UBS AB cinched a deal Tuesday to buy Charles Schwab & Co's institutional market making, research and trading department for $265 million, Bloomberg reports. By selling its capital markets unit, Schwab is expected to regain its focus on individual investors and financial advisers.
Incorporating the daily trading activity of Charles Schwab SoundView Capital Markets potentially inflates market orders at UBS, the third-largest trader on the New York Stock Exchange, to more than 200 million shares per day among 11,000 equities. In addition, the deal also guarantees that UBS will facilitate Schwab's stock and option trades for several years.
The deal also solidifies Schwab's intent to focus on its core business of catering to wealthy investors and their financial advisers. Schwab previously drew criticism by releasing strong television advertisements condemning conflicts of interests between tainted financial research and commission-driven investment sales at Wall Street firms while quietly building its own transactional revenue streams.
Schwab's capital markets unit generated $75 million, or 6.7% of the company's total revenue, in the second quarter.