The San Francisco broker may find ways to use its better pieces without the need for the extra broker-dealer

May 18, 2012 — 3:18 AM UTC by Brooke Southall


Brooke’s Note: My question when I saw that Schwab was winding down its IBD, brokersXpress, was: Why didn’t it sell the unit, or at least the valuable pieces. The answer appears to be that, in a sense, Schwab is — to itself.

After spending $1 billion to acquire optionsXpress, it seemed odd that The Charles Schwab Corp. would essentially put the options specialist’s IBD and its assets on the waiver wire rather than try to make back some cash through a sale.

There are serious brokersXpress assets including 35,000 accounts and affiliations with 160 registered representatives, 65 investment adviser representatives and 100 RIAs.

But Schwab determined that it would be more trouble than it was worth, according to spokeswoman Susan Forman.

The most options

“In addition to the technical and operational complexity of separating brokersXpress from optionsXpress, the decision to wind down brokersXpress gives the advisors on the platform the most options to do what is in the best interest of their business and their clients.”

Forman allows that one serious option for many of those IBD reps and IARs will be to work for Schwab itself in its branches. “That may be the path some of the people take.” Accounts that don’t get moved to another company will be rolled over to the broker-dealer of optionsXpress, she adds. The brokersXpress staff of around 15 people is likely to be absorbed by optionsXpress or into Schwab Advisor Services

Forman says that Schwab bought optionsXpress for its derivatives business and the IBD was just a bonus. Schwab originally thought it might find a way to use brokersXpress but determined not to after a period of observation.

“We got brokersXpress and we evaluated it,” she says.

No people referenced

Share your thoughts and opinions with the author or other readers.

Submit your comments: