What it means
A brokerage processes transactions for customers, and counting qualifying trades over a period and expressing the result as a daily average gives analysts a way to track activity. The traditional definition focuses on trades generating commissions or fees, and an SEC-hosted issuer report defines its DARTs in that way.
That is evidence of the issuer's reported metric, not a regulator-imposed definition for every brokerage. Other firms can use broader revenue-related definitions; for example, a qualifying trade may generate payment for order flow even when the customer pays no commission.
The words revenue trades therefore require explanation in the firm's reporting notes. A shift toward commission-free trading can change the meaning of the series, because under a commission-only definition trades may stop qualifying even if customers trade just as often.
When a firm changes its definition, a rising reported number may partly reflect reclassification, so check whether earlier periods were restated on the new basis. An expanded definition can retain some of that activity while creating a break in comparability, and a chart combining different definitions can create a false impression of organic growth.
The denominator is also important, because a trading-day average should not be compared with a calendar-day average without adjustment, and reporting periods with different numbers of market sessions can have different totals despite similar daily activity. Order and execution conventions need attention too, since a firm's metric defines which transactions qualify and how they are counted.
Do not substitute exchange share volume or assume that every order submitted is a completed revenue trade. DARTs count activity rather than dollars, and revenue per qualifying trade can change with pricing, product mix and customer behaviour, so a higher number of trades can coexist with lower transaction revenue.
The count does not measure all brokerage income, since interest, account-related charges and other services contribute outside it, and it does not deduct operating costs or describe profit by itself. Trade counts are not customer counts either, as one active customer can generate many qualifying transactions while another makes none.
DARTs can be useful alongside revenue per trade and client activity measures, which help separate volume changes from monetisation changes, but they still need consistent definitions and should not be treated as an earnings forecast. For a non-finance manager reviewing a brokerage, record the qualifying-trade rule, day basis and any definition changes, compare periods on the same basis and reconcile activity with reported transaction revenue.
The metric answers how much defined trading activity occurred, not whether every additional trade improved the business.
In practice
Real-world examples.
Example
A fictional broker records 1.2 million qualifying trades over 20 trading days. Its DARTs are 60,000 under that definition. Dividing the same total by 30 calendar days would produce a different measure and should not be labelled equivalent.
Example
DARTs rise from 100,000 to 150,000, but average commission per qualifying trade falls from 4 to 2. On the same day basis, daily commission revenue falls from 400,000 to 300,000. More activity does not guarantee more commission income.
Example
A broker broadens its metric to include certain commission-free transactions. An analyst checks restated comparison data before interpreting the larger DART figure as growth. Otherwise, changed eligibility could be mistaken for additional customer trading.
Formula
Calculation
DARTs = qualifying revenue trades during the period / applicable reporting days. With 2.1 million qualifying trades across 21 trading days, DARTs equal 100,000. A simplified transaction-revenue estimate is DARTs x days x average revenue per qualifying trade, but only when the revenue and counting definitions match. It excludes income outside those transactions and is not a profit formula.Case study
Seen in the real world.
Fictional case: An investor sees a brokerage announce a sharp increase in DARTs. She reads its notes and finds both more qualifying transactions and a change in product mix. Average revenue per transaction has fallen, while other income and expenses have changed too. She separates activity growth from monetisation and compares the same reporting basis across periods. The resulting assessment explains the brokerage's performance more accurately than assuming that a larger trade count must mean proportionately higher earnings.
She then builds a small reconciliation for a fictional quarter. DARTs rise from 100,000 to 120,000, a 20% increase, while average revenue per qualifying trade falls from $5 to $4. Daily revenue from those trades moves from 100,000 x $5 = $500,000 to 120,000 x $4 = $480,000, a 4% decrease, so the headline growth did not translate into higher trade revenue. The case is illustrative and implies nothing about any real brokerage; it simply shows why activity and monetisation should be read side by side.
Watch out
Common mistakes.
- Treating DARTs as a monetary revenue figure or automatic profit forecast.
- Comparing firms or periods without aligning eligible trades and day conventions.
- Mistaking a definition change for growth in customers or actual trading activity.
Questions
People also ask.
Are DARTs dollars of revenue?
No. They are an average count of qualifying trades.
Can DARTs rise while commission revenue falls?
Yes. Revenue per trade can fall by more than activity increases.
Does every broker use the same definition?
No. Read the issuer's metric notes before comparing.
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