Charles Schwab is buying TD Ameritrade for $26 billion.
The move doesn’t come as a major surprise. Deals were expected in the industry, because the business model for discount brokers has fallen apart this year.
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The major brokers have dropped stock- and ETF-trading fees to zero. And low interest rates have hurt results, because the brokers depend on earning interest from their clients’ deposits. Schwab makes most of its money from interest income. TD Ameritrade makes a higher proportion of its revenue from fees, and was considered a potential acquisition target. “We will take a look at anything that makes financial and strategic sense,” Ameritrade CEO Tim Hockey told analysts last month.