Setting the standard for retail trading one year after launching Schwab Trading Powered by Ameritrade

One year ago, Schwab marked a significant milestone—the introduction of Schwab Trading Powered by Ameritrade™ and the availability of the thinkorswim^® platform suite for clients. This was a big moment for the company that offered a sense of accomplishment, and it was also a new beginning for the next chapter of what’s in store for traders. Over the course of the last year, Schwab has also launched futures and forex trading, as well as portfolio margin, on its thinkorswim^® platform suite, and made a series of enhancements across its trading platforms. 

We sat down with Schwab’s head of Trading Services James Kostulias to talk about retail trading, Schwab’s leadership in the space, and the latest trends with trader clients.

The brokerage industry has seen historic growth among retail investors over the last few years. Tell us a little bit about your role as head of Trading Services and how this trend affects your team.

The influx of clients and their engagement with the markets over the past few years has been remarkable. There was of course a big boom with meme stock mania, but we’re still seeing strong growth even though the meme stock craze has mostly subsided. New clients are joining Schwab in record numbers, and trading volumes are still at historic levels. We’re experiencing strong growth across the board, but when you think about meme stocks and the types of investors trading those names, younger investors are still coming to Schwab in strong numbers. Through the first half of 2024, around 60 percent of our new retail households are under 40 years old, and 30 percent are under 30 years old.

As head of Trading Services, my team manages the entire client experience for traders at Schwab, including platforms like thinkorswim^®, products, trader educational content, and the specialized support teams that provide world class service to our trader clients 24 hours a day every day. We also work closely with the Schwab.com and Schwab Mobile teams. A little over a year ago, we packaged all these capabilities together and introduced Schwab Trading Powered by Ameritrade™.

Before my current role, I spent most of my career with Ameritrade in leadership roles across the retail, technology, and active trader businesses, so this is an area I’ve been in for a long time and I’m very passionate about it.

You were also one of the leaders of our integration with Ameritrade—how’s that going now that all the Ameritrade clients have moved to Schwab?

That’s right. We had an amazing team working on the integration between Schwab and Ameritrade, and I was fortunate enough to be one of the leaders overseeing it. Ensuring that the account transition process was as smooth as possible for clients was the biggest priority, but stepping back, we really viewed this as an opportunity to combine the best of both firms, and as a result Schwab has strengthened its leadership in the retail investing and trading space with more to offer clients than ever before.

We moved the final group of Ameritrade clients over to Schwab in May of this year and we’ve seen positive growth and engagement since then in terms of these clients bringing additional assets to Schwab and making use of Schwab products and services they didn’t have access to before—most notably our wealth management and banking capabilities. And on the flip side, we’re seeing great engagement from Schwab clients with the thinkorswim^® platforms, which we launched at Schwab a year ago when we introduced Schwab Trading Powered by Ameritrade™. From Q2 to Q3 this year, there was a 35 percent increase in legacy Schwab clients accessing thinkorswim^®.

Coming out of the integration with Ameritrade, Schwab is clearly a leader in the retail trading space. How do we think about our role in the industry, and more importantly, how we serve trader clients?

Schwab has a long history of serving traders—really dating all the way back to when Chuck started the firm to make stock investing more accessible to Main Street investors. Our ability to combine the best of what Schwab and Ameritrade offered to investors puts us in an even stronger position to serve a wide range of investors and traders. I’d point to our trading platforms with thinkorswim^® plus Schwab.com and Schwab Mobile, the breadth and depth of our wealth management and financial planning capabilities, customer service that is recognized as being among the best in our industry, and additional resources like our branch network across the country and banking.

We also offer an extremely wide array of trading products to our retail clients, ranging from stocks and ETFs to futures contracts and futures options contracts across a variety of markets, forex trading of more than 65 currency pairs, and portfolio margin. From an options standpoint, Schwab offers not just equity options but also index and ETF options, including uncovered and short selling, in appropriately approved accounts. Coming out of the integration, we’ve also made spread trading in IRAs available, so we really have a broad range of capabilities for clients with options-trading approval.

Schwab now (as of October 31, 2024) has more than $9 trillion in client assets, 36 million active brokerage accounts, and facilitates approximately six million daily average trades, so that is a huge number of clients who trust Schwab with their investing and trading.

There’s no doubt that the competition in our industry is fierce, but we’re a leader, we’ve been at the forefront of moving the industry forward for investors for more than 50 years, and we’re keeping our foot on the pedal to continue innovating to meet investor needs.

Can you talk about what we’re seeing big picture in the trading space and how we think about the growth that’s taking place?

Absolutely, it’s a tremendous time to be a retail trader considering the access people now have to the markets through a range of products and innovations such as fractional shares and expanding overnight trading, platforms that are easier to use but that also provide sophisticated tools, and just the amount of trading information and resources now available to everyone.

But I will say that a big focus at Schwab—as well as a competitive differentiator—is on modernizing the investing and trading experience while at the same time providing clients with resources to help them make smart, informed decisions. Making trading platforms easy and accessible is important as the number of people with the ability and interest to get invested increases, but ease alone it isn’t enough given the complexity of markets today. We’re focused on providing a holistic experience that includes highly experienced service and support, educational content and research, and risk management tools and resources. Investing can be fun, but it isn’t a game.

Trading is clearly a huge focus at Schwab. What are the big priorities and focus areas for Trading Services in the year ahead?

We serve a wide range of traders, from those just getting started to highly experienced and sophisticated active traders who need a comprehensive suite of platforms, products, and support capabilities. And when we look at our offer and how to evolve and expand, it’s all centered on what clients tell us they need. 

As far as our focus areas, it starts with a strong foundation. We talked about the huge number of trades we facilitate daily—clients care about trade execution quality and speed. A few quick data points that are relevant here: in the 3rd quarter of 2024, over 96 percent of orders at Schwab were filled at prices better than the National Best Bid and Offer (NBBO)¹, and they were executed at an average speed of 0.05 seconds.² These are impressive numbers, but they are the basics that traders expect.

Building out our trading experience is of course a big priority as well. Schwab is one of the original “start-ups” in the brokerage space, and that spirit of innovation continues today. Most recently, we announced plans to significantly expand access to a broad list of stocks and ETFs in the overnight trading session. Earlier this year, we made futures, forex and portfolio margin available through thinkorswim^® at Schwab, and we also introduced a very cool experience called Guest Pass, which lets anyone who’s curious about thinkorswim^® try out the platforms for 30 days without needing a Schwab account within the simulated paperMoney trading environment. This means they can test-drive thinkorswim’s^® more than 400 charting indicators and studies, 20+ drawing tools, nine study customizations, complex order types, customizable workspace, and its specialized options tools including the Sizzle Index™, a thinkorswim^® feature that allows you to find stock symbols that currently see an increase in the number of options traded compared to the last five days’ average.

We’ve also added or expanded a ton of features and functionality on Schwab.com and Schwab Mobile this year with live streaming market data, redesigned watchlists, improved research tools, and we launched an All-In-One Trade Ticket that lets clients place trades from a single location.

Before we go, earlier this year you and your team rang the closing bell at the New York Stock Exchange, which is a cool experience—what was that like?

Oh wow, you’d be amazed how many people ask me about that! That was really fun. We were there celebrating the launch of the Schwab Trading Activity Index^TM, which is our proprietary index that analyzes retail client stock positions and trading activity. There’s actually a lot of formality and ceremony to ringing the bell, but I’ll tell you that as the person fortunate enough to bang the gavel—it’s a lot heavier than I expected, and the only thing I could think about in the moment was not accidentally letting it go! But in all seriousness, it was great recognition for our team that works so hard to serve our clients every day, and it was symbolic of Schwab’s leadership in the trading space.