A potential acquisition of TD Ameritrade Holding Corp. by Charles Schwab Corp. may draw fierce antitrust scrutiny, analysts said.

Shares of the two companies rallied on Thursday, with Schwab rising as much as 14% and TD Ameritrade jumping as much as 26%. Even with such a gain, TD Ameritrade shares would still fail to return to levels they’d traded at earlier this year, before a wave of commission cuts roiled the industry. Other companies in the space didn’t fare as well on Thursday, with E*Trade Financial Corp. tumbling as much as 10% as hopes for a deal for that company faded.

Here’s a sample of some of the latest commentary:

UBS, Brennan Hawken

The very large and surprising deal “carries a lot of execution risk,” particularly regarding legal and regulatory issues, Hawken warned in a note.

Hurdles include the “size the combined entity would represent in the discount brokerage space,” even if regulators were to take into account full-service wealth management firms like Morgan Stanley and Bank of America Corp., he said. Schwab cutting commissions and then bidding for its “most hindered” competitor might also draw legal challenges and further anti-competitive scrutiny, Hawken said.

Hawken added that E*Trade was “left out in the cold,” and appears vulnerable as it had begun to reflect an M&A premium and the Schwab-Ameritrade tie-up would reduce the number of potential buyers.

BofA, Michael Carrier

TD Ameritrade’s relationship with holder Toronto-Dominion Bank “creates some complications,” Carrier wrote, including “dis-synergies and a bit tougher regulatory approvals.”

Carrier expects merger discussions and activity in the sector in the near term, which is likely to benefit online broker stocks. He sees the Schwab-Ameritrade deal making “strategic sense” as the two have similar business models, particularly regarding retail and registered investment adviser, or RIA, platforms, and TD Ameritrade lacks a permanent CEO.

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