Morgan Stanley says it will buy online discount brokerage E-Trade for about $13B, in the biggest takeover by an American lender since the 2008 financial crisis
The move will give one of Wall Street's powerful blue-chip firms control of a major presence in the world of online brokerages.
New York TimesMichael J. de la Merced
Context & Ripple Effects
Morgan Stanley's $13B purchase of E-Trade caps a rapid commoditization of retail trading: months after E-Trade joined the race to zero stock-trading commissions alongside Schwab, TD Ameritrade, and Interactive Brokers, standalone discount brokerages stopped looking like viable independent businesses — and started looking like distribution to be acquired. It was the largest takeover by an American lender since the 2008 crisis, marking Wall Street's return to big-bank M&A.
E-Trade's retail customers and its self-directed brokerage platform now sit inside a blue-chip investment bank, giving Morgan Stanley a direct consumer channel it previously lacked.
E-Trade exits the ranks of independent online brokers at the moment commissions hit zero, removing one of the four named zero-fee competitors from the standalone field.
Second-order effects
Rival brokers face a consolidated competitor that can cross-subsidize retail pricing with banking profits — a pressure visible later when Morgan Stanley's E-Trade pilot undercut Coinbase, Robinhood, and Charles Schwab on crypto fees.
Bank-owned distribution raises the bar for remaining independents: eToro's later $231M acquisition of TradeZero shows mid-size brokers consolidating rather than competing head-on against bank-backed platforms.
Third-order effects
If the pattern holds, the line between Wall Street banks and Main Street brokerages keeps eroding: retail trading platforms become acquisition targets and product-distribution channels for large lenders, with regulators like the Federal Reserve as the gating authority on how far banks extend into new asset classes such as crypto.
The trend: Retail brokerages are being absorbed into universal banks, converting commission-free trading platforms into distribution channels for bank products — from equities to crypto.
Nothing to see here, just a Wall Street bank trying to increase its size, operational complexity, and interconnectedness...while regulators roll back post-crisis rules...while risks are building in the financial system. All good! https://twitter.com/...
Fintech 1.0 saw co's building out better vertical experiences: @Chime in banking, @Wealthfront in asset mngt, @SoFi in student lending. Fintech 2.0 will be all about horizontal expansion: @RobinhoodApp doing banking, and banks like MS becoming brokerages. https://www.nytimes.com/…
WOA. Big @WSJ news in financial advisor world this morning - Morgan Stanley Is Buying E*Trade! This has significant implications for the future of RIA custody options... and the prospective #Schwabitrade deal... (1/?) https://www.wsj.com/... https://twitter.com/...
Morgan Stanley is buying E*Trade Financial in a $13 billion deal that will reshape the storied investment bank and firmly stake its future on managing money for regular people. #finserv #wealthmanagement cc @UrsBolt @TheRudinGroup https://www.wsj.com/... via @WSJ @lizrhoffman
“We'll take on Schwab. We'll take on Fidelity.” Future of asset mngmt biz is a barbell, w/ fully vertically integrated, massive scale players on one end and boutique, high touch/value players on the other. Middle will continue being squeezed... @WSJ https://www.wsj.com/...
Not gonna age well. Paying $3.1B premium at $13B for what value of synergies? $MS paying 3.9x Tangible Book Value for a biz that's reliant on a stock market that trades at 11x TBV. “Morgan Stanley Is Buying E*Trade, Betting on Smaller Customers - WSJ” https://www.wsj.com/...
Morgan Stanley acquiring etrade for $13 billion. They'll be writing a big chunk of this down in the coming years. There's nothing here. Imagine acquiring customers who don't plan to pay you for anything? https://www.wsj.com/...