Good day everyone and welcome to the TD Ameritrade Holding Corporation’s March Quarter Earnings Results Conference Call. This call is being recorded. With us today from the Company is President and Chief Executive Officer, Fred Tomczyk, and Chief Financial Officer, Bill Gerber. At this time, I’d like to turn the call over to Bill Murray, Managing Director of Investor Relations. Please go ahead, sir.

Thank you, operator, and good morning, everyone and welcome to the March quarter earnings call. If you haven’t already refer to our press release and March quarter earnings presentations, which can be found on amtd.com. Our Safe Harbor statement and reconciliation of certain non-GAAP financial measures to the most comparable GAAP financial measures are included in the slide presentation. Description of risk factors can be found in our most recent financial reports, Forms 10-Q and 10-K. As usual, this call is intended for investors and analysts and may not be reproduced in the media in whole or in part without prior consent of TD Ameritrade. This morning Fred and Bill will go through our normal operating review of the quarter results, following that and before Q&A Fred will come back to give his thoughts and perspective on the recent headlines surrounding the recent release of the Flash Boys book. As is our normal custom, please limit your questions to two so that we can get to as many analysts as possible. With that, let me call -- let me turn the call over to Fred.

Thank you, Bill and good morning and welcome everyone. The momentum we built in the first quarter has continued through to the second quarter of fiscal 2014. After gathering results remain strong and client trading climb to record levels. The retailer investor is clearly engaged. And we see this in all of our metrics we look at in measuring client engagement. Let’s take a look at the quarter’s key highlights on Slide 3. We posted our second consecutive record quarter for net revenues with $812 million, up 20% year-over-year and diluted earnings per share of $0.35, up 35% year-over-year. Year-to-date earnings per share were $0.70, up 32% year-over-year. We cross the $600 billion threshold for total client assets one-year after hitting the $500 billion mark ending the quarter $617 billion, up 19% year-over-year. Net new client assets were $12.2 billion, an 8% annualized growth rate and within our forecasted range. Our average client trades per day for the quarter were a record 492,000, an activity rate of 8.1%, the best activities rate we’ve seen in a decade. We grew average fee-based balances to $134 billion, up 20% year-over-year. Interest sensitive assets ended the quarter at $96 billion as clients continue to cycle cash back into the markets. Let’s take a closer look at how each piece of our growth strategy fared, starting with asset gathering on Slide 4. This quarter we brought in $12.2 billion in net new client assets, an 8% annualized growth rate. That brings us to a total of nearly $27 billion or 10% annualized growth for the first six months of fiscal 2014. Both our retail and institutional channels continue to exhibit strength in asset gathering. Our retail channel had its best quarter for net new client assets in three years continued retail reengagement combined with…

Thanks, Fred, and good morning, everyone. Despite a continuing challenging rate environment, we generated another record quarter for revenues surpassing last quarter's record. This growth was primarily driven by record trading and record margin lending as more investors found opportunities to engage in the markets. In addition, we delivered another strong quarter of asset gathering. With that, let's begin the financial overview on Slide 8. We’ll start with March to March comparisons on the left side of the page. Note that there was one more trading day this quarter. Overall, year-over-year revenue is up 20%, expenses are up 11% and as a result pre-tax margin was 39% of revenue, while net income and earnings per share increased 35%. On Line 1, transaction-based revenue is up $87 million or 30%, driven by record trading levels which increased year-over-year by 114,000 trades a day. However, slightly offsetting this, commission rates fell $0.16 due to trade mix. On Line 2, asset-based revenue is up $47 million driven by margin lending revenue up $60 million due primarily to balance growth. Investment product fees up $13 million also due to balance growth and stock lending revenue up $15 million, primarily caused by a greater pool of available collateral as margin loans grew, plus broad based market performance stoked demand on the short side. As a result, revenue was up $133 million year-over-year and grew to a record $812 million during the quarter. On Line 5, operating expenses excluding advertising are up $29 million or 8%, primarily due to expenses related to the increased trading volumes, the impact of strategic growth initiatives driving increases in headcount and higher incentive expenses due to our results. We will continue to closely watch our expenses, but will prudently invest where we think it makes sense to do so, primarily…

Thank you, Bill. Before we turn the call over for Q&A, I’d like to address some of the market structure issues that have become a topic of the much discussion in the recent weeks. First of all, with so many participants weighing in on this subject, we’ve seemed to have lost perspective of where we’re in terms of U.S equity market structure. It has become a debate pitting one participant’s opinion against that of another’s opinion. The fact of the matter is that our current market structure is the result of some very thoughtful regulatory changes over the last decade or so, coupled with significant investments and innovations in technology. The U.S equity market is one of if not the best functioning and most efficient markets in the world. Over the last decade, retail and institutional trading costs have declined and are amongst the lowest in the world. Bid-ask spreads have narrowed significantly. Liquidity as measured by shares and dollar volumes have increased and execution speed, something which is very important to the retail investor has improved considerably. Speaking as one of the leading retail brokers in the country, if we want to have a discussion on market structure, then let’s do it in a thoughtful, fact-based way focused on the issues that we all agree are problems and should be addressed. This is a very complicated subject and any changes need to be carefully thought through, fully researched, analyzed and tested to ensure that we will benefit the markets and investors rather than move us backwards. Take for instance high frequency trading. This is a term with no agreed upon definition. That means different things to different people. But based on our analysis, there is no question that the regulatory changes and the electronification of the markets, including most…

Thank you. We will now begin the question-and-answer session. (Operator Instructions) And our first question is from Rich Repetto with Sandler O'Neill. Please go ahead.

Yes. Good morning, Fred. Good morning, Bill.

Hi Rich.

I guess the first question is -- was on the strong NII and the securities lending and margin loan balances. And I’m just trying to -- try to gauge like the sustainability of the securities lending because Bill -- I hear you said greater pool of available collateral and you said something about market-based stocking demand or demand stocking. So I just -- should we just look at how margin balances are trending to sort of model out the securities lending and the outperformance you’ve seen and how well margin loan balances, we know they ended the quarter higher than the average, but how are they in April as trading has come off a little bit?

Yes, so -- I mean margin lending has increased again. So it’s higher now than it was at the end of the quarter. And we do see a few things. I think what the best way to think about it, one of course is look at margin lending because as I said that does provide the approval that it's available for us to loan. And two, I think generally speaking, look at the overall short interest would probably be a decent gauge to determine is there more short activity, because those are the two drivers. So as I said, so one, the balances were up which drove more collateral available. And two, the market did have a lot more shorting going on in the quarter and those two elements is what drove the revenue. So, I am cautiously optimistic that that’s going to continue into each quarter. But as to your point, this is a difficult one to model.

Got it, okay. Thank you. And then my follow-up Fred, so thanks for the balance comments here on market structure. And I guess my question is just a bit more specific to Ameritrade, but payment for order flow; do you suspect that’s going to be any changes in the payment for order flow regulations and if so what are some -- what's important to Ameritrade and what alternatives might, if there was any changes if you see that?

Payment for order flow has been around for a long time, it's been looked at before. So this isn't the first time this has come up for a discussion. So, we don’t have any particular inside knowledge, but we’re not anticipating because of books been written, but all of a sudden payment for order flow is going away. I would also add that, and it's a hypothetical question of it going away. We normally don’t answer those, but in any situation where something changes and almost we would look at it and say, after we’ve looked at to our best execution responsibilities, we would look to extract value from our order flow. And we believe that in any competitive market structure, and we believe we will continue to have a competitive market structure. Our flow has value, that’s been proven out, and we’re going to look to whatever variety of ways and alternatives are available to us to make sure that we extract some of that value, but after we’ve looked after our best execution responsibilities.

Got it. Thanks and congrats on the strong quarter.

Thanks.

Our next question is from Patrick O'Shaughnessy of Raymond James. Please go ahead.

Hi, good morning guys.

Hi, Patrick.

So I was hoping if you could talk about your trading volumes after Michael Lewis’s book came out. Did you see any impact on your customers all of a sudden thinking, hey maybe the market is not there for me and maybe I should take a step back or do you think that your customers kind of shrugged it off?

Well, I’ll give you some statistics. First off, trading did not change after Michael Lewis’s book. And just to give you some statistics we don’t pay attention to what certain media people say as much and we don’t pay attention to what some our peers say as much. We pay attention to what our clients say. And we have had, I think it's -- let me get them here for you, 70 phone calls and 112 emails on this. So, this is from our perspective not a hot issue with our customers, that’s not to say we don’t take it seriously, but it's not a hot issue with our customers. And our perspective on this is, this is a Wall Street issue, not a Main Street issue and we’re on Main Street front.

Got you. I appreciate that. And then for my follow-up, Fred if I caught your comments correctly you talked about broadening your investment product offering in a couple of quarters, is there any additional detail you can provide on that right now?

The team is working through that right now, but I think what we’ve learned with Amerivest is, it's important to have the right types of products for different market environments and whenever it happens to be in demand not unlike any large asset manager and so we continue to look at that, and the team is looking at launching another version or two of Amerivest probably before the fall.

All right, great. Thank you.

Our next question is from Joel Jeffrey of KBW. Please go ahead.

Hi, good morning guys.

Hi, Joel.

Over the past year you guys haven't been terribly active in terms of share repurchases. I’m just wondering if you’re kind of rethinking that activity level given its stocks just kind of maintain this above 30 price level since the beginning of the year. Kind of any updated thoughts on how you’re thinking about share repurchases?

It's something that we sit down and look at and talk about after each quarter and reevaluate our priority list in terms of where we want to -- what we want to do with our free cash flow and strong capital levels. I think that the truth of the matter is I think we did think about it, certainly when it went down below 30 we thought hard, but we’re unable to make any moves because we’re in a blackout period. But I think right now Bill and I talked about this yesterday, and I think our buyers would continue to lean towards dividends in the current environment.

Okay, great. And then just, thinking about the trading activity being up and as strong as it's been, and the net new asset flow is coming in. Should we think about a lower percentage of client assets coming in as cash and having that in kind of negative impact on the growth rate of the IDA balances?

No, we haven't seen that indication at all, no accounts continue to have a good cash level, in fact a higher cash level than you’re seeing on average. And we haven't seen any changes in that. I think what we’ve seen here is just we’ve seen for the first 6 months, $27 billion in net buying activity in both our retail and institutional clients, and it's just, we got it -- we’re going into a market environment where people are very -- happen to be very bullish and to be looking to invest. So I think all you’re seeing of the cash level’s is that that bullish settlement come out in the cash allocations which are at the low end of the ranges we have seen over the last 10 years.

Great. Thanks for taking my questions.

Our next question is from Kenneth Hill of Barclays. Please go ahead.

Good morning, Fred and Bill. How are you guys doing?

Hi, Kenneth.

So we’ve seen your partner TD Bank talk about growing its wealth business more dramatically. You guys seem to be a key piece of that expansion here in the U.S. I know that relationship has been good for you guys, good for them as well, but I was hoping you could speak a little bit more to the intention to grow that wealth business in U.S. and what that could mean to you guys over time?

Well we believe that in our discussions with them, where they’ve been a good strategic partner over the years and we anticipate that continuing. In our discussions on this one, they’re more interested in the high end of the wealth business what you would typically call our A-type of market, and more of a private banking type high end that’s part of the market. We are much more on our retail side, a mass -- mass affluent type marketing firm obviously we bump into each other a bit, but that’s common of all wealth models. But really we’re trying to grow both sides of the equation in a partnership oriented way through their customer base and brand system. As I have said before, I think they had a certain strategy in the best of intentions. We have a strategy in the best of intentions, but getting two organizations to get this working together well will take time. But (technical difficulty) management intentions and strategy we’re pretty much aligned.

Okay. And then, I think Fred in our comments you mentioned the RIA trend seem to be good, and you see innovative offerings like the options market center helping to drive new types of RIAs to your platform. I was wondering kind of how that’s translated to customer base and any shifts you’ve seen in the customer base with the goal there being to garner maybe a more useful component to it over time?

Well the RIAs client base will definitely lean towards older and wealthier by -- that’s the market they’re after. We’re seeing in the RIA channel, there’s about 1000 RIAs that are now using options in their business in one way shape or form. And approximately the 50% of RIAs that use options have over $100 million of client assets. So it's tends to skew to the higher asset intensive and that’s what we were trying to hand out, it basically is taking us up. It's not that we haven't been in that market it's increasingly attracting the larger RIAs to our offering. And then on the retail side, it is -- we’re just seeing options continue to have appeal, mobile continue to have appeal. So, we’re seeing a lot of changes in technology and the way people are investing particularly the, what you might call the millennials today.

Okay. Thanks for taking my questions.

Our next question is from Mike Carrier of Bank of America. Please go ahead.

Thanks guys. Bill, maybe a question just on the expenses and then I think tax rate. So, just on the expanses, I think this quarter is always seasonality and you guys guided on the advertising side. So, I guess when we get the moderation I think you mentioned sort of that $390 million range ex-advertising. Within there, is that like predicated on this higher activity run rate, so meaning like clearing an execution, cost being a little bit higher, comp being a little bit higher. And then, I just wanted to get some color on the seasonality particularly on comp and advertising, and then the tax rate’s simply was a little higher this quarter, so I didn’t know if there was anything unusual there.

Okay. So, yes on the expenses you’re exactly right. Certainly more trading activity will drive more in clearing the execution et cetera. Obviously our results being towards the high end would therefore as I said in the remarks tend to increase the incentive as well. So those two things for the last half of the year if the results continue and the trading continues strong then yes those will be elements that we’ll see a -- it will be a little bit hotter than what we had envisioned particularly at the midpoint of our range. On the taxes of course, well first two things; one is the seasonal resets that you have in FICA and all that other jazz and the other merits in January 1, I mean those are all elements too. We obviously know those are coming and have those factored in, but they are a change sequentially. On the tax rate, the tax rate actually was pretty normal this quarter. It was last quarter that we had the state tax benefit that lowered the December quarter rate, and so I would say that in, this may come as a surprise to you pal, but the states continued to increase their tax rate. And so we’re fighting through all the states that are increasing taxes et cetera. So, right now I would say the quarter that we had was pretty clean and would be a reasonable rate to use going forward for a while.

Okay. And then Fred, just on activity levels, so when you look at the activity this quarter, was there anything you would characterize as unusual. I mean it seems like based on your guys index it's been kind of a consistent improvement in kind of the outlook from the retail investor for some time. And then I guess on that front we all sort of come up with some growth rate for DART activity over time and it tends not to be that strong. But are areas like increasing use of derivatives or the mobile technology, are those structural growth driver’s that can take that growth rate a bit higher than maybe what some of us would think would be more normal?

The way we look at it is it's hard to point to any one thing that’s going to move the activity rate over like about a 12 month period significantly other than settlement and volatility. Those are the two things. I think in the long-term we look at things like there’s no question when you have more derivatives, people tend to trade more and they tend to be more resilient in their trading, because options in futures expire. So you have to re-put your position on, on a regular basis. There’s also no question that options in futures traders know how to trade in almost any type of market versus where if you’re an equity trader in a down market you’re not sure what to do, and we have seen those play out. But mobile, we would definitely say is a long-term secular shift. I think derivative is a secular shift. But mobile we know for example that people that trade with us with mobile trade on average one time more per month than people that don’t. And so we do see some long-term shifts, but it's hard for me to say that that’s going to dramatically change in any material way the trajectory of growth in trading over the next 12 months as an example. It may over time, but I think what's catching our attention is when you see the number of people using mobile with us every week up 50% year-over-year, there’s no question this is a definite trend and you’re seeing that in the technology industry and you’re seeing it in our industry. But I think what -- as we look at it from here there’s no question. I think we had a bit of a correction in some certain biotech and social media, and so our newer tech stocks here, so we’ll see how that fairs on the IMX in April. But anytime you have the kind of increasingly bullish settlement that we’ve had over the last 6 to 9 months, and you have increase in volatility, our trading is going to be strong than it was this past quarter.

Okay. Thanks guys.

Okay, Mike.

Our next question is from Alex Kramm of UBS. Please go ahead.

Hi, good morning.

Good morning.

Just wanted to come back and sorry to beat the dead horse on the whole market structure or payment for order flow discussion, I think you laid it out very well. I think the one thing I’d be curious about is that, I mean this is, payment for order flow in particular it's been something that’s been reviewed several times. I think it was mentioned briefly in the concept release in 2010. So, maybe if you can just give us, I don’t want to say a history lesson but maybe just how you’ve been involved with regulators in the past like, how engaged you are in these discussions, like where you’ve been asked in the past and how you’ve argued the case. And then maybe, if there’s been any increase in engagement with the staff or commissioners from your person level in the last few weeks after this has obviously been a much bigger issue here?

We normally do not comment on interactions with the regulators, but I can say, I have had no discussions with anyone at the SEC in the last two or three weeks. Historically I mean, the last time this whole -- what I find interesting here is, just give you a bit of a lesson here, it's interesting, I think there was been two books written on the whole market structure here in the last year, one was called Dark Pools by Scott Patterson. I thought it was a very good book, very soundly written. It was interesting back then 6 months ago Dark Pools were the evil enemy of the empire here. And here we go into the Michael Lewis’s book called Flash Boys, and we have a new evil enemy. And what’s interesting to me and the hero of that book is the IEX and no disrespect to the IEX, but they want to become an exchange but they’re actually in fact a Dark Pool today. And so, as you look through all this, this does move around. But the history here if you go back through time has been the SEC has always done this in a very thoughtful way, a very fact based way from our perspective, that’s all you can ask for. They weigh every participant’s views which I think they should -- we can all also ask for, but it's not like lobbying the government, the Federal politics. They’re a very different organization with a very different mandate. And that’s all you can ask for, but it's always been consistently to encourage a competitor of market because they believe that’s the best way to encourage competition and make the markets efficient. And all the way through they have been consistent in applying that in a very thoughtful way, a competitive market and making sure that the markets is efficient and robust as possible.

That’s great, thank you. And then just secondly, maybe just a little bit more about April. I mean obviously you have given us the DARTs number and some of the other metrics here. But I think you just mentioned to an earlier question that there has been a big, there was a mini correction here, so can you just talk about anything you’ve seen in terms of behavior that we should be aware of and also we have the tax paid and that sometimes that drives a little bit of cash outflows. I think more so for your competitor but, anything we should be aware of as we think about April here with almost the month done here.

I think where we are right now in April it's hard to read. We just had a mini correction but we have also had a series of vacations, anybody that lives in New York knows that. New York hasn’t been the normal New York the last week or two. But a lot of people are way on vacations and I think it's continued till this week. I have never got to work so fast, and it's kind of slow right now, number one. Number two is, on tax payments I think almost anybody in this business is going to have tax outflows for taxes right now for a bit, probably through that now I would guess given that April 15th has come and gone although there’ll still be some checks, cash. But when the market was up 30% last year people had capital gains and a lot of people did harvest them and if they did basically they’re going to have tax liabilities.

Okay. Very good. Thank you.

Our next question is from Bill Katz of Citi. Please go ahead.

Hi, thanks very much for taking the questions. I apologize for also asking question on payment for order flow. But when you define -- a little bit of a technical question I apologize, but when you define best execution can you give me a definition of how you define that please?

That is a defined term under the SEC we report. Well, I am sorry about that, let me back up. The best execution is to make sure that you have, you execute in the NBBO that’s published in the market.

So, that would be based off of the [ph] [swift] as it stands right now?

Well that’s how we report on our 605 or 606 reports. That’s the convention.

Okay, that’s helpful. And then just sort of stepping back for a second, when you look at -- you mentioned the pipeline is still pretty good in terms of RIAs and FAs. Can you just sort of go into a little bit more in terms of where you’re seeing that demand coming from and then from, in terms of acquisition cost any change in pricing to gather those assets so to speak?

Well I haven't seen anything particularly in the last quarter. I think it's been a competitive market, heavy use of promotions and incentives. I think that happens in almost any direct response marketing organization or type of business or e-marketing. You’re going to see a heavy use of promotions and incentives and/or teaser rates. And I can’t say I have seen any material change in the last 12 months. It's just very competitive.

Okay. Thank you.

Our next question is from Chris Allen of Evercore. Please go ahead.

Good morning, guys.

Hi, Chris.

I think most of everything has been kind of covered. I guess just one question; you mentioned a higher FTE count because of strategic initiatives. Can you give us any color there, does that relate to the ongoing build out of sales or in some other areas?

There’s several areas, but yes it's increasing sales people. Obviously this time of the year you have an increase in the call centers to handle the volumes et cetera. But in technology we have added some people, so it's in selected areas but -- and we’re obviously willing to continue to look at that to continue to drive our innovation and the mobiles Fred talked about et cetera so we are making some conscious decisions here.

And the investment in technology that you guys referred to, this is ongoing built out of the platform or is there any kind of specific areas?

I mean it's ongoing built out of the platform. You’re doing a few things, always looking for more efficiencies and speed. And you’re looking for new innovation and building new products and so both of those areas I would say are the key drivers.

Got it. Thanks a lot guys.

Okay, Chris.

Our next question is from Christian Bolu of Credit Suisse. Please go ahead.

Good morning, guys and thanks for taking my questions. I hate to ask another one on payment for order flow, but just would be helpful if you could expand on kind of what alternatives you have to monetize your order flow should payments for order flow go away?

Well, I am not going to get too specific because I think that’s a hypothetical question. But under current law -- I mean under current rules, you have I think its three options you can internalize which some players do. You just basically set up a market maker responsible --- market maker and do it yourself. So two, you can log to different market venues, or you can (indiscernible) to an exchange whenever. So you have a variety of alternatives. All I’m trying to say is basically, it's clear in any competitive market structure our flow has value and economic value that’s been proven out. People that want to start a venue or start an exchange or whatever are interested in our flow. They need volume. They need liquidity. And we’re a good stable source of volume and liquidity. And so there is a value in that. And in any competitive market structure people will figure out ways to basically, to make the next best adjustment, that’s how we’ve gotten where we are. We have had innovation in the market and we would expect after any other changes that you would look to the next best alternative, and almost any player in the market is looking to lower their transaction cost and/or do revenue share type opportunities for their business when that has economic value and we would do the same thing again. It’ll just be in a different way.

That’s helpful. Just a follow-up question, on derivatives as a percentage to total trade it stepped down a little bit I think to 39% from 41% last quarter. I realize it's difficult to comment on quarter-over-quarter moves and the absolute number was very strong, but just given that trend has been up basically for a while now, I appreciate any color you have on the decline in the percentage.

Yes, well I think this one’s actually rather simply because derivatives are used by maybe I don’t know 10% to 11% of your client base. And what you’ve got here is that, the reengagement of the retail investor is very broad based. And so when you get to the other 85% lets call it, the client that’s reengaging and they’re more likely to go into equities, the numbers just overwhelm the derivative trade volume. And so it's just a mad thing about a broad based reengagement by the customer base.

Great. It's very clear. Thank you very much.

The next question is from Chris Shutler of William Blair. Please go ahead.

Hi, guys good morning.

Good morning.

Hi, Chris.

Fred you mentioned Dark Pools, and I’m just curious, I mean if there were regulatory actions taken to move more trading back to the exchanges, how do you think that would ultimately impact your payment for order flow revenue?

Well it would be, I mean what you’re asking, first off it's a hypothetical question, but I understand the exchanges are looking to move more to their venues, which I don’t blame them for. I mean from an economic perspective it's attracted to them. It would definitely put a dent in it, but it would not eliminate it.

Okay. And then just one other totally unrelated the, your advertising spend has been very consistent now for what, I think what's going on about 5 years, so just thinking ahead once rates do begin to rise, do you have plans to ramp up your ad spending and essentially I am trying to figure out if you think you’re leaving any growth on the table as it stands today?

Well, I think to say there has been a level for the last 5 years is probably not accurate. So I’ll talk in 6 years because I have been -- I’m 5.5 years in now. And so when I first came down we were spending about $140 million a year in advertising in my memory, and now we’re spending about $250 million. So we definitely upped it, because we saw the opportunity in the market and we wanted to broaden out our offer and we made the shift from being just a trading shop -- equity trading shop to an equity and option trading shop, but also to an asset gatherer. So we’ve invested a lot in marketing. It's been constant in probably the last two to three years, I think that’s fair. And I think right now when rates do rise we’ll look at that in terms of where we invest. I think marketing is a little bit more dynamic and a bit of a call on the market environment that you’re in. There is certain market environments where it works really well and other ones where it doesn’t work so well. We have been -- the hard part is predicting those. But if I had to say, where would we invest right now if we wanted to invest, marketing would be on the list. We have always had sales people on the list, but if I had to pick one right now it would be technology because I do think we’re going through a fair bit of change in technology whether it's mobile, the trend to mobile to social media, data analytics all those types of techniques that which are pervasive in almost any business and so I have seen quite a shift and we’re investing in each of those areas rather significantly. And the question we keep asking ourselves, are we investing enough in those areas. Because we do see it shifting and normally these shifts start, they pick up momentum and then they get stronger. We have been at the front edge of that but just got to make sure you can stay at the front edge and keep up with the volumes as it continues to grow.

All right. Thanks a lot.

Our next question is from Alex Blostein of Goldman Sachs. Please go ahead.

Hi, good morning, guys. So, hopefully the last one on payment for order flow, but taking the step back it feels like there’s a couple of hot topics that are at the heart of the issue here and I appreciate the fact that a lot of it is ultimately hypothetical. But when we think about some of the debates whether it's potential change to maker, taker or some of the volumes going back to the lid venues. Do you see anything out there right now that I guess would make the retail flow less valuable to the wholesalers overall, and again I appreciate that it's fairly hypothetical just trying to figure out the different scenarios what kind of a change in economics that could mean for your business?

Yes, those are hard to get out, because it is a hypothetical question and when you say a change to maker, taker well it depends what the change is. And whether there is a change, number one. Trade out is probably a little easier because there is a definitive proposal on the table by the exchanges, we’re not in favor of trade out for -- we just understand that to us that’s kind of like picking winners and losers. If there is an issue with not enough trades on the let market, then we should have a discussion about how to like the markets and this was the discussion around [ph] [DART pools] or you can like the markets without forcing or picking winners and losers from our perspective. And -- but trade at definitely would have a dense because basically its going to force trades into unless it has a certain improvement level on to a venue where its going to be a cost to us versus our revenue share. And so trade at puts a dent, but it doesn’t eliminate payment for order flow from our perspective.

Okay. Thanks for that. And then, shifting gears a little bit, just want to spend a second on kind of addressing against the breadth of the retail reengagement and where we’re really in the cycle. And I guess the two ways to think about it is obviously you guys are near record or at record as far as activity per account goes. There are two drivers there that’s obviously the cyclical recovery and then there are some meaningful structural talents whether it's the derivatives or the mobile usage, where are we in the cyclical piece I guess? I mean, I don't know if you guys can look at that as a percentage of cash or is percentage of stock ownership between your client base, but just trying to get a sense of is there enough left in the actual cyclical piece of the retail reengagement cycle?

The -- oh geez, good question actually. I would say to you that in terms of the cyclical change I think we are at the high-end here or the trailing end of the cycle, unless the economy, if we do come out the economy turn stronger here and I’d say April, May, June or even in the fall and the market starts to -- the economy starts to grow faster. I think you'll see it go again, then we would be -- tend to be bullish. But that’s very much a function of the economy and I’m optimistic, but I have been optimistic for a bit and this has been a long tough slog. But I think that where we are in the cycle is largely a function of the economy. And right now I think we paused. We had a good run last year, we’ve had a positive quarter, we’ve been sideways, we had the weather, we’ve had a few events here and there we’ve got events in Russia and Ukraine. So a lot of it is going to depend on the economy and macroeconomic geopolitical events here I think where we go in terms of the cycle. What was the second one? Was that your question or …?

Yes, I know. That was my question -- just I guess trying to better understand where we’re in the cycle, but -- and the structural tailwind that you addressed, seems like it’s more of a steady-eddie progression both on the derivative and the mobile side?

Yes. The other thing I think with respect to trades, which is on slightly different than sentiment, but a component of sentiment, trades will depend more on volatility from here.

Right. Great. Thanks so much for taking the questions.

Thanks, Alex.

This concludes our question-and-answer session. I would like to turn the conference back over to Fred Tomczyk for any closing remarks.

Okay. Well, thank you for your time today everyone. We are obviously -- we had a strong march quarter. We’ve had a strong first half. We are very happy with where we are in terms of our earnings for the year. We are certainly trending very, very well. We have had record net revenues for the second quarter in a row, earnings per share up 35% year-over-year. Asset gathering remained strong and as you can see in our volumes we have got record trading volumes in the quarter, record margin loans and as Rich pointed out strong securities lending which goes out in hand with margin loans. So we’re very happy. I think the management team is going to stay very focused on what it’s to control. Keep our heads down and keep doing our job to execute our strategy. With that, I will talk to you again in July. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.