Online Brokers TradeKing, Zecco To Merge
May 15 2012 - 3:19PM
Dow Jones News
Online brokerage firms TradeKing Group and Zecco Holdings
announced their merger on Tuesday, a tie-up meant to lure trades
from larger rivals.
The deal would consolidate a client base of around 500,000
accounts and place it sixth behind industry leaders. The financial
terms of the deal were not disclosed.
"It's all about creating a firm with the resources to challenge
the top five," Don Montanaro, chief executive of TradeKing, told
Dow Jones Newswires, referring to Charles Schwab Corp. (SCHW), TD
Ameritrade Holding Corp. (AMTD), E*TRADE Corp. (ETFC), Fidelity
Investments and Scottrade Inc.
Charles Schwab held roughly 8.7 million funded client accounts
at the end of March, according to Evercore Partners. TD Ameritrade
had around 5.7 million, and E*TRADE about 3.9 million. Smaller
rivals like Interactive Brokers Group Inc. (IBKR) had about 200,000
client accounts.
Fort Lauderdale, Fla.-based TradeKing is concentrated on
equity-options trading, while San Francisco-based Zecco offers
foreign exchange-trading in addition to stocks and options.
TradeKing clients would gain access to Zecco's foreign-exchange
trading capabilities.
"In the end, the merger will give them more scale, but they'll
still be much smaller than the E*TRADEs and Ameritrades of the
world," said Richard Repetto, brokerage analyst with Sandler
O'Neill. "I just don't think they have the same marketing
budget."
Both brokers have made the integration of client interaction an
integral part of their trading platforms since launching in 2005.
Capabilities for traders to communicate with each other, as well as
with the firms' analysts, on forums are built into both platforms.
Separately, TradeKing clients can open and manage accounts through
Facebook.
The deal, if approved by regulators, would create a large,
integrated financial social network, said Michael Raneri, chief
executive officer of Zecco.
While its social-network capabilities are intriguing, it's also
too early to tell how widely retail investors will adopt the newly
merged exchanges on social-media sites, said Chris Allen, retail
brokerage analyst with Evercore Partners.
The deal marks the latest in an ongoing consolidation push among
discount brokerage firms, much of which has focused on adding heft
in derivatives trading. Schwab last year acquired Chicago-based
OptionsXpress Holdings for about $1 billion, following on TD
Ameritrade's 2009 acquisition of derivatives-focused brokerage
Thinkorswim. Last year, Tokyo-based online securities brokerage
Monex Group bought another smaller U.S. player, Tradestation.
-By Chris Dieterich and Alexandra Scaggs, Dow Jones Newswires;
212-416-2611; christopher.dieterich@dowjones.com;
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