TD Direct, a favourite execution-only stockbroker among private investors, is likely to be sold according to a report by Sky News. There are a number of suggested bidders but one of them is Barclays Bank who run a similar platform under the name Barclays Stockbrokers. With TD Direct having £13 billion of assets under management, a merger of those platforms would still leave the combination somewhat smaller than Hargreaves Lansdown, the market leader.
Mergers and restructurings are the name of the game among “platform” stockbrokers of late for a number of reasons (for example Alliance Trust recently acquired the execution only business of Stocktrade from Brewin Dolphin). With such heavy capital investment in technology required, size and transaction volumes really matter to enable them to compete on price – which is the only thing many execution only clients look at. With retail stockbroking volumes relatively quiet, brokers have also been hit by the very low rates on client cash deposits held in nominee accounts (that they retain the interest on rather than passing it on to their clients). That was, and still is, a major source of profits for brokers.
Barclays and TD Direct apparently declined to comment on the story, which is a sure sign, is it not, that things are afoot? TD Direct clients should anticipate having to learn and accept a new platform which is the usual result of stockbroker mergers, and not always to everyone’s liking. Plus of course possibly higher charges which is also often part of the package. It can be annoying when you have chosen a service for its features, ease of use and costs that suit your needs to find your business has been transferred to someone else!