Charles Schwab Reportedly in Talks to Buy TD Ameritrade

Charles Schwab, a San Fransisco-based discount brokerage company, is reportedly in talks to buy TD Ameritrade, another online brokerage based in the United States, according to CNBC.

The news outlet, which cites an unnamed source familiar with the matter, said a deal could be announced as early as this Thursday. According to FOX Business' Maria Bartiromo, Charles Schwab is buying Ameritrade for $26 billion, according to further sources.

A deal between the two players would be a big change for the US market and would create a giant in the brokerage industry with $5 trillion in combined assets.

Not only this, but Charles Schwab and TD Ameritrade are the two biggest publicly traded discount brokers in the United States. Schwab has a market capitalization of $57.5 billion, and Ameritrade has a $22.4 billion market cap, CNBC said.

There also appears to be the hope of further consolidation in the sector, as shares of Interactive Brokers and E-Trade both increased in premarket trading.

The US commission-free race

In recent months, brokerages have been in a commission battle, with more and more brokers trying to emulate commission-free trading, which first hit the market when Robinhood launched fee-free stock trading in 2013.

As Finance Magnates reported, Charles Schwab launched its own commission-free stock trading offering back in October, reducing the fee it charges to zero from $4.95 per trade. The new offering provides zero-fee trades on US and Canadian exchange-listed stocks and options, as well as exchange-traded funds (ETFs).

The financial services giant’s announcement followed on the heels of Interactive Brokers’ launch of the IBKR Lite, which routes trades through Market Makers Market Makers Market makers or called dealing desk brokers represent a type of broker that internalize flows and are taking the opposite side of a transaction submitted by their clients. The market making broker is only quoting a feed of prices to its clients. These feeds may or may not be the exact same as the prices quoted on the interbank market.Any order a client enters is processed internally and never goes out to the market, except in rare cases where a market making brokerage identifies a client as a v Market makers or called dealing desk brokers represent a type of broker that internalize flows and are taking the opposite side of a transaction submitted by their clients. The market making broker is only quoting a feed of prices to its clients. These feeds may or may not be the exact same as the prices quoted on the interbank market.Any order a client enters is processed internally and never goes out to the market, except in rare cases where a market making brokerage identifies a client as a v Read this Term rather than seeking best Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term through its smart order router.

TD Ameritrade then rose to the occasion and introduced commission-free trading. In particular, clients are able to access stocks and ETFs with no commission fees. TD Ameritrade also cut prices for options trading to $0.65 per contract.

So far, neither Charles Schwab nor TD Ameritrade have responded to media requests for comment.