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ETrade’s Sale Is the Death Knell for Discount Brokerages

In an age of zero commissions, trading is just a way to draw in customers for other products.

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Illustration: Xavier Lalanne-Tauzia for Bloomberg Businessweek

Throw dirt on it. The era of independent online brokers is over.

It was Charles Schwab Corp. that plunged the knife in, but the sale of ETrade Financial Corp. was the last gasp. Schwab’s purchase of TD Ameritrade Holding Corp. to create a $5 trillion monster serving customers who trade stocks in their pajamas for free made it impossible for ETrade to continue as it was. Morgan Stanley swooped in, and for $13 billion in stock it gets to clothe itself in ETrade’s digital street cred, attracting younger, tech-savvier clients to a bank whose reputation is staid even by Wall Street standards.