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Morgan Stanley to Buy E-Trade for $13B

nytimes.com

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Re: Morgan Stanley to Buy E-Trade for $13B

#11

Post by lifeslogit »

ethbro wrote: post #3

With the move to $0 order fees for online brokerages, not surprised to see more tie-ups. Even running the business at break-even, MS gets to market their other products to all E-Trade's customers. That said, what's the current economic model for independent online brokerages? Sell order flow? Rate arbitrage off uninvested assets?

Some other ways Brokers make money: Market Making operations that leverage the same infrastructure and market position, Interest on Margin, Stock Loan/Borrow activity with other Brokers, and Market Data Access.

Still with these items, I agree that a move to 0 commission trading will cause a shift.

Re: Morgan Stanley to Buy E-Trade for $13B

#12

Post by thebiglebrewski »

lettergram wrote: post #8
thebiglebrewski wrote: post #4

Aw man, I just got moved from Capital One 360 Investing to E-Trade. Now I'll have to move to Morgan Stanley? Any way to just transfer my sh*t from E-Trade to Robinhood without just selling and re-buying, incurring a change in tax status? Seems Robinhood has unfortunately sunset that option...

You can transfer stocks, Robinhood implemented that a 12-18 months ago (and E*TRADE has/had it)

https://robinhood.com/us/en/support/articles/360001474726/tr...

Re: Morgan Stanley to Buy E-Trade for $13B

#13

Post by thebiglebrewski »

seanhunter wrote: post #9
thebiglebrewski wrote: post #4

Aw man, I just got moved from Capital One 360 Investing to E-Trade. Now I'll have to move to Morgan Stanley? Any way to just transfer my sh*t from E-Trade to Robinhood without just selling and re-buying, incurring a change in tax status? Seems Robinhood has unfortunately sunset that option...

I would think an ACATS transfer should be available for any registered US broker. That would not involve selling and re-buying.

https://robinhood.com/us/en/support/articles/360001474726/tr...

Re: Morgan Stanley to Buy E-Trade for $13B

#14

Post by francisofascii »

thebiglebrewski wrote: post #4

Aw man, I just got moved from Capital One 360 Investing to E-Trade. Now I'll have to move to Morgan Stanley? Any way to just transfer my sh*t from E-Trade to Robinhood without just selling and re-buying, incurring a change in tax status? Seems Robinhood has unfortunately sunset that option...

and before Capital One it was ShareBuilder

Re: Morgan Stanley to Buy E-Trade for $13B

#15

Post by frockington1 »

omarhaneef wrote: post #10

I rely on Matt Levine to explain, more clearly than I could, how brokerages make money ("The Trades Will Be Free Now"): https://www.bloomberg.com/opinion/articles/2019-10-02/the-tr... Let me highlight a key passage: "Even this understates the change, because the actual way that stock brokers work today is that you keep some cash in your brokerage account to fund potential trades, and the broker earns interest on that…

I agree with the premise that GS is trying to break into more retail and boring banking. In my opinion they may have already missed the opportunity. JPM/Chase and Bank of America/Merril Lynch figured out this business model over a decade ago and have been building customer bases. Last earnings showed the Apple card to be a disappointment

Re: Morgan Stanley to Buy E-Trade for $13B

#16

Post by rwmj »

markvdb wrote: post #7
ethbro wrote: post #3

With the move to $0 order fees for online brokerages, not surprised to see more tie-ups. Even running the business at break-even, MS gets to market their other products to all E-Trade's customers. That said, what's the current economic model for independent online brokerages? Sell order flow? Rate arbitrage off uninvested assets?

There was a somewhat revealing interview by the people behind Flatex, a big discount broker from Germany [0]. Dutch source, do use a translator https://www.tijd.be/markten-live/nieuws/algemeen/nieuwe-eige... "Is it easier for a pan European company to keep big US competition like Robin Hood and Ameritrade out? Niehage: 'The companies you name are very badly positioned for Europe. Their economic model is based on two…

> 'That's the high frequency traders. As far as I know, Robin Hood sells its customer orders to this kind of parties.

Is this front running (and hence illegal), or do they mean to say customer trades, or something else?

Re: Morgan Stanley to Buy E-Trade for $13B

#17

Post by frockington1 »

thebiglebrewski wrote: post #4

Aw man, I just got moved from Capital One 360 Investing to E-Trade. Now I'll have to move to Morgan Stanley? Any way to just transfer my sh*t from E-Trade to Robinhood without just selling and re-buying, incurring a change in tax status? Seems Robinhood has unfortunately sunset that option...

Robinhood has terrible order execution. I switched to TDA after getting sick of limit orders executing nowhere near my limit price. Market orders were abysmal as well

Re: Morgan Stanley to Buy E-Trade for $13B

#18

Post by auntienomen »

rwmj wrote: post #16
markvdb wrote: post #7

Earlier quoted context omitted.

There was a somewhat revealing interview by the people behind Flatex, a big discount broker from Germany [0]. Dutch source, do use a translator https://www.tijd.be/markten-live/nieuws/algemeen/nieuwe-eige... "Is it easier for a pan European company to keep big US competition like Robin Hood and Ameritrade out? Niehage: 'The companies you name are very badly positioned for Europe. Their economic model is based on two…

> 'That's the high frequency traders. As far as I know, Robin Hood sells its customer orders to this kind of parties. Is this front running (and hence illegal), or do they mean to say customer trades, or something else?

They sell the order flow. It's not front running.

Re: Morgan Stanley to Buy E-Trade for $13B

#19

Post by basch »

omarhaneef wrote: post #10

I rely on Matt Levine to explain, more clearly than I could, how brokerages make money ("The Trades Will Be Free Now"): https://www.bloomberg.com/opinion/articles/2019-10-02/the-tr... Let me highlight a key passage: "Even this understates the change, because the actual way that stock brokers work today is that you keep some cash in your brokerage account to fund potential trades, and the broker earns interest on that…

this is a good explanation too, and from a local.

https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...

The writing was on the wall for E-Trade. Banking is in an ebb of consolidation. E-Trade and TD Ameritrade had to sell once Interactive Brokers / Schwab started that game of dropping commission. They didnt add enough other value besides stock trading. They are a component to a larger banking suite.

I have to think Wealthfront and Betterment are targets now too. I have to think American Express is still a viable target as well.

The next thing empires SHOULD be looking at, is overall life management software. Personal Capital, YNAB.

I am somewhat surprised nobody offers an abstracted savings account, that handles 401k, IRA, HSA, paying rent and bills, and access to credit. Instead of showing you the balance of each account, it would show you how much you have, how much you need in the future, and how much you can spend today. And then automatically apply extra cash to the best spots, and automatically use credit and pay it off. Using credit AS part of the budget process. Not completely dissimilar from Singapore's Central Provident Fund.

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