Charles Schwab is in talks to buy TD Ameritrade, a source told CNN's Becky Quick on Thursday. The deal may be announced today.
Shares of TD Ameritrade rose 20% in trading on the report's priority values. Zwab's shares fell 3%.
The deal between Schwab and TD Ameritrade will consolidate the industry going through major disruptions. In recent months, all major brokers have announced plans to go for zero commissions.
Schwab was the first of the biggest players to make the move, eliminating commissions in early October. Schwab's competitors, including Fidelity and TD Ameritrade, were quickly followed.
Calls to Schwab and TD Amitride were not immediately returned.
Not paying trades is a boon for consumers, but it is left to brokers to try to find ways to make a profit. The deal between Schwab and TD Ameritrade will create a $ 5 trillion bahamas in combination.
Big brokerage firms have been under pressure to go to zero fees since 2013 when startup Silicon Valley company Robbinsley offered stock trading for free. Since then, the Vanguard group has lowered trades fees with the funds traded and JP Morgan Chase has launched its own free trading application. Interactive brokers have also announced a free product called IBKR Lite. Other players include ETrade Financial.
Schwab and TD Ameritrade are the two largest discount brokers traded in public trading. Schwab has a market capitalization of $ 57.5 billion, and Ameritride has a market capitalization of $ 22.4 billion,
Shares of discount brokers rose in hopes of further consolidation in the sector, with Interactive Brokers up 3.3% and E-commerce up 6.8%.
–Maggi Fitzgerald contributed to the report on CNBC.