Online dealer Charles Schwab received antitrust approval from the Justice Department for its acquisition of TD Ameritrade, sources told CNBC’s David Faber on Thursday.
Allotments of Schwab gained 5.5% and TD Ameritrade jumped 9%.
Schwab announced last November it would buy rival broker TD Ameritrade in the all-stock traffic valued at $26 billion. The merging of the two biggest publicly traded discount brokers will create a mammoth with diverse than $5 trillion in client assets, $3.8 trillion from Schwab and $1.3 trillion from TD Ameritrade.
The gain calls for 1.0837 Schwab shares for each shares of TD Ameritrade, sources said. The companies expect the deal to shut up shop in the second half of 2020.
The deal raised concerns about Schwab’s dominance in the registered investment advisors space, but the DOJ did not see any contravention, sources told Faber. The new company will hold over a third of the registered investment advisor custody make available, JMP Securities estimates.
While some Wall Street analysts are worried the consolidation of two of the biggest players could gonfalon antitrust issues, the company will capture only about 11% of client assets in the retail financial secondments market, Schwab said at the time the deal was announced.
The news was first reported in a tweet from Faber on Thursday morning.
Consolidation in the brokerage persistence was expected, given the massive disruption that has taken place, with all the major brokers dropping commission costs at the end of last year. Schwab was the first major player to make the move, eliminating commissions last October.
The big online stockjobbers saw new accounts soar in the first quarter, when stocks experienced the fastest bear market and the worst first put up in history.
Charles Schwab CEO Walt Bettinger said in an earnings release that the broker saw “monumental volumes” of employment from the 609,000 new broker accounts added in the first quarter, with over 280,000 in March alone. TD Ameritrade guessed last month that retail clients opened a record 608,000 new funded accounts in the first quarter, with profuse than two-thirds of those opened in March.
The broker industry’s next approval is likely to be Morgan Stanley’s purchase of E-trade, which isn’t expected to flag any antitrust issues, analysts told CNBC.
Subscribe to CNBC PRO for exclusive perceptions and analysis, and live business day programming from around the world.