Schwab last month announced plans to eliminate commissions for U.S. stocks, exchange traded funds and options. The move forced other brokerages to follow suit and triggered a slump in the shares of such firms, with TD Ameritrade among the hardest hit.
TD Ameritrade has lost 11% since then, valuing the company at $22 billion. Schwab gained 7% in the same period, giving it a stock market value of $57 billion.
Todd Rosenbluth, director of ETF research at CFRA Research, said that a tie-up of the two firms could help address the burn of zero commissions with increased scale.
“It would reduce the likelihood that investors bounce around,” he said. “They’d have a go-to destination.”
He added that the same principle would apply for independent advisers, who increasingly choose between the two firms for clearing and trading services. “There’s scale benefits for them to provide,” he said.
CNBC also reported earlier the firms were in talks, with a deal likely as soon as today.
This article was provided by Bloomberg News.
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