The deal – if one were to happen – would come a month after both companies announced plans to eliminate commissions for most online trades – a move that is good for customers, but left analysts and investors in these stocks and wondered how Schwab and TD Ameritrade would compensate for the loss of income.
Schwab said that it would go to zero just a few days after minor rival Interactive Brokers Group ( IBKR ) said the commissions were ending. But Schwab's decision started an immediate price war, with TD Ameritrade ( AMTD ) E-Trade ( ETFC ) Fidelity, Ally Invest ( ALLY ) and other smaller web brokers who all quickly follow suit.
The traditional discount brokers have all faced intense competition from Robinhood, a trading app that was popular with millennials who launched a few years ago without a business model without a commission.
Schwab ( SCHW ) and TD Ameritrade were not immediately available for comment.
Shares in Schwab rose almost 1
5% in early trading, while TD Ameritrade's shares rose almost 30%. Interactive Brokers Group's share increased by 2%, but E-Trade shares were more than 3%.