From the New York Times

TD Ameritrade announced on Monday that it would acquire Scottrade Financial Services, a rival discount brokerage, for $4 billion, in a bid for scale at a time when small investors are losing their taste for stock trading.

The deal reflects the ongoing evolution of the investment business.

Both companies trace the roots of their business model to a regulatory move in 1975 that banned fixed brokerage commissions, giving rise to a clutch of firms, including Charles Schwab & Company, that offered stock trades with discounted commissions. Discount brokers continued to flourish in the dot-com era, when individual investors, day traders and smaller advisers helped drive a boom in online trading.

But in the current market uncertainty, mom-and-pop investors are more reticent to buy and sell stocks. Index funds and other so-called passive investments have also gained favor, limiting interest in owning individual stocks.

The industry is feeling the pressure. TD Ameritrade, for example, said on Monday that its average client trades per day declined seven percent in the three months through September.

The weak environment is driving a broad industry consolidation.

In April, Ally Financial agreed to acquire TradeKing Group, an online broker and independent adviser, for about $275 million. In July, E*Trade Financial Corporation agreed to buy the parent company of the options and futures trading company OptionsHouse for $725 million in cash.

The deal with Scottrade would give TD Ameritrade, which is based in Omaha, $944 billion in client assets and 10 million accounts. TD Ameritrade would also more than quadruple the size of its branch network.

“This combination will allow us to leverage our strengths and increase our scale, further accelerate our asset gathering capabilities and introduce our award-winning lineup of trading tools, products and education services to millions of new investors,” Tim Hockey, the TD Ameritrade chief executive, said in a news release.

After the merger, Rodger Riney, the Scottrade founder and chief executive, would join TD Ameritrade’s board.

“Joining forces will enable us to offer clients an expanded array of trading tools, enhanced education resources and advanced option capabilities with broader geographic reach,” Mr. Riney said. “Together, we will be well-positioned to compete in today’s rapidly evolving financial services industry.”

The deal is expected to take place in two parts, with Toronto-Dominion Bank, one of TD Ameritrade’s largest shareholders, first acquiring Scottrade’s banking business for $1.3 billion in cash. Then, TD Ameritrade would acquire the privately held Scottrade for $2.7 billion in cash and stock.

The transaction is subject to regulatory approval and is expected to close by the end of September 2017.

Barclays and the law firm Wachtell Lipton Rosen & Katz advised TD Ameritrade. Goldman Sachs and the law firm Sullivan & Cromwell advised Scottrade. Citigroup and the law firm Simpson Thacher represented Toronto-Dominion Bank.

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