-=TD Ameritrade (AMTD) to be acquired by Charles Schwab (SCHW) for $26 bln

 TD Ameritrade to be acquired by Charles Schwab (SCHW) for approximately $26 bln in all-stock transaction

Under the agreement, TD Ameritrade stockholders will receive 1.0837 Schwab shares for each TD Ameritrade share, which represents a 17% premium over the 30-day volume weighted average price exchange ratio as of November 20, 2019.

With today's announcement, the TD Ameritrade Board of Directors has suspended its previously disclosed CEO search, naming Stephen Boyle, TD Ameritrade EVP and CFO, as the company's interim President and CEO. Mr. Boyle will assume leadership of the company effective immediately, guiding its management team through its fiscal 2020 plan and the proposed integration with Schwab.

With anticipated synergies, the deal is expected to be 10-15% accretive to GAAP EPS and 15-20% accretive to Operating Cash EPS in year three, post-close. Focusing on expenses, current estimates are for approximately $1.8 to $2 billion run-rate expense synergies, which represents approximately 18-20% of the combined cost base. Some of the expense synergies the combined firm expects to realize will come from elimination of overlapping and duplicative roles. Additional synergies are expected to be achieved through real estate, administrative and other savings. Details on these synergies will be shared at a later date, once the integration process is underway.

TD Ameritrade (AMTD) to be acquired by Charles Schwab (SCHW) ?

• Charles Schwab (SCHW) is in talks to acquire TD Ameritrade (AMTD) for $26 billion, according to reports from CNBC and FOX Business. The move comes after industry disruption essentially forced brokerage firms to cut trading commissions to zero. 

AMTD daily

This week's biggest % winners & losers : Sept 30 - Oct 4, 19 (wk 40)

The following are this week's top percentage gainers and losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

This week's top % gainers

• Healthcare: ENDP (3.82 +19.75%), ARQL (8.29 +18.43%), SRPT (88.25 +17.67%), CDNA (25.37 +16.22%), RGNX (38.49 +15.41%), ARWR (30.6 +13.5%)
• Materials: SBGL (6.36 +14.39%)
• Consumer Discretionary: TSG (20.92 +38.82%)
• Information Technology: RNG (163.3 +31.85%), AVYA (13.23 +28.45%), OKTA (116.53 +20.06%), COUP (148.32 +15.97%)
• Energy: TOO (1.53 +30.77%), DHT (6.88 +14.1%), STNG (33.65 +14.07%), FRO (10.28 +12.72%)

This week's top % losers

• Healthcare: GTHX (23.34 -31.29%), LNTH (19.74 -22.04%), ANGO (14.6 -19.02%)
• Materials: SXC (5.31 -15.71%)
• Consumer Discretionary: GPRO (3.97 -21%), TAST (6.8 -16.46%)
• Information Technology: CASA (6.22 -20.47%)
• Financials: AMTD (33.7 -28.25%), ETFC (36.4 -15.87%). SCHW (35.67  -13.86%), IBKR (47.59  -10.86%)
• Energy: NBR (1.57 -18.65%), MDR (1.63 -18.5%), QEP (3.15 -17.54%), CDEV (3.8 -15.95%)
• Consumer Staples: UNFI (7.45 -34.76%), CALM (37.97 -16.4%)

TD Ameritrade (AMTD) and E*Trade (ETFC) eliminate trading commissions

 On October 2, shortly after the market closed, E*TRADE Financial Corp announced that its online brokerage would cut its base commission rate to $0, following in the footsteps of Charles Schwab and TD Ameritrade. 

• Now that E*TRADE, TDA, and Interactive Brokers offer some form of free trading, the industry is closely waiting for Fidelity, TradeStation and other online brokers to respond. 

E*TRADE Financial Corporation (NASDAQ: ETFC) today announced it will eliminate retail commissions for online US listed stock, ETF, and options trades. It will also reduce the options contract charge to $0.65 per contract for all traders while maintaining its active trader pricing at $0.50 per contract. These changes will take effect on October 7, 2019.

• Press release; October 2, 2019
• investopedia.com article
• charts https://finviz.com/screener.ashx?v=211&t=AMTD,ETFC,IBKR,SCHW&ta=0&o=-change

The current commission schedule shows tiered rates, depending on the client's trading frequency. The base rate was $6.95, dropping to $4.95 for clients who traded more often than 30 times per quarter. Options were charged at $6.95 per leg with $0.75 per contract; active traders paid $4.95 per leg with $0.50 per contract. 

TD Ameritrade's commission-free trading starts October 3.

=Charles Schwab (SCHW) to eliminate commissions for stocks, ETFs

Charles Schwab to eliminate commissions for stocks, ETFs and options listed on U.S. or Canadian exchanges, across all mobile and web trading channels;  

• Starting on Oct. 7, Schwab, which holds about $3.72 trillion in client assets, will be slashing its trading commission cost for U.S. stocks, ETFs and options from the previous $4.95 to zero. Trading options will continue to cost 65 cents per contract. 
• This comes after Interactive Brokers (IBKR) last week announced IBKR Lite, which will offer zero commissions on US exchange-listed stocks and ETFs, no minimums, and free market data without its IB SmartRouting system.
• Commissions have been declining for decades but the rise of commission-free trades from start-up trading app Robinhood accelerated the decline in recent years. Robinhood is expected to IPO this year or next.
• TD Ameritrade (AMTD) and E*TRADE (ETFC) seem likely to follow suit to remain competitive.  
• Schwab, TD and ETrade all saw their stock prices take an initial hit on Tuesday following Schwab's pre-market announcement. On a day that saw the S&P 500 Index decline by 1.2%, Schwab shares fell by nearly 10%, TD shares lost nearly 26% and Etrade shares declined nearly 17%.
• https://finviz.com/screener.ashx?v=211&t=AMTD,ETFC,IBKR,SCHW&ta=0&o=-change

Almost forty five years ago, Chuck Schwab made investing more accessible to all Americans with the concept of low commissions to buy and sell stocks. On October 7, 2019, in conjunction with the release of Mr. Schwab's latest book, "Invested," Charles Schwab & Co., Inc. is removing the final barrier to making investing accessible to everyone by eliminating commissions for stocks, ETFs and options listed on U.S. or Canadian exchanges, across all mobile and web trading channels1. Clients trading options will continue to pay 65 cents per contract.

Beginning October 7, 2019, the company will reduce U.S. stock, ETF and options online trade commissions from $4.95 to zero. And with no minimum account size3 to open a full featured Schwab brokerage account, every investor, no matter how large or small, can benefit from the expertise and support of a firm that has been entrusted with more than $3.7 trillion in client assets. Every Schwab client using our web and mobile channels automatically qualifies for the new pricing, without opening a new account, making a new deposit or maintaining a minimum balance of any type.

=Interactive Brokers (IBKR) will offer zero-fee trades on stocks and ETFs

Interactive Brokers (IBKR) will offer zero-fee trades on stocks and ETFs via a new service, as it looks to broaden its appeal with retail investors. IBKR stock retreated slightly Thursday, with TD Ameritrade (AMTD), E-Trade (ETFC) and Charles Schwab (SCHW) falling harder.

The new IBKR Lite service will offer unlimited trades on U.S.-listed stocks and exchange traded funds for a zero trading commission. It debuts in October. It will have no account minimums or inactivity fees.

Interactive Brokers will rebrand its existing low-fee stock trading offering as IBKR Pro.

Fee wars have engulfed financial services firms. But to date, online brokers Schwab, TD Ameritrade and E-Trade only allow customers to trade select ETFs for no commission. They've also lowered fees or removed minimums to trade stocks and ETFs, as investing apps like Robinhood capture a new generation of investors.

Customers can switch between IBKR Lite and IBKR Pro, subject to conditions. Pro clients will get potentially better pricing on stock trades through smart routing technology. Price improvement may matter less to regular investors.

Interactive Brokers' stronghold is active traders and institutions, but it's looking to tap a broader audience.

IBKR Stock, Brokerage Stocks Lagging
Interactive Brokers stock fell 0.4% to 51.51 on the stock market today, well off intraday lows of 49.36. Charles Schwab stock lost 2.2%, E-Trade stock tumbled 4.8% and AMTD stock dived 6.5%. Schwab charges $4.95 for stock trades, and has relatively high exposure to asset management. E-Trade and Ameritrade charge $6.95 per trade.

J.P. Morgan Chase (JPM) unveils its new investing app, You Invest

Shares of Charles Schwab fell 4 percent, TD Ameritrade fell 6.7 percent, E-Trade fell 4.8 percent and Interactive Brokers fell 3.1 percent in premarket trading. The move by J.P. Morgan aggravates a cold-blooded price war, with the globe's largest managers fighting for clients with low-cost options. J.P. Morgan will launch its new service next week.

• J.P. Morgan’s new digital brokerage service comes with free trades, portfolio building tool and access to equity research.
• The bank’s new trading service starts next week and will be available to its 47 million mobile or online users.
• All customers get 100 free stock or ETF trades in the first year. Those with Chase Private Client get unlimited trades.
• CEO Jamie Dimon hinted at this move in 2016, citing Amazon Prime as his inspiration.

   

The move, more than two years in the making, instantly intensifies the price war that is occurring throughout the investing landscape. Whether it’s executing trades, managing portfolios or simply owning mutual funds and ETFs, costs have been collapsing on Wall Street. Among brokerages, the free trading app provided by Robinhood Markets has gained attention recently for attracting more than 5 million users, and a $5.6 billion valuation, in just a few years. 

J.P. Morgan, the biggest U.S. bank, has a distinct advantage over many competitors: It already has financial ties with half of American households. When its engineers flip a switch in coming days, more than 47 million people who already use the company’s banking app or website will gain access to the new service, called You Invest.

“There are customers out there who may not want to trust their credentials or their money to an app of the month,” said Jed Laskowitz, a J.P Morgan veteran who runs You Invest. ”We’re thinking about what’s right for our customers, helping them get invested, and stay invested and diversified. ”

TD Ameritrade (AMTD) reported earnings on Mon 23 July 2018 (a/h)

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TD Ameritrade beats by $0.10, beats on revs; announces dividend 

• Reports Q3 (Jun) earnings of $0.89 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus of $0.79; revenues rose 48.4% year/year to $1.38 bln vs the $1.35 bln Capital IQ Consensus.
  • The Company gathered $20 billion in net new client assets for the quarter
  • Average client trades per day of approximately 784,000, up 54 percent year over year.
  • Net interest margin 1.94% vs. 1.55% in same period a year ago
• The Company has declared a $0.21 per share quarterly cash dividend, payable on August 21, 2018 to all holders of record of common stock as of August 7, 2018.

TD Ameritrade (AMTD) reported earnings on Tue 18 July 2017 (b/o)

** charts after earnings **

 

TD Ameritrade beats by $0.02, beats on revs :

• Reports Q3 (Jun) earnings of $0.44 per share, $0.02 better than the Capital IQ Consensus of $0.42; revenues rose 11.1% year/year to $931 mln vs the $897.98 mln Capital IQ Consensus.
  • Record net new client assets of approximately $22.0 billion, an annualized growth rate of 10 percent.
  • Average client trades per day of approximately 510,000, up 10 percent year over year.
  • Interest rate-sensitive assets(2) of $120 billion, up 6 percent year over year. 
• "We're pleased to report another quarter of strong growth across all of our businesses," said Tim Hockey, TD Ameritrade president and chief executive officer. "Investors remained broadly engaged, with strong trading volumes despite persistent low market volatility. We're seeing healthy trends in new account growth and asset inflows from both new and existing clients, and our institutional channel continues to break records for asset gathering. Our technology pipelines are full of enhancements that address client irritants and introduce new, cutting edge solutions. We have a lot to feel good about, but as we plan for the close of the Scottrade acquisition on the horizon, we have much more yet to do."

TD Ameritrade (AMTD) reported earnings on Tue 19 July 2016 (b/o)

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TD Ameritrade (AMTD) reported earnings on Tue 19 Apr 2016 (b/o)

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TD Ameritrade reports EPS in-line, misses on revs :

• Reports Q2 (Mar) earnings of $0.38 per share, in-line with the Capital IQ Consensus of $0.38; revenues rose 5.4% year/year to $846 mln vs the $858.14 mln Capital IQ Consensus. Net new client assets of ~$14 billion, an annualized growth rate of 8%. Record average client trades per day of ~509,000, an activity rate of 7.6%.
• "Over what was a volatile quarter for the markets, we gathered $14 billion in net new client assets and helped our clients place a record 509,000 trades per day, on average."

TD Ameritrade (AMTD) reported 4Q earnings on Wed 20 Jan 2016 (before open)

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** charts after earnings **

 

TD Ameritrade beats by $0.03, reports revs in-line :

• Reports Q1 (Dec) earnings of $0.39 per share, $0.03 better than the Capital IQ Consensus of $0.36; revenues fell 0.9% year/year to $812 mln vs the $811.51 mln Capital IQ Consensus.
• Average client trades per day of approximately 438,000, an activity rate of 6.6%
• "Asset gathering is going particularly well, as we delivered our second best quarter ever -- and a double-digit annualized growth rate. With the Federal Reserve raising interest rates for the first time in nine years and continued execution on our growth strategy going well, we are well-positioned for the current environment. We will continue along our path, investing thoughtfully in growth and building our long-term earnings power for the benefit of our clients, shareholders and associates."
• "Interest rate-sensitive assets ended the quarter at a record $110 billion, driven largely by growth in client cash balances -- both as a result of strong organic growth and shifting investor sentiment in an uncertain market environment."
• Repeats 2016 outlook ranges in today's investor presentation; sees FY16 EPS of $1.45-1.75 vs $1.63 Capital IQ Consensus Estimate; sees pre-tax margin of 39-42%.