Morgan Stanley Buys E-Trade For $13 Billion (bloomberg.com) 14
Morgan Stanley is buying E-Trade in a $13 billion deal that "will give a powerful Wall Street firm control of a major presence in the world of online brokerages," reports The New York Times. The deal highlights the tech-driven change felt in many markets, from the fixed-income market to the institutional market. Matthew Leising writes via Bloomberg: A report released Thursday by Greenwich Associates found an appetite for "new and better digital products and tools" among fixed-income investors is fueling competition at banks. Kevin McPartland, head of market structure and technology research at Greenwich, said the elimination of trading commissions by many firms including Charles Schwab Corp. has freed investors to choose a brokerage based on services alone. "A lot of it is based on the tools you provide to the end-user, and I'm not sure the institutional market is much different any more," he said in an interview. "Compute power is effectively limitless at this point."
In earlier research, Greenwich asked investors how they choose a top-tier bank, and 18% of respondents said technology services like execution algorithms and analytics were a factor. Breakthroughs in artificial intelligence, machine learning and the ability to mine huge pools of data have radically changed investing, McPartland said. The E*Trade deal, announced Thursday, helps Morgan Stanley add clients who are less wealthy than its traditional customers, but a state-of-the-art platform for investors was another draw. Morgan Stanley Chief Executive Officer James Gorman cited E*Trade's "innovation in technology" as a reason for the acquisition, according to a statement.
In earlier research, Greenwich asked investors how they choose a top-tier bank, and 18% of respondents said technology services like execution algorithms and analytics were a factor. Breakthroughs in artificial intelligence, machine learning and the ability to mine huge pools of data have radically changed investing, McPartland said. The E*Trade deal, announced Thursday, helps Morgan Stanley add clients who are less wealthy than its traditional customers, but a state-of-the-art platform for investors was another draw. Morgan Stanley Chief Executive Officer James Gorman cited E*Trade's "innovation in technology" as a reason for the acquisition, according to a statement.
Is this purchase subject to FTC approval? (Score:3)
because it probably should be very closely examined.
Re: Is this purchase subject to FTC approval? (Score:2)
Of course not, fed repo operations need more counter parties so why not bring hedge funds into the NotQE game. Best economy evar!!
Re: (Score:2)
Yeah... far too much consolidation in this industry already. Not a fan of Morgan Stanley, but been using ETrade for decades.
No real $ (Score:1)
Trying to do a late 90s Citibank? (Score:2)
Back in the late 90s, Citibank acquired a bunch of unrelated financial businesses in an attempt to get as big as possible, and as involved in customers' financial lives as possible. Maybe that's what's driving this? The only other thing I can think of is acquiring the customer base so they can try to sell them financial advice and asset management. Trade commissions have been set to $0 everywhere now, so they're sure not making money off everyone's stock trading. I think the only way to make money is hawkin
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You can make money in multiple ways. You get interest on the money deposited in margin accounts. You can provide broker markets on derivatives, and then just net them off to securitise them with exchange-traded derivatives. You can offer your own derivatives to customers, and price them how you want since you're the only possible counterparty.
Somebody please stop this (Score:3)
See also Boeing, the big banking companies, the cable companies, etc etc etc.
elimination of trading commissions (Score:4, Informative)
means the broker is making profit from either order flow or a spread. Either way, unless the buyer is placing a limit order it's not getting filled on an inside market. IE, it's not filled at the best available price in
front of the broker order. Additionally, if the order is filled on a limit order, chances are the buyer doesn't have the freshest data on price as the broker has.
If an institution can purchase a security cheaper than is listed or offered on a market, the market is no longer transparent and hence is designed to fuck retail investors/buyers.
Re: (Score:2, Informative)
Re: (Score:2)
'only reason not to use one is when you want to trade quickly'
Most retail investors don't place limit orders with their brokers, they trust the broker will place the order and provide the best available price. The only reason spreads are thin on a listed security is due to the fact that the specialist must fill any bid or ask for size that's not from his account first. Hence scalpers assure this.
On 'transparent' markets there is fragmentation that is supposed to be balanced by market makers. The pr
WHY ARE WE ALLOWING THIS? (Score:2)
God damn Ferengis!