Schwab closes on optionsXpress

Deal valued at $1B; trading platform highly valued

The Charles Schwab Corp. today announced the completion of its purchase of optionsXpress Holdings, Inc.
The all-stock deal, announced last March, is valued at $1 billion.
OptionsXpress has about 400,000 client accounts with $8.4 billion in client assets, while Schwab has $1.66 trillion in total assets with more than 10 million accounts of investors, clients of RIAs and retirement plans.
Schwab said its clients can now open a separate account using the optionsXpress platform. Integration work is underway to allow clients to see their optionsXpress account balances through their Schwab accounts and allow transfers of assets between accounts, the company said.
“Schwab will eventually utilize optionsXpress’ trading platform as its advanced platform for active traders,” said Raymond James analyst Patrick O’Shaughnessy in a research note yesterday. The goal is to get its customer base to trade more often, he wrote.
The acquisition should boost Schwab’s trading business by about 20%, Mr. O’Shaughnessy said.
Schwab spokeswoman Alison Wertheim had no further information about what the ultimate plans for the optionXpress platform might be.

Options trading has been a fast-growing business for discount brokers.
TD Ameritrade Inc. bought the options-trading firm of thinkorswim Inc. in 2009 for $606 million. The thinkorswim trading platform was seen by many as a step up for active traders.
TD Ameritrade has also been encouraging its RIA clients to use more options strategies using the thinkorswim platform. The firm has been showing its advisers how options trading can produce income and manage portfolio risk.
The optionsXpress deal is “very reminiscent” of the thinkorswim acquisition, Mr. O’Shaughnessy wrote. “Schwab would do well to mimic the success of its online brokerage peer.”
Ms. Wertheim said optionsXpress’ capabilities will be made available to RIAs affiliated at Schwab, but she had no further details on when that might happen.