For decades, Charles Schwab Corp. quietly plotted to unleash its ultimate weapon against rivals: $0 fees.

Schwab considered eliminating charges in the 1990s after the advent of online trading, and again in the 2000s during the financial crisis, according to a person with knowledge of the matter. Each time, it dismissed the idea as too risky -- a danger to its own bottom line.

But with investing costs collapsing across Wall Street, the San Francisco-based firm finally took the leap in October -- and, in a matter of weeks, it drove a major rival into its arms.

On Monday, days after reports of a possible acquisition first surfaced, Schwab formally announced that it would acquire TD Ameritrade Holding Corp. in an all-stock deal valued at roughly $26 billion.

The deal caps a year of off-again-on-again negotiations and cements Schwab’s position in the industry it pioneered a half-century ago.

For TD Ameritrade, one of Schwab’s keenest rivals, the tie-up is an acknowledgment of a stark, new reality: One of finance’s most basic businesses, stock trading, has become so mundane that brokers are giving it away for free.

Schwab played its hand deftly. First, it sent shockwaves through its industry -- and sent TD Ameritrade stock into a tailspin -- by abruptly announcing last month that it would allow customers to trade stocks and exchange-traded funds for free. Then, it reentered talks that culminated in Monday’s announcement.

Chief Executive Officer Walt Bettinger was blunt in early November, telling Schwab clients that discount brokers were headed for a shakeout. But as recently as last week, the company’s Chief Financial Officer, Peter Crawford, was holding his cards close in discussions with industry executives.

“What a poker player,” Matt Witkos, head of global distribution at Eaton Vance Corp. in Boston, said of Crawford. “It was pretty shocking.”

Falling Costs

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