Morgan Stanley to buy E*Trade Financial in $13 billion deal

Daniel Fowler
February 21, 2020

Major investment bank Morgan Stanley is buying online trading firm E*Trade Financial Group, which would extend the bank's offerings to everyday investors.

Morgan Stanley will get E*Trade's more than 5.2 million client accounts and $360 billion of retail client assets as part of the deal.

Morgan Stanley shares were trading down 3.57% at $54.30 in Thursday's pre-market session.

As for Morgan Stanley, the company was ready to launch swaps tracking Bitcoin futures since early fall in 2018 but did not receive a single contract by the end of that year.

"ETrade's products, innovation in technology, and established brand will help position Morgan Stanley as a top player across all three channels: Financial Advisory, Self-Directed, and Workplace", said James Gorman, chairman and CEO of Morgan Stanley.

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The deal is expected to close in the fourth quarter of 2020.

E*Trade CEO Mike Pizzi will continue running the business under Morgan Stanley's ownership, the bank said.

The race to commission-free trading has shaken up the discount brokerage industry, with E*Trade rival Charles Schwab Corp. announcing it was eliminating trading commissions for US -listed stocks, exchange-traded funds and options, and then agreeing to buy competitor TD Ameritrade Holding Corp. "By joining Morgan Stanley, we will be able to take our combined offering to the next level and deliver an even more comprehensive suite of wealth management capabilities".

"E-trade has almost 2 million corporate stock plan customers and so this strategically widens the potential opportunity for Morgan Stanley to convert those customers", Ryan added. In a footnote to the presentation, Morgan Stanley noted that ETrade's peers include Fidelity, Charles Schwab and TD Ameritrade, which are now working to complete a merger, and Merrill Edge. "We'll take on Fidelity", Gorman told The Wall Street Journal, which broke the news of the E*Trade deal.

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