S&P reviews eight U.S. brokerage firms

Standard & Poor's said it completed its review of its counterparty credit ratings on eight independent U.S. brokerage firms.

As a result, it placed the ratings of E*Trade Financial Corp. (CC counterparty credit and senior unsecured) and its subsidiary, E*Trade Bank (CCC+ counterparty credit), on CreditWatch with positive implications and affirmed the ratings of:

• BNY ConvergEx Group LLC (B+ counterparty credit and senior secured/stable);

• Charles Schwab Corp. (A counterparty credit and senior unsecured/stable);

• IBG LLC (BBB+ counterparty credit/stable);

• Jefferies Group Inc. (BBB counterparty credit and senior unsecured/negative);

• LPL Holdings, Inc. (B+ counterparty credit and senior secured/stable);

• Raymond James Financial, Inc. (BBB counterparty credit and senior unsecured/negative); and

• TD Ameritrade Holding Corp. (BBB+ counterparty credit and senior secured/stable).

The agency said the CreditWatch action on E*Trade reflects its belief that the company's debt exchange no longer meets S&P's criteria for a distressed exchange offering, because the value to the investors is unlikely to be less than what it promised on the original securities, and a review of the company's financial position, which has faced unique challenges from asset quality problems at its banking unit.

As for the other brokers, S&P said the ongoing downturn has pressured these companies, but so far they have mostly fared considerably better than large banks and universal bank brokerage peers despite their inherently less diversified business profiles and generally less substantial resources.

According to the agency, the companies' primary advantages are lower credit and market risk exposures, flexible cost bases and less-capital-intensive businesses.

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