Charles Schwab is in talks to buy TD Ameritrade, a source told Becky Quick on CNBC on Thursday. The deal could be announced today.
TD Ameritrade's shares rose 20% in the pre-market trading of the report. Schwab shares were down 3%.
The deal between Schwab and TD Ameritrade will consolidate an industry that is undergoing massive disruption. In recent months, all major brokers have announced plans to switch to zero commissions.
Schwab was the first major player to make the move, eliminating commissions in early October. Schwab's competitors, including Fidelity and TD Ameritrade, were fast-tracked.
Calls to Schwab and TD Ameritrade were not immediately returned.
No transaction fees are a boon to consumers, but left brokers scrambling to find one. ways to maintain profits. The deal between Schwab and TD Ameritrade would create a $ 5 trillion combined behemoth.
Major brokerages have been under pressure to reach zero fees since 201
Schwab and TD Ameritrade are the two largest publicly traded discount brokers. Schwab has a market cap of $ 57.5 billion and Ameritrade has a market cap of $ 22.4 billion. Other players include ETrade Financial.
Discount brokerage stocks rose in hopes of further consolidation in the sector, with Interactive Brokers up 3.3% and e-commerce up 6.8%.
– CNBC's Maggie Fitzgerald contributed to this report.