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In answer to your question regarding the TDAM - SCHW merger’s impact on Think or Swim, I wrote a more in-depth blog about the merger. (See Section Entitled “Technology Be Thy Name” for a more direct answer regarding ThinkorSwim)Charles Schwab to Buy TD Ameritrade $26 billionMcCabe Hurley, November 22, 2019On Thursday, November 21, 2019, the newswires announce Charles Schwab (SCHW.N) to buy TD Ameritrade (AMTD.O) for a $26 billion stock swap. With Charles Schwab’s share price at $47.98, AMTD shareholders will receive 1.0837 shares for each AMTD share held.Details and timing of the deal haven’t been announced by the Companies. But by all appearances, the deal is done. Never say never, but here’s how it’s shaping up.Charles Schwab & TD Ameritrade Merger DetailsAt $52 a share, the takeover premium of AMTD is ~30%, versus Wednesday nights close of $40/ share.The merger is anticipated to close in 9-12 months (2H20). After closing, integrating the two companies is expected to take 18 – 36 months.The corporate headquarters of the New Company is expected to be Schwab’s new location at Westlake, Texas. Ameritrade has strong family ties to Nebraska, with the former COO, Pete Ricketts, now Governor of Nebraska. Pete is the son of Ameritrade found Joe Ricketts. So expect Ameritrade to lobby for continued presence in Omaha.Revenue Synergies of AMTD & SCHWThe two firms have a nice M&A story. Charles Schwab was an early entrant in the field of discount brokerage. TD Ameritrade has become a juggernaut with retail. But that lone wouldn’t make for a compelling story. It’s their other revenue sources where we find a compelling story.Schwab spent the last decade or so building up their mutual fund/ETF as well as their custody platform for Registered Investment Advisors (RIA).During the same period TD Ameritrade has invested in electronic access for retail and their electronic platform Think or Swim. TDAM is no slouch in Custody Services for Registered Investment Advisors with 6,000 RIA as of 2018. AMTD also offers Robo-advisory Services under the brand name “Essential Portfolios”. With a minimum investment of $5,000, the management fee is .3% of Assets Under Management per year.Both firms have grown revenue-generating business units, offering many opportunities for cross-selling and growth.Success will depend, in part, who gets control of the key business units and how they drive growth going forward.Expense Synergies of AMTD & SCHWOn the expense side, according to Christopher Harris at Wells Fargo, estimated synergies at 52% leaving much room for redundancies and cost-cutting. Kyle Voigt estimates expense synergies would save the new company as much as $2 billion in annual costs.The expense synergies will be found in operations, back office and IT. It bears mentioning that expenses aren’t cut just because both companies are fully staffed in those areas.·Nowadays, areas such as collateral management and margin are so vital, there’s a good reason to keep redundancies in place. Particularly given the different areas in which each company operates.Using Merger & Acquisition averages, the acquiring company can chop off 50% to 70% of the costs of its target, while holding onto about 90% to 95% of its revenue, according to analysts at Barclays.Business Drivers of Each Company in 2018Let’s take a look at the primary Revenue Drivers for each company. The two pie charts below show the sources of revenue for TD Ameritrade (2018) and Charles Schwab in 2019.Below the pie charts, we detail the business lines as well as some history and forward-looking thoughts.Pie Chart – Net Revenues 2018: T.D. AmeritradePie Chart – Net Revenues 2018: Charles SchwabNet Interest Revenue:TD Ameritrade shows 28% of net revenue is from Net Interest generated from the Cash sweep less interest expense. TDAM is under contract with TD Bank Until 2021Charles Schwab shows 61.8% of net revenue is from interest generated from the cash sweepFor those playing at home, remember TD Bank owns 42% of TD Ameritrade’s shares. Yeah, the shareholder vote just got serious, but let’s remain focused on the economics of the merger for now.Commissions:TD Ameritrade is still reliant on commissions (36% of net revenue in 2018)Charles Schwab is barely reliant on commissions (8% of net revenue in 2018)It seems like $0 commission is more of an issue for TDAM, given both of the company's recent move to $0 commission for ETFs and US Stocks.Asset Management Fees, Investment Management Fees:TD Ameritrade shows 10% of net revenue is from their Investment Management FeesCharles Schwab shows 27.7% of net revenue is from Asset Management & admin. FeesCharles Schwab’s asset management and administration fees are earned from proprietary money market mutual funds & fee-based advisory services.TDAM’s Investment Management Fees are from their growth in RIA custody services.The Race to $0 CommissionsWhile the race to zero commissions may be partly an illusion, the external optics can’t be denied. Schwab picked up 142,000 clients last month after announcing zero commission on ETF’s and US Stocks. That’s a 31% increase over October’s new client rate. How much revenue will zero commission cost each company? How will the New Company recoup this lost revenue?In 2018, TD Ameritrade earned ~$2 billion in total revenue, which was 36% of total revenue (see pie chart above).Charles Schwab pivoted away from commission-generated business lines. In the 1990s Schwab used to generate 50% - 60% of total revenue from commissions. In 2017 & 2018 commission accounted for only 8% of total revenue.With both the company’s engaging client portfolios either as a direct advisor or as a custodian for RIA’s, there are plenty of opportunities for the New Company to replace lost commission revenue.The New CompanyAs of November 1st, Schwab had $3.85 trillion in total client assets. TD Ameritrade had $1.3 trillion at the end of September. The combined company is expected to control 24 million clients with $5 trillion under management.Technology Be Thy Game – Electronic Execution and Social MediaThe New company resulting from the merger between Charles Schwab and TD Ameritrade is interesting on several levels. Most interesting to me is their client-facing front-end platforms. Both are very good on front end analytics, with Think or Swim having a more recognizable footprint.With respect to ThinkOrSwim, based on industry opinions of the platform and widespread adoption of social trading, ThinkOrSwim could be used as a cornerstone product from which to grow other revenue sources. Charles Schwab’s platform is better known for its equity research - which can easily be folded into ThinkOrSwim.Social trading is an undeniable force for Millennials. It remains to be seen how the New Company will engage this population. They may use their current platform to grow with a client over time as they mature from rolling tech dice to forming a college or retirement-focused investment portfolio.Bank & Broker Mergers Easier NowAfter the “catch a falling knife” mergers in the midst of the credit crisis, banks and broker-dealers haven’t been heavily represented in the M&A pipeline. Lately, a few changes in D.C. may bring this interest back.Regulators had been aggressively enforcing rules to bar firms with compliance issues from expanding after the Credit Crisis. In the absence of compliance issues, today the Fed views bank mergers more easily.Over the past few years, the Fed has expedited approvals for high-profile deals, the approval period in 2015 was 297 days. In the first half of 2019, approval timelines fell to 135 days. Approval is taking on 45% of the time it took 4 years ago.The changes in regulatory approach are proven by the value of M&A among commercial, savings and investment banks. M&A mergers reached $54.66 billion this year, the highest since 2009.Although regulators don’t comment on deals in progress, the TDAM-SCHW merger will likely face scrutiny on the fee structure & product line of the new company. Otherwise, by all reports, the merger is expected to be approved.

In answer to your question “What do you think about Charles Schwab looking to buy Ameritrade?” I just saw it on the crawl this morning, but it’s clearly a synergy move - and brings Schwab back into the discount brokers seat (which Schwab ironically started back in 1975)Daniel, as promised, here’s the updated answer including data known November 27, 2019EDIT:Charles Schwab to Buy TD Ameritrade $26 billionMcCabe Hurley, November 27, 2019On Thursday, November 21, 2019 Charles Schwab to buy TD Ameritrade for $26 billion stock swap. Charles Schwab’s (SCHW.N) share price is $47.98. AMTD (AMTD.O) shareholders will receive 1.0837 shares for each AMTD share held.Details and timing of the deal the Companies. But by all appearances the deal is complete. Never say never, but here’s how it’s shaping up.Charles Schwab & TD Ameritrade Merger DetailsAt $52 a share, the takeover premium of AMTD is ~30%, versus Wednesday nights close of $40/ share.The merger will close in 9-12 months (2H20). After closing, integrating the two companies will take 18 – 36 months.The new corporate headquarters will be Schwab’s new location at Westlake, Texas.Ameritrade has strong family ties to Nebraska. AMTD's former COO, Pete Ricketts, now Governor of Nebraska.Pete is the son of Ameritrade found Joe Ricketts. So expect Ameritrade to lobby for continued presence in Omaha.Revenue Synergies of AMTD & SCHWThe two firms have a nice M&A story. Synergies abound.Charles Schwab was an early entrant in the field of discount brokerage. TD Ameritrade has become a juggernaut with retail.TD Ameritrade has invested in its electronic platform Think or Swim.TDAM offers Robo-advisory Services under the brand name “Essential Portfolios”. With the smallest investment of $5,000, the management fee is .3% of Assets Under Management per year. TDAM is no slouch in Custody Services for Registered Investment Advisors with 6,000 RIA’s as of 2018.Both firms have growing revenue-generating business units. The New Company offers many opportunities for cross-selling and growth.Expense Synergies of AMTD & SCHWAccording to Christopher Harris at Wells Fargo, estimated expense synergies at 52%. Kyle Voigt (Keef, Bruyette & Woods) estimates the new company could save as much as $2 billion in annual costs.The acquiring company can chop off 50% to 70% the target's expenses. while holding onto about 90% to 95% of its revenue, according to analysts at Barclays.Business Drivers of Each Company in 2018Let’s take a look at the primary Revenue Drivers for each company. The two pie charts below show the sources of revenue for TD Ameritrade (2018) and Charles Schwab in 2019.Below the pie charts are details for the revenue drivers. Included are historical and forward-looking thoughts.Pie Chart – Net Revenues 2018: T.D. AmeritradePie Chart – Net Revenues 2018: Charles SchwabDetailed Look at Revenue Drivers: SCHW & TDAMNet Interest Revenue:28% of TDAM's net revenue is from Net Interest. Net interest income from cash sweep minus Interest Expense. But, TDAM is under contract with TD Bank Until 202161.8% of Charles Schwab's net revenue is from Net Interest. Net Interest income remains on Schwab's income statement.For those playing at home, remember TD Bank owns 42% of TD Ameritrade’s shares. That will make the shareholder vote interesting. ore on that further down.Commissions:TD Ameritrade is still reliant on commissions (36% of net revenue in 2018 - see pie chart).Charles Schwab is much less reliant on commissions (8% of net revenue in 2018 - see pie chart).$0 commission is more of an issue for TDAM, given both companies' recent move to $0 commission for ETF’s and US Stocks.Asset Management Fees, Investment Management Fees:TD Ameritrade shows 10% of net revenue is from their Investment Management Fees. TDAM’s Investment Management Fees are from their growth in RIA custody services.Charles Schwab shows 27.7% of net revenue is from Asset Management & admin. These fees are from Schwab's money market mutual funds & fee-based advisory services.The Race to $0 CommissionsWhile the race to zero commissions may be part illusion, the external optics are clear.Schwab picked up 142,000 clients last month after announcing zero commission on ETF’s and US Stocks. That’s a 31% increase over October’s new client rate.How much will zero commission cost each company?How will the New Company recoup this lost revenue?In 2018, TD Ameritrade earned ~$2 billion in total revenue, which was 36% of total revenue (see pie chart above).Charles Schwab pivoted away from commission-generated business lines. In the 1990s Schwab used to generate 50% - 60% of total revenue from commissions. In 2017 & 2018 commission accounted for only 8% of total revenue.Both companies are now active in asset management. So the New Company has ways to replace lost commission revenue.The New CompanyAs of November 1st, Schwab had $3.85 trillion in total client assets. TD Ameritrade had $1.3 trillion at the end of September. The combined company expects 24 million clients with $5 trillion under management.Technology Be Thy Game – Electronic Execution and Social MediaThe New company is interesting on several levels. Their front-end analytics are both strong. But Think or Swim has a more recognizable footprint.Social trading is an undeniable force for Millennials. The New company could use its current platform to grow with a client over time.FROM a new investor focused on speculationTO a growth-value balanced portfolioTO a retirement-focused management styleThe New Company's platform has all the pieces to feed this growth.Bank & Broker Mergers Easier NowAfter the mergers of the credit crisis, banks and broker-dealers haven’t been in the M&A pipeline. Lately, a few changes in D.C. may bring this interest back.Regulators wanted to bar firms with compliance issues from expanding after the GCC. Today, in the absence of compliance issues, the Fed has a favorable view of bank mergers.In 2015, the Fed approval timeline was 297 days. In 1H19, the approval period was 135 days. A drop of 162 days or 54.5%.Financial mergers reached $54.66 billion this year, the highest since 2009.Regulators don’t comment on deals in progress. The TDAM-SCHW merger will likely face scrutiny on fee structure & product line. Otherwise, the atmosphere in Washington favors approval.In exchange, TDAM steps up a notch and now offers its clients the fund type of advisory CS does well

The Cabinet Committee on Security (CCS) has approved the creation of a chief of defence staff (CDS).About CDS:He will be the single-point military adviser to the government as suggested by the Kargil Review Committee in 1999.CDS oversees and coordinates the working of the three Services.Conditions:He will be a Four-star General.Not eligible to hold any Government office after demitting the office of CDS.No private employment without prior approval for a period of five years after demitting the office of CDS.Roles and functions:CDS will provide “single-point military advice” to the government, inject synergy in planning, procurements and logistics in the armed forces.It will ensure integration of land-air-sea operations through the eventual setting up of theatre commands.The CDS will also function as the military advisor to the PM-led Nuclear Command Authority, as also have direct command of tri-Service organizations to handle the new warfare domains of space and cyberspace.Practice so far:India has had a feeble equivalent known as the Chairman, Chiefs of Staff Committee (CoSC); but this is a toothless office, given the manner in which it is structured.The senior-most among the three Service Chiefs is appointed to head the CoSC, an office that lapses with the incumbent’s retirement.However, CoSC arrangement is seen as “unsatisfactory”, and its Chairman as a “figurehead”.The post did not further tri-service integration, resulting in inefficiency and an expensive duplication of assets.The CoSC system is a leftover from the colonial era, with only minor changes being carried out over the years.What is the case for having a CDS?The first proposal for a CDS came from the 2000 Kargil Review Committee (KRC).Although the KRC did not directly recommend a CDS — that came from the GoM — it underlined the need for more coordination among the three Services, which was poor in the initial weeks of the Kargil conflict.Present challenges:The KRC Report pointed out that India is the only major democracy where the Armed Forces Headquarters is outside the apex governmental structure.It observed that Service Chiefs devote most of their time to their operational roles, “often resulting in negative results”.Long-term defence planning suffers as day-to-day priorities dominate.Also, the Prime Minister and Defence Minister do not have the benefit of the views and expertise of military commanders, in order to ensure that higher level defence management decisions are more consensual and broadbased.The CDS is also seen as being vital to the creation of “theatre commands”, integrating tri-service assets and personnel like in the US military.Significance:The charter of the CDS, if implemented properly, will prepare the 15-lakh strong armed forces for the wars of the future. The CDS is mandated to ensure the Army, Navy and IAF, which often pull in different directions, truly integrate to slash wasteful expenditure amidst the ongoing severe fund crunch for military modernization because of the ballooning pay and pension bills.