Charles Schwab (NYSE: SCHW) saw its shares take a quick hike soon after Thursday’s opening bell, amid media reports the firm is in talks to buy TD Ameritrade (NASDAQ: AMTD) in a deal that materialize as early as today.
The reports go on to say the deal between Schwab and TD Ameritrade would create a behemoth with more than $5 trillion in combined assets, about $3.8 trillion from Schwab and $1.3 trillion from TD Ameritrade.
The proposed deal would consolidate an industry going through massive disruption. In recent months, all of the major brokerages have announced plans to go to zero commissions.
Schwab was the first of the major players to make the move, eliminating commissions in early October. Schwab’s competitors, including Fidelity and TD Ameritrade, were quick to follow.
Sources say Schwab CEO Walter Bettinger has been designated to run the combined company. TD Ameritrade CEO and President Tim Hockey said in July he is leaving the brokerage in February 2020.
Last week, Schwab showed that the free trading is paying off in terms of new client accounts. It said it added 142,000 new brokerage accounts in October, 31% more than the number of new clients added in September and a 7% jump from October of last year. The new accounts brought Schwab’s client assets to a record $3.85 trillion.
Schwab and TD Ameritrade are the two biggest publicly traded discount brokers. Schwab has a market capitalization of $57.5 billion and Ameritrade’s is at $22.4 billion.
SCHW shares soared $3.66, or 8.2%, to $48.41, while AMTD shares galloped $8.38, or 20.3%, to $49.76
