Good day, everyone, and welcome to the TD Ameritrade Holding Corporation’s June 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 third 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. Well, good morning, everyone. I think there used to be saying around here at something like summers are slow, so that sell in May and go away something like that. I’ll host my second summer here at TD Ameritrade, and I have to say anything there is nothing slow about the summer. So our momentum from the second quarter has carried over into the third. Investor engagement has been resilient with high trading volumes despite ongoing low volatility. We’re seeing very healthy trends and new funded account growth, and asset inflows from both new and existing accounts. Asset gathering itself is a quarterly record, and we’ve already met our previous fiscal year record for net new assets with nearly a quarter yet to go. The Fed raised interest rates for the third time this fiscal year and the fourth since the financial crisis providing additional tailwinds and obviously a boost to revenue. We believe we are close to receiving final regulatory approvals for the Scottrade acquisition, and we hope to make everything official in the coming weeks. Our teams are eager to move from planning to execution, but we have an existing business to run as well and planning for fiscal 2018 is well underway. We’ll have updates for you on all of these fronts in October. But for now let’s continue talking about the quarter we just finished with our financial summary on Slide 6. There is a lot to like about this slide. We’re reporting strong financial results all around, including $0.44 in EPS. This compares to $0.45 a year ago, a quarter that included a $0.06 tax benefit. Our clients averaged 510,000 trades per day even if this historic stretch of low intraday volatility has persisted. We’re earned record net revenues of $931 million, up 11% from last year. We’re particularly proud of this given the fact that this is the first full quarter since we lowered pricing for clients. Net new client assets, as I mentioned earlier, are another new quarterly record at $22 billion, that’s up 62% from last year. Thanks to strong retail inflows plus outstanding performance from the institutional channel. We ended the quarter with $882 billion in total client assets. We’re also closing in on $200 billion in fee-based investment balances, up 18% from last year, and interest rate-sensitive balances were $120 billion, even as clients were aggressive net buyers in the market. For more color on these results, we’ll start with asset gathering on Slide 7. With $22 billion in net new client assets, we’ve set a new quarterly record for asset gathering. Year-to-date, we brought in $63 billion in net new client assets. Retail net new client assets were up nicely from the same quarter last year. With a market rally and broader investor engagement, there were many opportunities to capture money in motion. Our marketing team took advantage of that to bring more prospects into our account opening funnel with relatively flat spend. Website visits, account starts, and opens were all up nicely over last year. Client acquisition is extremely strong. In fact, through the first three quarters, we have already opened the same number of new accounts that we did all of last year. And our retail net advocate customer satisfaction scores were a new record high. But growth wasn’t limited to new business. Inflows from new and existing accounts were strong in the quarter. Increased activity from our sales teams was a key contributor to this money movement. Guidance solutions and enhancing the client experience remained our focus and clients have responded positively to ongoing upgrades across our long-term investing continuum. Goal planning conversations are up as our digital guidance sales. We set a new third quarter record for combined TD Ameritrade investment management sales with essential portfolios representing about a third of that activity. More platform upgrades are on deck for the coming quarter, which we hope will further encourage client engagement and satisfaction. Our development pipeline is filled with projects moving more efficiently towards completion. We were able to roll out several enhancements in the quarter that address client irritants and improve the mobile and web-based client experience, more on these in a few minutes. On the institutional side, you really couldn’t ask for a better year that’s until next year. After another record quarter of asset gathering, the momentum shows no signs of slowing down. Growth is coming from all corners of the channel; new versus existing, sales-driven versus organic, all are contributing nicely and our sales pipelines remain robust. Our value proposition and the strength of the advisor business model continues to resonate with advisors and their clients. Net advocate and client sat scores remain near record levels. We held our Annual Elite LINC Summit in June, hosting our top RIA clients for a few days of networking, education, and practice management support. We had 140 RIA firms in attendance, collectively managing $170 billion in total firm assets. We look forward to this event every year because of its intimacy. We can talk to our clients and gather meaningful feedback about their experience, as well as their thoughts and viewpoints from the industry. One thing that we continue to hear from RIAs and see on our own pipeline is that the DOL Fiduciary Rule is driving a lot of momentum. The rule is resulting in greater awareness of this fiduciary model. We’re hearing from brokers in our own breakaway pipeline that it’s much more attractive now to break off and embrace the independent arm. Our sales teams are quite busy. We continue to win business and we’re focused on the trends shaping the future of wealth management. We’re making every efforts to stay one step ahead of advisors and offering them the service and support they need to run efficient and successful practices. RIAs today are looking for seamlessness and automation. They want to spend less time doing administrative work and more time one on one with their clients. That’s the kind of thinking driving our institutional product development pipeline. Let’s take a look at trading now on Slide 8. Our 510,000 DARTs, while slightly down from our record second quarter were up 10% from last year. Despite persistently low intraday volatility and the after effects of lowering prices for clients, our trading volumes continue to hover around the 500,000 mark even into July, where we are currently averaging 498,000 per day. In fact, our core trading clients were even more engaged than they have been in recent quarters. Clients grew more bullish over the course of the quarter. And after five consecutive months of net buying, the June Investor Movement Index hit an all-time high. We saw an increase in trading across all client segments. This broader participation tends to result in a greater preference for equities. Despite that, derivatives still made up a healthy 42% of DARTs with our optionDARTs up 12% from last year. Futures continue to trend around 9% to 10% of DARTs and mobile continues to play a major role in client engagement, particularly when it comes to trading. Mobile logins across all apps were up 10% from last year. We introduced some order-take enhancements on our TD Ameritrade mobile apps specific to options that have resulted in some nice upticks in trading. For more on that, let’s move to Slide 9. As we mentioned last quarter, throughput continues to improve. Agile development teams now support nearly 50% of our targeted development areas, allowing us to turn up the dial on upgrades to client experience. We launched a redesign trade ticket for our TD Ameritrade mobile app, enabling clients to more easily construct complex option strategies. It made deposits and transfers easier to do through our main client trading site, simplifying money movement for clients. We also launched personalized performance videos for clients of essential and selected portfolios. These videos share quarterly individual account performance and insights about the underlying portfolios performance. It’s a great interactive feature and it’s been well received. And we’ve armed our sales and service teams with tools to help educate clients following the first phase roll out of the DLO fiduciary rule, including a new fee comparison tool. We’re actively engaged in planning for the second phase of the fiduciary rules roll out currently set for January next year. For our adviser clients, work continues on Veo One, which as a reminder takes theconcept of Veo Open Access one step further by integrating all of the third-party technology solutions an adviser might use into one consolidated dashboard. The Open Access concept has been a key differentiator for us for several years, but the seamlessness Veo Oneprovides is a new client experience win. Additional institutional enhancements in the quarter were a continuation of an ongoing effort to automate manual processes for advisers. For example, we enhanced the process for check deposits and introduced an IVR for adviser end clients. And our new account wizard is yet another addition that will help reduce data entry and automate account openings for advisers and their clients. Each of these are examples of how we’re opting our innovation quotient to make inroads on improving the client experience. A lot of that work takes place internally. But we’re also keenly focused on innovation outside of the company as well. For example, we just held our 8th Annual Tech Summit with some of the biggest developers in adviser technology. Staying close to client feedback and broader FinTech trends will remain important as we continue work to reimagine investing for our clients. Now with that, I’m going to pause and turn the call over to Steve for a financial review. Over to you, Steve.

Thank you, Tim, and good morning, everyone. We had a strong quarter that included many records. We’re pleased with the results and our future prospects. The quarter exceeded our expectations in several regards, and we look forward to the anticipated completion of the Scottrade acquisition in the September quarter. In advance of closing the deal, we took advantage of the favorable capital markets in April, issuing $800 million of debt and increasing our revolvers to $900 million. With that, let’s begin with the year-over-year comparisons on Slide 11. This was the first full quarter reflecting our lower commission rate pricing. We were able to absorb and still achieve record revenue. GAAP earnings per share were $0.44, down 2% primarily due to favorable tax items of $0.06 in this quarter last year and Scottrade-related expense items of $0.02 in the current quarter. Transaction revenue decreased $12 million year-over-year, or 3% due to a decline in base commission rates, primarily due to the impact of rate cuts as well as one less trading day. This was partially offset, however, by 48,000 more trades per day. Asset-based revenue was up $100 million, or 21% due to IDA and margin average balance growth as well as higher net rates. Operating expense was up $47 million including incremental spend related to technology and Scotttrade-related expense. Let’s move to the next slide to review the linked-quarter comparisons. Transaction revenue was down $30 million, primarily due to a decline in base commission rates due to the impact of rate cuts. Asset-based revenue was up $47 million, primarily due to rates and margin balance growth somewhat offset by IDA balance declines. Finally, operating expenses were down due to seasonally lower advertising spend. Let’s move to the next Slide. Our significant earnings power on cash balance is reflected on this slide. IDA revenue was $286 million, up $52 million, or 22% year-over-year due to balance and net rate growth. Average balances were up nearly $9 billion, or a 11% year-over-year. Sequentially, balances declined 3% due to record net buying activity in the quarter, as clients engaged the market. Net rates increased 10 basis points for the second consecutive quarter. Floating rate balances benefited from the Fed moves, while extensions were placed on the ladder at higher rates than balance is rolling off. In the quarter, we extended over $4.3 billion in balances at an average net rate of 144 basis points as compared to $2.8 billion, $2.5 billion in maturities at an average net rate of 138 basis points. Deposit betas have been lower than our expectations to-date. We will continue to monitor client and competitive behavior closely. Let’s move on to the next slide. Net interest revenue for the quarter was $175 million, up $32 million, or 22% from last year due primarily to the benefit of rate hikes and margin balance growth. Net stock lending revenue was $34 million, up $3 million year-over-year and sequentially due to stronger demand. Margin revenue was up $14 million year-over-year, as we had record levels during the month of June. Sequentially, margin revenue increased $12 million. Margin rates were up 14 basis points, following the March Fed move. After the June Fed move, we increased margin pricing by 25 basis points on all borrowers. We would expect to see these changes reflected in the financials beginning with next quarter. Let’s move to the next slide. Fee-based revenue was a $112 million for the quarter, up $16 million year-over-year. Advised balances were the combination of essential portfolios, selective portfolios and advisor direct were up 17% year-over-year. Let’s move to the next slide. Interest rate-sensitive asset balances were $120 billion at period-end, up $7 billion, or 6% from last year. Cash as a percentage of total client assets ended the period at just under 13%, down from last quarter as client net buying was a record and investments appreciated significantly. Duration at quarter end was 2.2 years, up 0.1 years from last year-end. Let’s move to the next slide for a deeper dive on expenses. Expenses in the quarter were in line with our expected range of $530 million to $540 million. Let’s begin with year-over-year comparisons. Expense growth of $47 million included in a $11 million increase in technology investments and $14 million of Scottrade-related items. Sequentially, the primary changes were due to seasonally lower advertising costs. The level of expenses going forward were largely depend on the amount of growth in technology investments, as well as Scottrade-related items. We’ll continue to invest in technology to drive productivity and customer experience benefits. Regarding Scottrade, we remain comfortable with firm wide expense synergy levels as outlined in our Deal Announcement Act last fall, although some likely occur earlier and some later than anticipated. With an anticipated close in the September quarter, we would include Scottrade-related assumptions in our annual guidance to be released with our October call. This will include a more definitive view on the benefit of interest rates. And now, I’ll turn the call back over to Tim.

Thanks, Steve. Well, obviously it was a great quarter. Fundamentals remain strong throughout the company. Momentum has carried over from last quarter and continues to build a great place to be as we finalize plans for fiscal 2018. With a market rally and broader investor engagement, there were many opportunities to capture money in motion. Our marketing efforts were efficient and effective, driving new business to the firm with relatively flat spend. Trading remain strong despite persistently low intraday volatility. Asset gathering surpassed a new quarterly record of $22 billion, thanks to strong retail inflow and record asset gathering from RIA. We continue to improve our speed to market with more agile development teams and a robust technology pipeline. Clients are already benefiting from an enhanced experience, and we’re close to finalizing the acquisition of Scottrade. Planning has been underway for some time and our teams are ready to turn the corner. We cannot wait to introduce Scottrade clients to everything we love about TD Ameritrade. You can expect a full update when we meet again in October. With less than a quarter to go, we haven’t quite closed the books on fiscal 2017, but we’re looking ahead. We’re optimistic about our prospects, but as always, we have so much work left to do. And now, we’ll open up the call for Q&A. Operator, over to you.

[Operator Instructions] Your first question comes from Devin Ryan from JMP. Your line is open.

Hey, good morning, guys.

Hi.

Good morning.

Maybe starting here just one on kind of the cash management strategy with a bit of decline in the quarter. If some of the duration increase looks like it’s because of the floating IDA balances decline, and so just curious, do you want to build that floating piece back up and with the flattening in the yield curve, I guess, particularly how are you thinking about that and especially with Scottrade cash coming on? It doesn’t maybe make sense to keep more in floating, so you’re not locking in low rates for longer?

Yes, Devin, so we tend to try to stay pretty consistent where we’re right around our target duration now of 2.2 years. As you mentioned, when Scottrade closes, that will actually bring on a lot of floating rate balances, so we’ll be working to extend those over the few months after we close the transaction. So we’re comfortable that we have enough exposure to floating rates right now.

Okay, all right, that’s great. And then maybe just a follow-up here on commentary around deposit paid as obviously have been low and that’s been good for you guys. How are you thinking about the competitive dynamics there? Are you looking at just the spread, and where you are relative to the upper-end of maybe competitors, or is it, if customers start asking for higher rates there, how should we think about that backdrop and how you guys are managing that?

Devin, it’s Tim. The - so generally, the competitive pressures on deposit pricing or margin pricing for that matter have a lot to do with clients and what their expectations are. So we watch it pretty closely, but I would say that our expectation is - has been higher for a beta than we’ve seen to-date. Clients have just not been as interested in rates at the levels that they currently are, and so we’ll continue to watch it pretty, pretty carefully and we think that changes essentially for every step along the Fed rate as rates go up, clients tend to get more sensitive obviously to those moves.

Got it. Okay. Thanks, Tim.

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

Yes, good morning, Tim. Good morning, Steve. And I guess, my question is sort of related to the first question. But on the Scottrade investment and cash and their IDA. So we’re running numbers and again, we’re going back to, I think, was a $154 million you talked about initially. But at current rates and I’m trying to see whether you’d still invest parallel or similar to the Ameritrade portfolio, we’re coming up with over $300 million in incremental IDA from Scottrade and IDA spread of 100 - over 110 basis points. Is that similar to the numbers that you’d expect to get once the deal closes?

Yes, so we’re going to give formal guidance next quarter, Rich. Obviously, some of this is going to depend on where we actually strike the tractors, and rates have been bouncing around about 5 basis points a day here, it seems like. But I think, you’re on the right track that that rates are significantly higher than when we modeled the deal about the significant benefit to us when we do publish that.

Okay. And I guess, the next question is sort of longer ranging. But for Tim, we’re seeing - what - and you said in your prepared remarks, you pay attention to the FinTech trends, and we’re seeing automation impact, industries - a wide range of industries. And I guess, you’ve upped the investment spending and focused on client enhancement, and you mentioned a lot of examples. So that the question is, what enhancement do you - over the next two to three or four years, what enhancements do you see that could really change the experience of online trading?

Great question, Rich. I’m obviously not going to tell you what our development plans are yet that we cannot disclose. But having said that, one of the reasons why we are investing A, more dollars, and B, in our capabilities to become just more capable of reacting quickly to market forces is, as you and I have discussed before, there are pretty significant technological forces that will come into play notably through much more human interaction, voice response for example, is something that’s become very, very popular and advanced in the last few years. Let’s face it, trading is quite a technical interface right now, and that is - we know that’s an impediment to clients who wish to participate in the market. They can be daunted by the complex screens that they see, so that technology tends to make things easier and simpler over time. And so, I think there will be a pretty large scale shift into that direction.

Just - I’m a late adopted, but I get my Amazon Echo on Amazon Prime day last week. So thank you.

All right.

Thanks.

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

Hey, guys, good morning.

Good morning.

So first question on Scottrade. Has Scottrade treated the, I guess, the part of the beta same way as you. And can you just give us a sense of how their, I mean, without going into too much detail, how their metrics have trended over the last six or nine months, so NNA, total assets, et cetera?

Yes, we’re not going to give any significant details out on Scottrade. I think, their business model is very similar to ours. When we disclosed the deal initially, they kept their interest rate sensitivity a little bit shorter than ours. And so, I would expect that they’d be managing consistently with that. I think their clients have been very loyal. We would expect that they’re seeing good growth along with the industry, but we’ll give all the details when we close the transaction.

Okay. And Tim, little bigger picture question. How are you measuring progress against kind of your growth objectives for TD Ameritrade investment management? It seems like part of the business where there should be a lot of opportunity. So kind of looking out five years, how would you ideally like the revenue mix of the company to look?

We don’t have any specific targets on that front. Obviously, as we long stated, my predecessor before me having a revenue mix that is less reliant on commission trades obviously. Although that was largely impacted in the move a few months ago. So we want that number to get bigger, don’t have any specific targets to share with you at this point though.

I would say, Chris, just the - already, we’re seeing that commissions as a percentage of revenue are down. And if you look at commissions, excluding order out in revenue, they would be only about 27% of our revenue. And with this latest that increase, we’d expect that to continue to decline going forward. But in terms of your question is what are we expecting from advised assets. I think we’re up 25% year-over-year. We’ve had the new essential portfolio in - for less than a year now, we think that’s gaining some momentum. So we’ll continue to build out the capabilities in the products on that front to broaden our revenue stream.

Okay. Thanks, guys.

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

Hey, this is actually Sharon filling in for Steve this morning. My first question is kind of as a follow-up to Devin’s. As we think about the cash from Scottrade, given the flattening yield curve, how should we be thinking about like the targeted pace for deployment there?

Yes, so we’d like to spread that out over probably three to six months or around the close just to make sure that we don’t get locked into one specific date. And we’ll look at rates to see whether we think there are anomalous to any given point in time. But I’d say that’s a pretty good sort of rule of thumb.

Okay, cool. And then - yes, sorry.

I was just going to say, and I think we’re going to - our plan is to look at it just like our own balance sheet as we - as we’ve studied their deposits, we think they are extremely similar to ours. So we probably have a target duration around 2.2 for them as well.

Okay. And then now that we’re one full quarter out from the price wars, it doesn’t look like given the strong asset trends and strong DARTs that you’re seeing very much impact other than the declining average commission for trade. Would you think that’s fair or like kind of what are you seeing there?

I’d think that’s absolutely fair. Obviously, almost all of the price impact was overcome with the higher trading levels. It’s tough to say at this stage, but it certainly feels like the retail engagement was higher. You just can’t tell whether that’s - as a result of the overall lower prices. My gut would tell me no, I didn’t think a couple dollars difference in the cost per trade would bring many more clients into the marketplace. But our retail acquisition, as we said, was - is up pretty significantly. I think pretty surprised that here we are three quarters into the year, and we did all of last year’s new account production, so lots of engagement.

Okay, great. Thanks so much.

Your next question comes from Mike Carrier from Bank of America. Your line is open.

Thanks, guys. Tim, on some of the net new assets, so overall another strong quarter. You mentioned the split the 80% on the institutional, 20% on the retail. So when we think about the retail part of the business and part of it’s client mix, but just want to get your sense when you think over the next couple of years, what are you guys working on try to drive that higher or a bigger portion the overall net new asset growth maybe for that to be more over the growth engine?

Yes, so few things. Obviously, the next year in particular, the largest determinant of course is their integration with Scotttrade. And so we would be combining our forces and obviously hugely increasing our branch network. And so, as you’ve heard me say before, it will be the hopefully the combination of high tech and high touch and the best on the street. So that that’s largely targeted towards a retail offering as you know. So the combination of our additional investments in new technologies that, as I said earlier, to Rich will be helpful and making it easier for our clients to do business with us, as well as larger distribution being a focus for us. I think there’s going to be a great shift. At the same time, we have to continue to build out on the advisory continuum, so that we have a better set of products available for those clients who need it. So lots of opportunities for great growth I think.

Okay, thanks. And then just a quick follow-up for Steve. I guess, first, just on the other revenue line, I don’t know if there was anything in there that’s always a little volatile, but it seems a little elevated. And then just on the spread revenue in terms of the outlook, when we just - and this is just a near-term outlook. When I think about cash balances been a little bit lower, you get the June hike and then the curve flattening like anything that when you’re looking at how that’s impacting the outlook that would be more unusual than what we would typically expect?

Yes. So on the first question other revenue, as you said, was elevated a little bit. This quarter is the quarter where we tend to get high proxy income and that was a little bit stronger this year than it was last year. We also now have a little bit bigger securities portfolio. And so those are all mark-to-market, and so we had a slight favorable mark on that this quarter. In terms of the rate environment, we tend to stick pretty close to our asset liability management strategy. I wouldn’t expect anything to change significantly there.

Okay. Thanks a lot.

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

Good morning. Tim, you talked about the DLO driving some of the money in motion this quarter and some of things you’re doing to automate the workflow advisers they can focus on their core business. I guess just two questions on that. One, is there any color you could give on where the market share gains from the DLO are coming from? And then second, on the points that you’re trying to solve on the pain points for the advisers, is that more on the back office side, or are you focused more on asset allocation, portfolio risk management, or things like recordkeeping just be curious where you think the main pain points are?

Yes. So on the second question, first, I think the answer to that question is yes. We’re investing across the experience continuum, both in the back office, both in the - at the adviser experience itself as well as frankly at the end client. There’s lots of opportunities. Tom Nally, who runs that business is keen to say it’s a largely manual business. And so any opportunities to automate is a win-win, because we get an opportunity to improve the client experience, as well as lower our expense base on a large set of assets obviously. So I’d say, it’s broad-based. On the first point from a DLO point of view, it’s really early today to tell. We don’t get good market share data, as you know, intra quarter. You heard me say a year ago that I thought that that net DLO benefit would accrue to e-brokers. It might be that that’s in fact been the case, I mean you certainly see the flow is coming in from or into the adviser channel being elevated. There’s not a week or two that goes by back in June. Certainly, they didn’t talk about the impact of DLO and educating retail investors on what fiduciary actually meant. So all of those things are trends that that are contributing. But it’s tough to pinpoint specifically where the share is coming from.

That’s helpful. Thank you. And then, Steve, in the release you talked about your strategic flexibility improving for fiscal 2018, just given the strong start to the year. Any preliminary thoughts on how you would think about using that strategic flexibility or maybe kind of what’s on your strategic flexibility to do list?

Yes, I think we’re, as Tim mentioned, we are really keen to continue to invest in technology both to improve our longer-term productivity, as well as to improve the client experience. And I’d say, those would be the major things, so we continue to evaluate acquisitions, but nothing I think new on that front.

All right. Thanks for taking my questions.

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

Thanks, guys. Another one on institutional, I mean, the growth is really just quite phenomenal there. And it seems like you guys are really growing much faster than your peers that offer similar services. So just wondering, as you guys speak to your adviser clients, why do you think that is? I mean, what is Ameritrade’s really value proposition here to drive much faster growth than the peers?

Well, I can probably ramble on for about 45 minutes. But if I had to pick the two biggest differences, I’d say, first, again, relative to the overall focus on client experience of the firm, our institutional business is really focused on that, both at the adviser end as well as ultimately through to the end client. So not only offering the spoke service to our RIA advisors, but constantly focuses, as I said, a few minutes ago on those things that can make. Just remove the day-to-day irritants and there’s obviously things that we can do on that front. I’d say the second major contributor is focus on our open architecture technology, the Veo first and now Veo One is really a step that helps advisors integrate their existing choices of technology platforms into our own and makes it easier for them to operate across platforms, the combination of those things together I think are probably the two biggest determinants.

Okay great. And then a - just a quick follow-up here on Scottrade. As you guys think about your budgeting for the transaction, are you guys planning on investing in modernizing the branches, and if you are, do you have an idea of about how much that might - that expenditure might be?

Well, at this stage, we are still actually calibrating exactly how many branches we will be keeping open and so that’s a first question, and then we’ll be doing an assessment of next stage, obviously staffing and then the requirements if any to upgrade them. So, nothing to talk about further and we’ll disclose more next year if we have anything material to announce.

Okay, thank you.

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

Thanks, good morning. I guess maybe if you could talk about your appetite for M&A kind of post the Scottrade deal closing and how we should think about a resumption to maybe buybacks as well versus you know other uses of capital?

Yes, so Dan, I think maybe I’ll hit the buyback one first and I’ll let Tim talk about acquisition. So, on the buybacks, I think that we are not doing any buybacks currently. We would think that, after the conversion we’ll start to see the biggest lift in synergies and I think we’ll reevaluate buybacks at that point in conjunction with our board.

And on the M&A front, well, obviously as we intimated, we are quite busy with the Scottrade integration for some time. But post that, I could give you the standard answer that we’ll makes - do any acquisitions that makes sense both financially and strategically, but I think just to give you a little bit more color on that, post Scottrade we will have significant scale and as we’ve in the last year so, we have been ramping up our investments in our base capabilities. I think it’s incredibly important to continue to stay nimble to move faster than your competitors and to makes sure that you’ve got the right investments that you need to satisfy your clients. And so I don’t feel that anyway strategically imperiled with our scale that we’ll have post Scottrade and so we’ll have to take all that into consideration in years to come.

Great. And then, Steve, just a follow-up on the annual impact to EPS from higher rates, I think it came down a penny in the range and can you talk about just the move in the differences between now and last quarter?

Sure, so I think that really reflects sort of a range of like a 10% to 25% beta, so you know pretty, pretty wide range. I think that you know it’s always been our assumption that as rates get higher, more will be passed on to the clients who will see higher betas, you know to date the betas have been quite well and we’ll continue to reevaluate that as we go forward, but we’d expect that they would start to get higher over time.

Got it, thank you.

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

Hi, good morning, thanks for taking the question. Just on the client cash levels that seems to continue to drift lower, I think you mentioned, is that 12.9% of client assets. Just curious where you see clients putting money to work, whether it’s single stock or ETFs versus other instruments? Just any color you can share about that and just any color you could share also about the composition of the $882 billion in client assets, I don’t think you break it out across single stock or ETFs and other instruments, but I think if you could share that would be helpful?

Yes, so we have seen you know both this quarter was sort of the perfect storm in terms of those numbers right, so we saw our clients with net buying activities, so cash was down linked quarter and then we saw very strong returns in the markets, so the denominator was up, so I think that’s why you are seeing that percentage decline so significantly. We are seeing this quarter very broad-based engagement in the market, so everyone from brand-new customers opening their first account to very active traders seem to be engaged in the market. We saw a good activity across pretty much all of our products, futures were down a little bit year-over-year, because we had such a strong comparable. In terms of holdings, we are still seeing the trend where the ETF’s are increasing a bit as a percentage of assets. We continue to see good holdings in mutual funds and really across all of the products that we typically see.

Okay, just a follow-up on the strong trading activity, I think you had mentioned on one of the slides that it seem to be trending up about 10% year-on-year, activity rates as well, also pretty strong, I think about 7.1% in the quarter. So just curious anything you could share there in terms of what’s driving the greater activity that’s been trending up for the past couple of years. How much of that is share gain would you say, versus how much - to what extent is coming from greater activity from mobile which has been ramping higher for you guys and just how are you thinking about the outlook for activity levels, trending let’s say over the next three to five years?

Yes, so it’s actually a bit of a conundrum, on the one hand we’ve got broader retail engagement, generally as we say, if you look our June quarter after June quarter after June quarter, the engagement rates of our clients are up, their trading levels annualized are up, as we said their activity rate. And part of that is the shift to mobile, we know we get a lift in trading when a client becomes mobile active, again easier for them to do that business. So on the other end, the conundrum part is, as we said, we’re at multi-decade lows in the VIX, which tends to drive more trading activity. So, if you do get a bump in VIX, then with that broader based trading it will be interesting to see whether you get a real spike or not, but it’s sort of a steady drumbeat of higher growth rate in clients with slightly more trading levels even - even over and above the fact that we have volatility that’s quite low.

And just any sense on that activity rate where you kind of see that over the next three to five years and just how much of a lift or a bump you get from mobile?

We don’t project it out, but again as I was saying earlier, if you can imagine that access to markets and trading becomes less complex because of the inexorable trend in the last few years, of course it has tended to become more complex from, call it, 10, 15, 20 years ago. As technologies enable us to provide easier interfaces for clients, then I think you might see an uptick in overall activity level at the retail.

Got it. Okay, thank you.

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

Just wanted to drill down a little bit more into the institutional retail mix, either Tim or Steve if you can comment on some of the economics on the institutional client base on a go forward basis, but particularly in pricing, so we were - obviously you were talking about deposit beta remaining pretty low, do you see the institutional client base being a little bit more, I guess, aggressive in looking to raise those deposit rates and I guess the same thing on the margin yield side versus retail?

Yes, so generally, institutional, at the overall we don’t disclose obviously the breakdown, but everybody would know that the revenue level basis points for assets is lower, but so is the cost to grow it and the sensitivity of the advisors on behalf of their clients is little higher, so you expect higher betas and that’s anticipated during our overall beta range.

Yes, and I guess you know the flipside of that is that we think of that as more of a floating rate book and so the advantage of the Fed rates has bigger impact on the institutional portfolio.

Right, so less yield curve sensitive on that side.

Yes.

Yes, okay. And then just a follow-up Tim, maybe you talked a lot about the technology enhancements, how do you think about the adoption of those enhancements in terms of the strategy of either advertising that are rolling out that out to the client base, as you continue to develop that should be expect the incremental potential revenue from that to come in sort of over time or do you sense the adoption is really moving up quite rapidly?

I think this is an incremental thing. As I’ve said many times, it’s speeding up the metabolism of the firm generally in terms of releases, whether they’d be incremental releases from a client experience point of view, whether they be improvement in our operating efficiency inside the firm or frankly whether they’d be some step function rollouts of you know net new function to clients or to new market. You can’t do any one of those three things, I believe you have to do all three of these things in conjunction and they’ll be rolled out as ideas come to fruition.

Okay, great. Thank you.

Your next question comes from Kyle Voigt from KBW. Your line is open.

All right. Just one for Steve, a follow-up. I think you mentioned the Scottrade cost synergies, some may come earlier, or some may come later than previously expected. Just wondering if the year two $450 million of run rate synergies guidance - the guidance there still holds?

Yes. So in general, I’d say, yes, that’s a short answer. I’d say, we’re likely going to see a conversion probably a bit earlier than we had talked, or we talked about a conversion a year after the announcement or the close date. And then, I think we’re going to make sure we take our time particularly on our retail synergies to make sure that we’re providing a great client experience. I think you’ll see those ramp in over time rather than happening immediately after conversion.

Okay, fair enough. And then just one more follow-up on the IDA balances. The floating rate balances were, I think 18% of the total IDA at the end of the quarter, which is the lowest since 2013. And I get that Scotttrade will bring on floating balances immediately then you would extend those. I’m just trying to make sure that as a model into next year, should the floating rate percentage be closer to the historical level of 25% to get to that targeted low 2s duration, or has that percentage shifted for some reason maybe because of the dynamics with the really strong growth in margin lending balances, which have a shorter duration?

Yes, I think the 25, 75 is a pretty good rule of thumb. There were, as you mentioned, a few things this quarter that made that a little bit different. But I wouldn’t expect to deviate from that too much long-term.

Okay. Thank you.

Your next question comes from Brennan Hawken from UBS. Your line is open.

Good morning. Thanks for taking the questions. The price cuts seemed to have driven a decent amount of money in motion. Do you have any updated thoughts on whether the price cuts are going to result in higher than expected churn for the Scottrade accounts?

So I’m not sure it was price cuts that drove all that money in motion. As we said earlier, it could have been the model announcements done in the spring at some of the wire houses in anticipation of the DOL rule changes, it’s tough to tease it out. Having said that, we notwithstanding that we’re not closed yet and we’re still competing. Our expectation is that Scotttrade continues to participate in many of the retail trends that we’ve talked about. And so we expect those same forces to continue to play at our combined institution when we close in the next few weeks hopefully.

Okay. So, so…

I think it was a higher level of investor engagement too. People are thinking more about their investments, and so that’s creating more inflows and more outflows.

Okay. So paraphrasing no change in expected churn on Scottrade side?

No.

Okay, great. Thank you. And then question on the investments, I think that you highlighted in preparation for the year-end fiduciary rule deadline. Want to know like how much of that is still going to be valuable, given that changes to the rule are actually codified in the most recent final version of the rule. And so of the investments that you’re making, how much are narrowly specific to how the rule is defined now versus being broad-based and would still be applicable if we end up seeing a rather materially different rule has been pretty clearly signaled?

Well, first of all the investments we’re making in preparation for the DOL is quite a small amount relative to our overall spend. But I’d also say that, whether the rule gets a continuance or not in January or is delay, some of these enhancements are actually helpful for clients anyway just as the things we did in anticipation for the June roll out were as well. So I don’t see them as “wasted investments” should the rule be delayed.

Thanks a lot.

Your next question comes from Patrick O’Shaughnessy from Raymond James. Your line is open. Patrick O’Shaughnessy: Hey, good morning. So question is, how would you evaluate the competitive landscape for millennials right now? I imagine they’re not a big revenue opportunity today. But 10 or 15 years from now, there probably will be. And it seems like there’s some unique business models out there trying to target those investors?

Yes, so it’s Tim. First of all, if you go back and look at the percentage of our accounts acquired in the millennial camp over the last number of years, it’s basically been about the same. So that would highlight that it hasn’t exemplified or amplified in terms of the competitive nature for millennial, that’s first point. Second point is, millennials are always going to be your - or the younger investor is always going to be your future. And as you alluded, you have to balance the profitability of the existing clients with large assets and large trading level versus those that are just starting out. So my view is, we have to continue to offer those things that will continue to be appealing to investors at all ages. And then your millennials will continue to grow into your offering. Having said that, there are a few new models out there notably around again easier to use mobile dominant, low-price trading platforms and we take them very seriously. And we make sure that we are competitive for the offering for that segment.

Yes, I think, I’d add too that our very low marginal costs that allow us to bring in lower dollar accounts or lower revenue accounts today and still be profitable with those accounts. So I think it’s an area we can grow faster than lot of the competitors. Patrick O’Shaughnessy: All right. Thanks, guys.

[Operator Instructions] Your next question comes from Doug Mewhirter from SunTrust. Your line is open.

Hi, good morning. Just on the commissions, the revenues, obviously you’ve maintained a pretty healthy DART volume, despite the low volatility. And it seems that despite the price cuts that you still had about, what I would say better than expected revenue per trade again despite the price cuts and despite this sequential decline. Does that - was that also a little bit better than your internal expectations. And was it so was that due to a better mix or just higher average revenue per ticket?

Yes. So it’s pretty much in line with our expectations, Doug. So we talked last quarter about $1.10 to a $1.30 sort of estimated decline. If you look back and compare with the December quarter, which would have been the last quarter that we didn’t have any impact of the commission rate cuts were down about $1.23 per trade. So it’s pretty consistent. But as we’ve mentioned already, it’s a fairly modest number something that we can observe - we have been able to absorb, so feel good about that.

Thanks. My follow-up, just quickly on the - you did a notes offering earlier in the quarter. And part of that was in preparation for the Scottrade financing. Are you sort of basically done on the liability side your balance sheet in preparation for Scottrade or are you going to bump up your credit line a little bit more before closing, or is that you pretty much set up there now in terms of your debt levels?

Yes, we pretty much had ourselves offset in case the deal closed a little bit earlier and so we’re ready to go.

Okay. Thanks on the question.

[Operator Instructions] Okay. At this time we do not have any questions.

Great. Well, thanks, operator, and thanks everybody for being on the call. I appreciate it, and we’ll see you at year-end in October. Take care.

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