

Okay, right. But 93 is -- another words, you had, I think it was 55 basis points before; so, this is 70%. You’d expect to get incrementally 70% more revenue from Scottrade and the IDA on the $28 billion right at current rates right now?

Yes.

Okay. And then, my follow-up question is on marketing and you said some normal seasonal marketing trends. I didn’t quite see that this quarter because you had $11 million decrease quarter-over-quarter in marketing; normally we see an uptick going into the calendar fourth quarter. And I think I look back there’s only been one time in 15 years where it actually down ticked better [ph] than this year. So trying to understand why marketing went down quarter-to-quarter.

Yes. So, we did have a modest decline this quarter. What I was alluding to was next quarter we typically see a 20 to $30 million increase in marketing spend on a linked quarter basis in the March quarter, and that’s what I was trying to get at.

I guess just normally you have to spend I think marketing dollars ahead of account acquisition. So, I was just trying to understand why the pullback before the beginning of the year. Again, it has been history of Ameritrade to pull back in the calendar fourth quarter marketing?

So, Rich, it’s Tim. So, there is no message here about pulling back on marketing spend. Our head of marketing would say that in the fourth and the first quarter that we essentially had a little bit more efficient spend for what we are going to do but that will be a driver of our increase in OpEx next quarter as we seasonally adjust it up by a lot. We actually just launched a new campaign that literally just went out I think last week.

Your next question comes from Chris Harris from Wells Fargo. Your line is open.

Thanks guys. A couple of questions on Scottrade, curious to get your early feedback from what Scottrade customers, employees are saying and feeling about the merger. And then, is Scottrade experiencing any level of -- elevated level of customer attrition as a result of the deal announcement?

I would say the reaction from the employees and associates at Scottrade has been typical but then as being typical, it’s obviously nerve wracking when you find out originally that their company is being bought. But we spend a lot of time in St. Louis with the teams, a lot of time communicating as best we can, given where we are in the approval process about what’s going to happen. Our commitment to all of our associates, not just obviously Scottrade is to be very open, transparent and honest with what our assessment is. So, the reaction with the associates so far has been quite good. With clients, obviously there is some little bit of nervousness only because they don’t know what’s going to happen yet. And so, that won’t be coming in terms of communication until later on in the process. In terms of client activity and attrition, I think Scottrade has many of the same industry effects that we all have in the last quarter, that’s been busy for them as well and so far it is business as usual. And obviously we’re thrilled with where we are in the stage and we’re looking forward to getting to close.

Very good. And a quick follow-up on the outlook. You guys mentioned running above the high-end of the guidance for NIM and IDA. I think your guidance at a 138 basis points of NIM, 1% on IDA. Is it possible to get any more clarity on that, maybe how far above those numbers do you think you’re trending right now?

So, actually, what I said was that the forward curve is above the rate ranges that we said in our guidance. If you look in the package on page, I think it’s 25 in the appendix, you’ll see that. We’re not updating our guidance on the IDA, although I think I did mention in my remarks, both of balances and the rates are certainly trending very positively. And so, there is an opportunity to do better there, but we’re not giving specific guidance on those. Historically, we only changed our guidance if we are sure that we’re going to exceed the maximum of the EPS range.

Your next question comes from Chris Shutler from William Blair. Your line is open.

Tim, what are your thoughts on proprietary products in conjunction with that moving more into proprietary -- moving more into those with your advice solutions. You mentioned TD Investment Management, maybe just expand on that a bit. And how you’re thinking to evolving, particularly on the perception of channel conflict with your RIAs? Thanks.

Yes. Traditionally, obviously, TD Ameritrade has been an open architecture shop, and we believe that our clients have really placed a lot value in that. And we’re reassessing that I would say. And partly because when we actually go out and ask our clients, they often tell us that, in fact they trust the TD Ameritrade brand, and so they would be willing to consider a branded product. So, we’re taking a look at that as a potential but we’re still thinking about it.

Okay. And then, if you guys look at NNA growth, both on the retail and RIA sides of the business, can you give us a sense of how much of it is coming from existing TD Ameritrade customers? And what are the biggest points of emphasis the Company’s trying to -- what are the biggest initiatives to try to drive wallet share higher? Thank you.

Actually don’t know the split of existing versus new for the quarter, either retail, institutional, and I don’t know that we disclose that, but it’s probably on par. The story this quarter of course is that obviously record quarter but obviously was much higher driven by institutional than retail. And sorry, the second part of the question? What initiatives are we doing to drive that?

Yes.

Well, clearly, some of the things that I talked about in my speech was the launch of some of our newer products on the advisory side. We’re obviously anticipating the great addition of all of the additional teams that will be coming as a part of the Scottrade acquisition and our additional branches, because we know that that’s a net growth engine opportunity for us. So, we’ve got some product gaps to fill in which we’re doing as fast as we can, and obviously planning for the Scottrade integration. I can tell you that this past quarter, in doing some of the research, we’ve seen some interesting activity in terms of the types of flows and we’re wondering how much of that might be related to the start of the DOL discussions. But, we just don’t know yet; it’s too early. So, we’re watching closely.

Your next question comes from Conor Fitzgerald from Goldman Sachs. Your line is open.

Good morning. Just on expenses, I want to make sure I heard, Steve, correctly that you expect expenses above the high end of the range, given the better revenue environment. And then, assuming that I heard you correctly, there any way to help us size the magnitude or is there anything from Scottrade integration expense that’s impacting that number?

No, Conor. So, let me quickly just clarify that. We expect to be well within the guidance ranges for the year. I think just relative to our original plans, we’re going to make some modest investments, probably less than or around the 1% of our total expenses, so probably less than $20 million in incremental expenses versus what we would have normally thought. We do pre-close expect to have some modest expenses related to the Scottrade integration, but probably -- we saw $3 million this quarter, we probably expect less than $10 million before some of the big numbers start coming in when we actually close the deal.

And then, just a follow-up on the IDA. So, it sounds like you have some positive reinvestment trend this year, as you reinvest the $8 billion in higher rate and get benefit from the Fed hike. But it also seems like maybe longer term, you have pressure, given your new money yields are at 93 basis points at the current rate. So, just want to make sure I was thinking on the path of IDA correctly. It sounds like, we could be inflecting in the near-term for 2017, but longer term as you’re in the tougher comps in the reinvestment side, see pressure in some of the out years; am I thinking about that the right way?

Yes. I think if you just purely look at the yield, I think that makes sense. I think growth is a positive thing for earnings. And so, as you’re growing, you’re going to have a lower average rate that you’re investing and as opposed to just rolling over your existing maturities. But I think your math is correct, I think it feels pretty positive to us.

And then, maybe one more, just quick one for Tim, if I could. Just want to follow up on your comments on retail investors reengaging. It’s interesting that it’s happened at a time where cash as a percent of client assets is picked up. Just wondering if your anticipation is that clients might redeploy some of that cash back into the market or your view kind of the Twit centric world as more retail engagement being more velocity or higher turnover from their position?

Good question. My sense, what happened and certainly post-election was that the less active traders reengaged. There was a significant uptick in our non-active trader segment. And so, in other words, you saw the results of the election and they said, it’s time to look at my portfolio, maybe it’s been a while reposition and you definitely saw some of the sector rotation you did. Going forward, I think you’ll see that actually activities start to peter [ph] out a little bit as people are now positioned. But generally my sense is that you’re going to see a more volatile set of market conditions over the next little while and that will drive more activity.

I think two, Conor. One of the things that we tend to see with our retail clients is that they tend to be a bit contrary. And so, as the market moved up sharply, they tended to move out of the market a little bit. So, I think it depends maybe what the direction of the market might be as we move forward here. So, we’re watching that very closely.

Your next question comes from Devin Ryan from JMP Securities. Your line is open.

Tim, Steve, I want to come back to the comments, Tim, you made about financial advisors ready to make a move. We’ve heard recently from some others in the industry that they’ve actually seen a slowing movement just given all the uncertainty around the DOL rules. So, I’m just curious what you’re seeing drive that sentiment today. And then looking at that business and the flows you’re seeing there, does it feel like it’s coming more from market share gains of existing RIAs where you’re just winning incremental business or the new flows from advisors that are moving into the RIA space just along with that secular shift of assets into the channel?

I’ll take the second question first. And as I said a little earlier, I can’t actually tell you the split between new or not just off the top of my head and I don’t think we actually disclose. But I can tell you that generally the institutional business is almost on fire on cylinders. So, on the first point about slowing of activity, because the discussions with RIAs or breakaway brokers or potential RIAs is a long sales cycle, as you can imagine, it’s a multi-year discussion and it’s a quite big decision for our newest clients. The DOL discussion about getting prepared and the implications it would have on their business models has probably spurred on some of those conversations. So, the business I think is doing a great job of attracting new clients on its own. So, our senses is that’s actually been a little bit of a catalyst for some final movement, notwithstanding the latest discussions as to whether it will be delayed or appealed. If you’re someone who is considering this and has been taking a look at the potential impact, now might be the time to move. So it’s been part of our effect. I wouldn’t say it’s been the overarching, I’d say, it’s just the general innovation, client centricity and great customer care that the institutional business gives. It’s been of the largest driver of the growth there.

Okay, it’s interesting. Thank you. Then within sec lending, that’s been a little bit of a softer contributor over the past several quarters and I know you called that out. But you have had some nice quarters over the past year there. I know that can bounce around. But just curious your view, does it feel like we’re kind of below the baseline here in that area or does it feel like we’re at a pretty good level just thinking about modeling going forward just given that it’s going to bounce around here and it does feel like it’s been a little softer the past several quarters?

So, this is probably the hardest item for us to predict going forward. It’s clearly towards the low end of where we’ve been over the last few years. So hopefully, there is some upside there. But, the indicators, if you look at the IPO market and some other things, don’t look particularly strong right now. So, we’re being fairly cautious about that.

Your next question comes from Dan Fannon from Jefferies. Your line is open.

Thanks. Steve, you mentioned the forward impact of rates, this hike in December having a bit high above the range and then going forward the next hike being potentially lower based on competitive dynamics. I guess, can you expand on the competitive dynamic component? Is that something that’s happening already or how we should think about that playing out?

Yes. Dan, I don’t think there is any particular that we know. I think we’re just trying to say that we did better this time but we can’t guarantee that we’re going to do better in the future.

But all else equal, based on where rates are trading, the rates are today that next -- that should continue, that you’re guidance [Multiple Speakers].

Yes. I would stick with the original range probably, if you’re trying to predict this.

And then just the growth in the IDA balances was rather strong in the quarter. I guess any outlook in terms of kind of the near-term. I understand you obviously aren’t changing your guidance for the full year but kind of the near-term growth expectations, should we expect them to continue to be strong based on current trends?

Yes. I think that really relates to the question we had before on what are our retail clients going to do. Are they going to dive back into the market or are they going to stay a little bit, with a little bit higher cash, is not high really by historical standards but it’s a little bit higher than it’s been in the last couple of years. And so that’s what we’re watching closely here. And so, we’ll see. I think it’s a pretty fluid market right now. We have the inauguration on Friday. So, I think that’s something we’re going to watch over the next few months. We’re trying to sit back and make sure that we assess whether those funds that have come out of the market are going to stay in cash or not. So, it will take a few months to look at that. And I think we’ll have a better idea probably next quarter when we talk to you.

Your next question comes from Michael Cyprys from Morgan Stanley. Your line is open.

Thanks for taking the question. I just wanted to turn back to the Scottrade acquisition just for a moment. I think you had said previously that the acquisition would be dilutive in year one by about 7% to 12% or so. I guess, just given the move-up in the rates and just more broadly just curious what it would take for that to move towards breakeven in your one instead, what would need to happen?

So, we really don’t want to get into updating the guidance every time. I think we tried to give the detail on how we calculate the numbers, and rates move around a lot every day. So, I don’t think we’re going to give updated guidance.

But even putting any sort of updated guidance aside, even just putting for a moment any sort of movement in rates, just curious in terms of the moving dynamics behind. What’s driving some of that dilutive impact in year one? And then, if there is anything that could happen that theoretically could make it breakeven [Multiple Speakers].

Yes. I mean the big variables obviously are the synergies. Synergies, I think we’ve said on the call before, we get about a quarter of those synergies at legal close, and the rest of them pretty much right at the conversion. And so, the movement in those dates obviously would have a significant impact on the accretion. But right now, we’re not changing our outlook on those dates. Rates moving up obviously would be very significantly positive for the accretion and be giving the tools to calculate that and that will move up and down over time. It’s highly dependent on the level of rates at close. And so, we don’t want to give big changes in the guidance that have rates, market rates move up and down, as we’re getting close to close. But those would be clearly the two most significant items.

Okay. Thank you. That’s helpful. And just as second question here, just in terms of the straight and organic growth that you have this quarter. Just any other additional color you could share and then along with that how should we think about the split between the flows and the client assets this quarter between retail and institutional?

Well, I think obviously, we’re quite happy with the growth overall. As we said, we’re back into annualized double-digit territory, which is great. The shift, as we said, between retail and institutional did skew more to institutional, and that’s probably because they had a record and very strong results. And as I said, what we saw was an uptick in client engagement, new, what we call gross ins on the retail side, which is net new dollars in, but we also saw an uptick in the outs as well. And it’s -- the color would be, we think of that more as what’s called soft attrition. In other words, sort of call it checks being written on the account to go and purchase things, make investments in new car or the home renovation different than what we would call hard attrition which is sort of accounts transferred out. And so, we’re watching that closely, and we’re seeing whether that’s -- call it the wealth effect with Dow hitting almost 20,000 all those things. We’re just sort of interesting to see what will happen from here as we fill out the rest of our gaps from a product point of view and increase our distribution model.

Your next question comes from Doug Mewhirter from SunTrust. Your line is open.

I just had one or two questions. The first, you obviously had a very nice November because of the election in terms of the DARTS. I don’t know if I caught -- if you put monthly results in the release or I just missed it. Did they trail-off in December? I noticed some competitors had relatively soft December, just the market volatility kind of trailed off from there?

Yes. November was great, December trailed down a little bit; January to-date is pretty consistent with sort of the average of the two.

And I think we’re seeing 508 for January to-date; December obviously has the holiday number.

Yes. December was 484.

Okay, thanks. And my second question, was there any -- just thinking the numbers, your IDA had a really strong growth, your money market funds were comparatively lighter. Do you often get migration between the two accounts or it’s just a matter of what’s growing faster than the other?

Yes. Historically, there is not much move, but with the change in some of the mutual fund regulations, we did have a couple of billion move out of the money funds since the IDA.

Your next question comes from Steven Chubak from Nomura. Your line is open.

So, Steve, I had a follow-up question regarding some of the Scottrade IDA guidance. I appreciate all the detail you guys have provided, but I know the guidance, it was that you provided suggested that you are doing about 93 basis points, if the cash was deployed at current rates. I’m wondering whether that guidance actually contemplates the higher duration target of maybe two plus that you’re alluding or that’s based on the original deployment assumptions of around 1.4 years. And since I know you’ve got a lot of questions on this topic, it might also just be helpful if you guys would provide a more explicit on IDA yield, if the Scottrade deal closed on 9/30 and based on the forward curve and where it stands today?

So, the 93 that I gave was really trying to get at what our new growth would be, so that was in our duration. Scottrade would be slightly less, if you looked at it that way, and we’ll take into consideration providing additional guidance in the future.

Understood. And just one follow-up for me on the sec lending side; it’s certainly been an area where we’ve seen some near-term pressure, and Steve you alluded to this lower IPO market being a factor. I know there are a lot of the bigger banks have actually been guiding to a more constructive outlook for ECM and the IPO market. Do you have a sense as to how we should be thinking about what’s a normal revenue run rate for that particular business, if we do in fact see some normalization in the IPO market?

Yes. It’s really challenging, a lot depends on the collateral that our customers have, if there is an IPO, what kind of an allocation our customers get. So, it really is very difficult for us to predict that. It tends to be concentrated in a few hot stocks for us and it’s hard to predict when those -- what the supply and demand dynamics are going to be.

Well, let’s hope we see the Snapchat IPO in the coming year. Thanks for taking my questions.

Your next question comes from Brian Bedell from Deutsche Bank. Your line is open.

If I can just come back to the IDA, it sounds of course like the guidance is relatively conservative given the forward curve. But, maybe you can talk a little bit about the client pay rates and deposit pricing. Obviously the next move, you’ll be passing on more. But can you sort of characterize, what you think is a reasonable range of deposit betas to Fed moves, as you see it over the course of the year and talk about the difference between the institutional side and the retail side?

Yes, so typically we would -- the betas will be highest on the institutional side and then less on the retail IDA and lower still on retail fee credits. I think we said historically, our terminal betas are sort of around 40 on a blended basis but will do a little bit -- we’ll share a little bit less than that as we are sort of restoring historic margins. And so, we’re really looking closely at the market and what competitors are moving and where we stand there. And so my guess is that we don’t continue to -- betas will continue to increase over time but they’ve been fairly modest so far.

Okay, that’s helpful. And then just back to the futures trading, I am not sure, did you just -- I may have missed this but futures trading as a percentage of the DARTS, if you can do that for November and December, just to get a sense of the election trajectory?

For the quarter, it’s about 10%.

For the whole quarter, and was that elevated in November and December relative to that comparison?

It certainly elevated around those certain events, right. Anytime that we see a world effect that happens post market close, we see elevated activity; obviously the example we used was the election results because when the returns were coming in but we saw the same effect around Brexit.

Right. So, normalized for events, of course there is always events, you would say I think going into this year, you would still think it would be less than 10% within the mix?

Tough to say, but I can tell you that the percentage of clients and the numbers of clients that are using those vehicles are certainly growing at a decent clip; I think it was up something like 20% last year-over-year in the quarter. And so, as I said, clients are finding these interesting vehicles, both on a timeliness basis and ability to manage for world events and also to manage risks. So, that’s becoming with the education tools and the platforms that we can provide our clients, it is becoming more and more compelling for retail investors.

And you see it more on the equity index or -- I know historically it’s been very strong on the WTI with oil trading, but I assume…

Absolutely, indexes, oil, those are by far the most popular vehicles.

Your next question comes from Macrae Sykes from Gabelli. Your line is open.

Good morning. Could you go over the importance of the branch network in the expansion of Scottrade in a world of digital engagement? What are the big factors you are considering in terms of importance, is it asset gathering, client service, overall branding visibility?

Sure. Well, as you know, we before the deal have a 100 branches and Scottrade has 500 branches. And we think after we’re done the integration, we’ll settle in 400 to 450 range. When we were going through the discussions with Scottrade, it became apparent to us that we liked the distribution model, which I consider to be both, high tech and high touch. There was some real value and we were able to see it through due diligence of their distribution model and it was -- we thought it was quite additive to our own in terms of those market centers that were smaller, but still had a lot of client coverage and our existing clients we think would find value of having a local now post-integration TD Ameritrade branch available to them. So, we like the model. The branches are smaller than the TD Ameritrade branches on balance, and so therefore the distribution cost is lower for us. But, we really do see a market penetration effect when we compare our branch distribution system to their. So, in a world where Amazon is opening up its own retail bricks and mortar stores, we think everybody is realizing that the best distribution model is one that combines the best of both high tech and high touch.

Your next question comes from Chris Allen from Buckingham. Your line is open.

I think most questions have been asked. I guess the one question; you kind of noted the outcome of next rate hikes in potential lessening impact from the increasing competitive environment. Have you seen any changes in competitive environment given the last rate hike, either greater competition around active traders or anything on margin lending or is it just kind of waiting at the moment to see how it kind of filters through?

Nothing yet; obviously, we’re all seeing -- the industry is seeing a number of effects, rate hike being one, increased trade activity and of course we had holidays in there. So, I would say, it’s competitive as always has been, but there has been no shift as a result of the December hike.

We have no further questions at this time. I’ll turn the call over to the presenters.

Great. Well, obviously, it’s been a great quarter from our point of view. Appreciate everybody coming in, having the call with us. We’ve got lots of work to do and we’ve got lots of things to get done between now and the end of the year, hopefully in anticipation of the close with Scottrade as soon as we can. So, thanks very much for being on the call.

This concludes today’s conference call. You may now disconnect.