Charles Schwab Corp, the largest U.S. discount brokerage, is in talks to buy TD Ameritrade and a deal could be announced as early as Thursday, CNBC reported, citing a source familiar with the matter.
Shares of TD Ameritrade, which has a market capitalization of $22.41 billion, rose more than 20% to $50.01 in trading before the bell. Charles Schwab dipped 3% to $43.40.
CNBC did not provide any financial details on the deal, but Fox Business pegged the deal value at $26 billion, citing sources.
Neither companies responded to Reuters' requests for comment.
A deal between Charles Schwab and TD Ameritrade could be seen as a strategic response to recent disruption in the industry as nimbler, new-age startups grab market share by eliminating commissions on stock trades.
"This is largely about scale," Argus Research analyst Stephen Biggar said. "With several other self-directed firms still remaining as large players, I don't suspect regulatory approval would be an issue."
Last month, Charles Schwab became the first major brokerage to eliminate commissions on online trading of stocks, ETFs and options, a move that was quickly followed by rivals, including Fidelity Investments, E*Trade Financial ETFC.O and TD Ameritrade.
Fintech startups such as Menlo Park, California-based Robinhood are among the new wave of companies that have been capturing market share in recent years by offering commission-free stock trades.
If a deal between Schwab and TD Ameritrade were to go through, the combined entity would control a majority of a market that has been ravaged by price wars between the biggest players.
The two companies will have combined assets of $5 trillion, with Schwab alone managing assets of $3.85 trillion as of October end.
(Reporting by Tamara Mathias and Anirban Sen in Bengaluru; Editing by Maju Samuel and Anil D'Silva) ((Tamara.Mathias@thomsonreuters.com; within U.S. +1 646 223 8780, outside U.S. +91 806749 1208;))