Legend: ✅ direct source ☑️ 3rd-party source 💭 interpretation
Welcome back, insiders! You probably already know..
- Charles Schwab the Sanfransico-based bank and broker bought TD Ameritrade back in late 2019. TD is/was one of the leading discount-broker providers, most notoriously known for it's ThinkorSwim platform aka TOS
- There's a lot of rumors spreading regarding retail's ability to keep trading on TOS
- So if you're an active trader or investor looking for the truth, this video is for you.
- Here's what we'll discuss:
- This all started back in 2019 so we'll catch up on the whole timeline
- Once we get caught up we'll also discuss the road map ahead for TD users
- We'll review risk//rewards for users
- Including changes to your account
- Changing perks like the interest on your idle cash
- Effects on TOS
- Clear up Margin and settlement rumors
- And no finance video would be complete without a look at some charts.
- We'll wrap up with SCHW price analysis since the merger
- & analyze some comps
- Also change of background today, we're in Austria.
Transition Process and Timeframe
Start Date & Transition Phases
- ✅ 11/25/2019 Official PR (Pressroom Schwab)
- ✅ All-stock transaction valued at approximately $26 billion - a 17% premium over the 30-day volume weighted average price exchange ratio as of November 20, 2019
- 💭 Typical for acquisitions to have a premium
- ☑️ Google buying HubHubspot for 30% premium spot for 30% premium (Fool)
- ✅ 12 million client accounts, $1.3 trillion in client assets and $5 billion in annual revenue. We expect this added scale to lead to lower operating expenses as a percentage of client assets (EOCA), which helps fund enhanced client experience capabilities, improve the company’s competitive position and further its financial success.
- ✅ All-stock transaction valued at approximately $26 billion - a 17% premium over the 30-day volume weighted average price exchange ratio as of November 20, 2019
Completion & Further Roadmap
- ✅ Start combining the firms in 2020 (About Schwab FAQ).
- ✅ The integration is expected to take between 18 and 36 months
- ✅ Client account transition to Schwab began with a small group in February 2023, further transitions planned in stages throughout 2023 (4 phases) and a small group in early 2024. (Schwab)
- ✅ This phased approach was chosen to ensure a smooth client experience and to avoid trading disruptions
- ✅ By November 2023, Schwab had completed its fourth round of client account conversions, including a significant number of trader clients and ToS users.
- ✅ Schwab plans to finish transitioning all remaining Ameritrade client accounts in the first half of 2024, having already converted nearly 90% of Ameritrade accounts and 100% of the Registered Investment Advisor (RIA) firms previously custodied at Ameritrade (About Schwab).
Risk/Reward & Trading Platforms
Risks
- ✅ Integration Challenges: As with any merger of this scale, there could be operational and integration challenges that may temporarily affect clients' trading experiences. (About Schwab)
- 💭 TOS active trading delays / freezes, lots of traders complaining about, no hard evidence
- ✅ Staff Reductions: The integration will involve staff reductions, primarily in overlapping and duplicative roles, which is a standard part of achieving overall expense synergies in such mergers (About Schwab).
- 💭 TD had pretty good support, 8/10 I'd give it. Schwab discusses a lot about reducing redundancies like duplicate staff. If they cut too much maybe issues going forward? Idk. I used to like calling TD support if there were any little issues or even random questions.
Reward (Benefits)
- ✅ Enhanced Trading Platforms: The acquisition brings together the ToS platforms with Schwab’s trading capabilities, including Schwab.com and Schwab Mobile. (Schwab Trading)
- 💭 Not platforms I've heard traders care about, probably a big reason Schwab wanted TOS, utilize order for payment flow. What was popularized by Robinhood.
- Best the have to offer (Schwab)
- 💭 Thinkpipes A powerful, innovative platform designed to help advisors trade the way they want.
- ✅ Innovative and Client-centric Products: The merger is expected to expand Schwab's "no trade-offs" approach by combining the best offerings from both firms, including leading trading platforms, investor education, retirement services, and asset management (About Schwab).
- Price Reductions (Schwab)
- ✅ Commissions (Schwab)
- $0 Stocks ETF's
- $0 base options + $0.65 per contract, $0 Mutual Funds
- $6.95 commission per over-the-counter stock trade.
- $2.25 futures and futures options per contract, plus exchange and regulatory fees.
- $0 commission for forex currency trading. Trade cost is reflected in the bid/ask spread.
- 💭Call Schwab, ask to get options lowered, plus test out there support
- TD = $0 base options + $0.65 per contract at TD
- TD = $6.95 commission per over-the-counter stock trade.
- ✅ Current margin rates 11.825% - 13.57%
- 💭 TD was 12.75% - 14.75%
- ☑️ As of February 2024, Charles Schwab offers up to 0.5% interest on USD uninvested funds in your trading account. Same as Robinhood. (BrokerChooser).
- ☑️ TD Offered up to 0.4% interest on USD uninvested funds in your trading account (BrokerChooser).
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- ✅ Margin Requirements on Certain Securities (Schwab)
- 💭 No mention of settling period holdings
- ✅ T+1 settlement period, May 28, 2024 (Schwab)
- 💭 Could fuel a momo wave, when I had did my $25k small account challenge I started with a $6k account and did 3 $1k trades on Monday and again Tuesday, then on Wednesday I had Monday trades settled so now I can do 6 $1k trades each day. BIG Difference for market vol potentially. DOUBLE.
Stock Chart SCHW
- ✅ 13.52% HOD & 6.69% EOD Green Day On Merger News
- ✅ ~47% up since merger news April 11th EOD
- 💭 Is there a play here? IDK $130B MC
- ✅ Already one of the highest priced banks (Finviz)
- 💭 Feels weak, divergence on price inc and strength (vol)
