People walk past TD Bank in Brooklyn, New York.
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Charles Schwab is in talks to buy TD Ameritrade, a source told CNBC Becky Quick on Thursday. An agreement can be announced today.
TD Ameritrade shares jumped 20% in premarket trading on the report.
The agreement between Schwab and TD Ameritrade will consolidate industries that have experienced major disruptions. In recent months, all major brokers have announced plans to go to zero commission.
Schwab was the first of the main players to move, eliminating commissions in early October. Schwab's competitors, including Fidelity and TD Ameritrade, were quick to follow.
Calls to Schwab and TD Ameritrade were not immediately returned.
Not charging fees for trading is a boon for consumers, but it makes brokers scramble to find ways to maintain profits. The agreement between Schwab and TD Ameritrade will create a giant with a combined asset of $ 5 trillion.
Large brokerage firms have been pressured not to charge fees since 2013 when the beginning of Silicon Valley Robinhood offered stock trading for free. Since then, Vanguard Group has cut the cost of trading funds traded on the stock exchange and J.P. Morgan Chase starts his own free trade application. Interactive Brokers also announced a commission-free product called IBKR Lite.
Schwab and TD Ameritrade are two publicly traded discount brokerages. Schwab has a market capitalization of $ 57.5 billion, and Ameritrade has a market capitalization of $ 22.4 billion. Other players include ETrade Financial.
Discount brokerage shares rose on hopes for further consolidation in the sector, with Interactive Brokers up 3.3% and E-Trade surging 6.8%.