Potential ETrade take-over by TD Ameritrade

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Many people have raised questions whether opening an account with ETrade still makes sense given the possibility of a takeover by TD Ameritrade.

Our consulting arm SVA did some market research on similar acquisitions before and whether it had any impact on the existing customer base of a brokerage firm. Some of the deals included the recent take over of ThinkorSwim by TD Ameritrade. The conclusion of the report were quite interesting and its synopsis is shared below.

Online brokerage industry is in a very dynamic state today. It is seeing a slew of new firms joining the market which are trying to specialize in targeting specific market segments with ultra low rates like Trading King: Tradeking ($4.95 / trade) or lightning fast trading speeds from LightSpeed.

On the other hand we see a lot consolidation also happening in the industry with takeovers and mergers. Omaha, Nebraska based brokerage firm TD Ameritrade has acquired 10 small brokerage firms since 2001 including the latest takeover of Thinkorswim.com. The general trend after acquisition is that the new company keeps following the successful practices of the old company . What basically happens in lay man terms is that every brokerage firm needs to keep a minimum capital ratios to be in good condition and service their customers. As economy moves towards recession, smaller companies like e-trade in spite of having strong fundamentals find it difficult to maintain such ratios. A possible take-over by TD Ameritrade provides Etrade with the financial strength and provides its consumers the confidence that the firm is not going to become solvent.

The conclusion of the report is that it now makes even more sense to open an account with Etrade because not only it would keep on providing excellent service like it always has. But now it also has the financial backing of a very strong company. What more do you expect as an investor? Read more reviews about ETrade at Etrade Stock Broker Reviews. To get more information about ETrade, please visit ETrade Accounts