Nebraska-based investment brokerage firm,
) has modified its agreement with Canadian bank,
The Toronto-Dominion Bank
). The amendment extends the existing agreement's date of expiry
from Jan 24, 2016 to Jan 24, 2021. It also enables TD Ameritrade
to carry out more stock buybacks.
TD AMERITRADE (AMTD): Free Stock Analysis
EVERCORE PARTNR (EVR): Free Stock Analysis
INTERACTIVE BRK (IBKR): Free Stock Analysis
TORONTO DOM BNK (TD): Free Stock Analysis
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However, shareholders' agreement with Joe Ricketts - founder of
TD Ameritrade - will terminate on Jan 2016. This implies that
Ricketts will be bereft of the authority to appoint TD
Ameritrade's board of directors after expiry of its agreement
with Toronto-Dominion Bank.
According to the amended agreement, if any share repurchases by
TD Ameritrade leads to Toronto-Dominion Bank having more than 45%
interests, the latter will have to shed its stake. Notably, as of
Sep 30, Toronto-Dominion Bank owned 42% stake in the brokerage
The new agreement also permits the bank to keep 2% of securities
from its stake for clients and other general business purposes.
The permit under the current agreement is 1%. Additionally,
Toronto-Dominion Bank will sell ordinary securities within six
months of exceeding 1% of outstanding common stock.
Under the amended agreement, if the ordinary stock exceeds 1% of
TD Ameritrade's outstanding stock as well as any excess stock
over 45%, Toronto-Dominion Bank will be entitled to vote in the
same proportion as shareholders in
TD Ameritrade's tie-up with Toronto-Dominion Bank provides it an
opportunity to cross sell products. This is expected to be a
significant growth driver for TD Ameritrade's organic assets.
Also, innovations in online trading, long-term investment in
products and services, delivery of advanced customer service,
creative as well as cost-effective marketing and sales are
expected to boost TD Ameritrade's trading and investing business.
However, a low interest rate environment and stringent
regulations are challenges.
TD Ameritrade carries a Zacks Rank #3 (Hold). Some better-ranked
brokerage firms include
Interactive Brokers Group, Inc.
Evercore Partners Inc.
). Both these stocks have a Zacks Rank #2 (Buy).