(Reuters) – Charles Schwab Corp (SCHW.N) is in advanced talks to acquire TD Ameritrade Holding Corp (AMTD.O), a person familiar with the matter said on Thursday, in a deal that could exceed $26 billion and combine the two largest U.S. discount brokerages.
The companies are hoping their combination, which is bound to be scrutinized heavily by regulators, will give them more scale to withstand the impact of the industry’s move toward zero commission for trades, the source said.
If the deal negotiations prove successful, the companies could announce an agreement in the coming days, the source added, asking not to be identified because the matter is confidential.
Schwab and TD Ameritrade did not respond to requests for comment.
Shares of TD Ameritrade surged 16% to close at $48.38, giving it a market value of $26.2 billion, after CNBC first reported on the potential deal. Charles Schwab shares ended 7.3% higher at $48.03, giving the company a market value of $61.6 billion.
Pressure on the discount broker business model has been rising in recent years, as companies spend more on their trading platforms to keep up with technological advances, while lowering fees to attract more customers.
With disruptors such as Menlo Park, California-based Robinhood Markets Inc rapidly gaining market share by eliminating stock trading commissions, large brokers were forced to do the same: Schwab was first last month, covering online trading of stocks, ETFs and options, followed by others such as Fidelity Investments, E*Trade Financial Corp (ETFC.O) and TD Ameritrade.
While the brokerage industry has benefited from the stock market rally