Competition among brokerages continues to heat up

Mergers & Acquisitions

Sources indicate that the brokerage Charles Schwab is in talks to buy out rival TD Ameritrade. Some of you may recall that the latter swallowed up Scottrade not that long ago (2017). This year has already seen most major brokerages eliminate transaction fees as of October, a move that some credit tech startup Robinhood with driving since its entry into the space in 2012.

When news breaks of M&A activity, the equities of the companies involved often fare differently in the stock markets: that of the acquirer (in this case Schwab) tends to go down in price upon market participants learning of the situation, while the share price of the firm to be acquired (TD Ameritrade) usually rises in value. The stocks of other related corporations of comparable size and stature to the one targeted for takeover frequently gain in sympathy. We’ll see what the trading day holds for these businesses today, November 21, 2019.

edit #1: Share prices of both Charles Schwab (SCHW) and TD Ameritrade (AMTD) are up in pre-market trading.