Releasing the results, US Bancorp Piper Jaffray managing director Stephen Franco asserts that while trading volumes declined, the industry continued to grow, adding 1.3 million new accounts. In addition, assets held in online brokerage accounts remained strong, with a sequential decline of only 2.6 percent.

"After watching online trading volumes increase 163 percent over the previous six months, the online brokers were poised for a fall," says Franco. "The market corrections of April, combined with the move toward the seasonally slow summer months, led to the online brokerage industry's largest decline ever."

Assets held in online brokerage accounts declined only a modest 2.6 percent to $1.1 trillion, he adds, in the face of a 13.3 percent decline in the Nasdaq Composite over the three-month period.

Other highlights:

* Schwab retained its No.1 ranking and increased its market share by 60 basis points with the acquisition of direct-access broker Cybercorp. While Schwab did increase its market share in absolute terms, when factoring the combined market share of Schwab and Cybercorp from the previous quarter, the combined Schwab lost 130 basis points;

* the customer attracted to the "narrow and deep" philosophy of pure online brokers Ameritrade and Datek, was less deterred than the average online investor. Both Ameritrade and Datek saw their online trading volumes decline 14 percent, exceeding the industry average of a 23 percent decline;

* Datek's new promotional campaign resonates well with investors, as the company added 101,000 new accounts, the second consecutive quarter of strong account growth for the company;

* the top ten online brokers continue to dominate the industry with over 90 percent market share in trading volumes, 89 percent of total accounts and 92 percent of total assets. In a turbulent market, these companies have the resources to weather the storm. The long-term survival of many of the other 150 online brokers remains in doubt;

* E*Trade's revenue diversification strategy appears to be paying early dividends, as its assets per account declined just 11 percent since the beginning of 2000, compared with 28 percent for Ameritrade, 21 percent for Waterhouse and 18 percent for Datek.