TD Ameritrade Holding Corp.

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TD Ameritrade
TDAmeritradelogo.jpg
Founded 1971
Headquarters Omaha, NE
Key People CEO Tim Hockey
Employees 6,010
Products Online brokerage services
Website www.amtd.com

TD Ameritrade Holding Corp. provides brokerage services and financial services technology services in securities, futures, options and FX to retail investors, traders and independent registered investment advisors. [1]

TD Ameritrade, a publicly traded company since 1997, operates more than 100 branches in 33 US states, as well as a brokerage in Singapore, and holds more than $882 billion in customer assets and 7.3 million funded client accounts, as of June 2017. From 2012 to 2017, the firm attracted more than $267 billion in new client assets. It also provides custodial services for more than 5,900 independent registered investment advisors, or RIAs.[2]

The company had a market cap of $22.3 billion in September 2017. [3]

Headquartered in Omaha, Nebraska, it has offices in Jersey City, NJ and Southlake, Texas.

Background

The Early Years

TD Ameritrade traces its roots back to 1971 as a local investment banking firm, and to First Omaha Securities, Inc., a discount brokerage firm founded in 1975 by Joe Ricketts, who would go on to become chairman of TD Ameritrade. It was later renamed First National Brokerage Services, then Accutrade and finally Ameritrade. The year 1975 is significant for the firm, as that is when US regulators eliminated fixed brokerage commissions, thus spurring the rise of discount brokers like Ricketts' companies.

In 1983, the company began offering clearing and execution services for its own broker-dealer subsidiaries.The firm claims it was the first brokerage firm to offer innovations such as: touch-tone trading in 1988, internet-based trading, unlimited streaming of realtime quotes, extended trading hours, direct access to markets and commitment on the speed of order execution.

In the 1990s, the firm created the core of what the broker-dealer is today, an online multi-asset and multi-service online broker. It created two subsidiaries, Ceres in 1994 as a lowest cost discount broker and eBroker in 1996, which was established as an Internet-based broker. It also purchased All American in October 1995 for $200,000.

In 1995 Ameritrade Holding Corp. purchased K. Aufhauser & Co. for $7.6 million in cash. Aufhauser was acquired for its customer service as well as its research and investment analysis plus WealthWeb, the first firm to offer securities trading on the Internet. Accutrade developed into a discount broker which offered new technology for customers. In January 1996, TransTerra's Accutrade launched "Accutrade For Windows," which helped meet demand for online trading. TransTerra then merged with Ameritrade in September 1996. In 1996, the firm held approximately 110,000 accounts. [4] [5]

In March 1997, the company went public on the Nasdaq Stock Exchange.

More acquisitions and growth

By the early 2000s, Ameritrade was ready to make some acquisitions under the leadership of Joe Moglia, who became CEO in March 2001. Just before his arrival, it purchased TradeCast, a small broker dealer, in February 2001. In November 2001, it acquired National Discount Brokers Corporation, which carried $6.3 billion in customer assets. The deals helped push the firm's total number of accounts to 1.79 million by year end.[6]

It completed a merger with Datek Online Holdings Corporation in September 2002, making it the largest brokerage firm in the world at that point, as measured by online equity trades in 2002. The firm's customer accounts totaled 2.84 million in September 2002. [7]

The firm also bought Mydiscountbroker.com in June 2003. In January 2004, it purchased Bidwell and Company. In February 2004, it purchased BrokerageAmerica and in October 2004 it bought JB Oxford and Company.

The firm made its biggest acquisition in January 2006, buying TD Waterhouse from Toronto-Dominion Bank for $2.9 billion, thus renaming the firm TD Ameritrade. Toronto-Dominion received a 32.6 percent ownership in TD Ameritrade in the deal. The merged TD Waterhouse gained a combined $225 billion in client assets at the time and increased its qualified customer accounts to 3.2 million. Ameritrade Canada was sold to TD Bank for $60 million.[8] [9] [10] [11]

Moglia stepped down as CEO in 2008 and became chairman. He was succeeded by Fred Tomczyk, who had been COO at the firm.[12]

New Deals and Asset Classes

TD Ameritrade continued its acquisition trend under Tomczyk with the acquisition of Thinkorswim Group Inc. in 2009 for $606 million. The deal was significant because it helped establish TD Ameritrade's options and futures brokerage business. The stock and cash deal gave shareholders of thinkorswim 0.3980 of a TD Ameritrade share plus $3.34 in cash for each of their shares. TD Ameritrade paid $225 million cash and issue 28 million shares in the transaction. TD Ameritrade went on to expand that part of its business substantially in the years that followed. The company has also grown its derivatives trading business in equity options and futures from 36 percent of total trading in 2012 to 44 percent in 2017. [13][14][15]

In 2016, Tim Hockey took over as CEO of TD Ameritrade, succeeding Tomczyk who retired in September 2016. [16]

In October 2016, TD Ameritrade announced the purchase of rival online broker Scottrade for $4 billion. The deal would increase TD Ameritrade's customer assets to $944 billion with more than 10 million customer accounts. It would also more than quadruple its network of branch offices. The deal featured two steps. Toronto-Dominion bank, which now held a 43 percent stake in TD Ameritrade, would acquire Scottrade's banking business for $1.3 billion in cash. In the second step, TD Ameritrade would acquire the privately held Scottrade for $2.7 billion in cash and stock. It was due to close in September 2017, but had faced some shareholder scrutiny of the deal. [17][18]

Products & Services

TD Ameritrade offers a number of products and services, including:

  • Trading on common and preferred stock., American Depository Receipts and closed-end funds traded on any United States exchange or quotation system as well as Exchange-Traded Funds
  • Options
  • Futures
  • Foreign exchange.in over 75 different currency pairs
  • Mutual funds on over 13,000 mutual funds
  • Fixed income on US Treasury, corporate, government agency and municipal bonds, as well as certificates of deposit
  • New and secondary issue securities
  • Margin lending
  • Cash management services
  • Annuities

Key People

  • Tim Hockey, President and CEO
  • Prashant Bhatia, Managing Director, Corporate Strategy & Business Development
  • Steve Boyle, Executive Vice President, Chief Financial Officer
  • Tom Bradley, President, Retail Distribution
  • Tom Nally, President, TD Ameritrade Institutional
  • Steve Quirk, Executive Vice President, Trader Group
  • JJ Kinahan, Chief Strategist and Managing Director of market structure strategy and client advocacy for TD Ameritrade
  • JB Mackenzie, Director of futures and forex at TD Ameritrade's Thinkorswim brokerage

References

  1. TDA 2016 Annual Report. TD Ameritrade.
  2. By the Numbers. TD Ameritrade.
  3. Checking the Overall Picture for TD Ameritrade Holding Corporation. Stock News Journal.
  4. TD Ameritrade History. TD Ameritrade.
  5. Ameritrade S-1 Filing. Ameritrade.
  6. Letter to Shareholders. Ameritrade.
  7. Ameritrade Annual Report 2002 - Report of Management. Ameritrade.
  8. Ameritrade to Acquire TD Waterhouse U.S.A. TD Ameritrade.
  9. Ameritrade Holding Corporation Merger & Acquisition Announcement Of Td Waterhouse USA Conference Call. TD Ameritrade.
  10. Ameritrade-TD Waterhouse merger took a long time. San Francisco Chronicle.
  11. TD Ameritrade History. TD Ameritrade.
  12. TD Ameritrade names COO Fred Tomczyk as next CEO. Associated Press.
  13. By the Numbers. TD Ameritrade.
  14. TD Ameritrade To Buy Thinkorswim For $606 Mln. Reuters.
  15. Press Release. TD Ameritrade.
  16. TD Bank Shakes Up Top Ranks, Tim Hockey Departs for Ameritrade. Wall Street Jouranl.
  17. TD Ameritrade to Buy Scottrade in $4 Billion Deal. New York Times.
  18. TD Ameritrade faces scrutiny over Scottrade purchase. Reuters.
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