The New York-based company has lost some business to the retail brokerages in recent years as those firms invested heavily in their web platforms/Bloombergby Bloomberg
Morgan Stanley has agreed to acquire discount brokerage E-Trade Financial Corporation for $13 billion, pushing further into the retail market with its biggest acquisition since the financial crisis.
In a statement, Morgan Stanley also gets E-Trade’s direct-to-consumer and digital capabilities to complement its full-service, advisory-focused brokerage.
James Gorman, the Chief Executive Officer of Morgan Stanley, said, "E-Trade represents an extraordinary growth opportunity for our wealth-management business and a leap forward in our wealth-management strategy."
"This continues the decade-long transition of our firm to a more balance-sheet-light business mix, emphasizing more durable sources of revenue," added Gorman.
The retail-brokerage industry is being reshaped by price wars and consolidation. In early October 2019, Charles Schwab Corporation eliminated commissions for US stock trading, forcing other brokerages to follow suit and sweeping away an important revenue stream.
The following month, Schwab agreed to buy rival TD Ameritrade Holding Corporation for about $26 billion and create a mega-firm with $5 trillion in assets, forcing smaller brokerages like E*Trade to contend with a much more formidable competitor.
Gorman has been emphasizing Morgan Stanley's wealth-management powerhouse and purchasing E*Trade helps him add less-wealthy clients than its traditional customers. The New York-based company has lost some business to the retail brokerages in recent years as those firms invested heavily in their web platforms.