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A report from Bloomberg has revealed that online stock brokerage TradeKing may be looking for a buyer. The report’s sources claim that the discount broker, one of the most affordable US retail firms, has asked Bank of America to assist with preparations for a sale.
The company has yet to make any official statement, possibly due to ongoing negotiations, but according to the sources cited TradeKing is hoping to receive around $300 million from the sale. The firm’s Chief Executive Officer, Don Montanaro has stated in a recent interview that TradeKing is well-positioned for growth because half of its customers are 35 or younger and have not yet hit their financial peak, and also listed several venture capital providers that the broker is working with.
Only last year TradeKing acquired rival firm MB Trading, a move which subsequently had significant ramifications for the forex brokerage industry when the broker chose not to renew MB Trading’s retail forex dealer license, instead channeling all forex client transactions through the TradeKing introducing brokerage arm. This decision appeared to backfire, and major competitor GAIN Capital saw higher volumes and an increased market share. TradeKing previously purchased assets from GAIN, as well as online broker-dealer Zecco Holdings.
TradeKing’s recent growth has been in large part due its competitive flat fee structure, charging $4.95 for stock trades and requiring no minimum account balance. For investors or more active traders whose main priority is low fees, this has enabled the broker to gain market share from more established firms such as E*Trade, Fidelity, and Charles Schwab. The broker’s appeal to more active traders will also provide some immunity given the current market conditions, which erode the confidence of longer term investors and lead to reduced trading volumes.
If the Bloomberg article proves correct, then TradeKing should see no shortage of suitors, and may even be acquired by an institutional firm that is seeking to expand its client base with retail operations.