Most firms in the sector, including E*Trade, will likely conduct merger talks given the “pressures on the business, this transaction, game theory, as well as the attractive synergies and accretion,” he said. Shares of companies that get left out may face pressure.

KBW, Kyle Voigt

The deal “makes strong strategic sense and provides room for revenue and cost synergies, but a key focus for investors will be the potential for antitrust hurdles,” KBW’s Voigt wrote.

Schwab is the number one player in the RIA business, followed by Fidelity, he said, and may hold about half of the market share of RIA custody assets, while TD Ameritrade may have around 15% to 20%. He flagged E-Trade, Fidelity and larger bank brokers like BofA and JPMorgan Chase & Co. in the self-directed retail asset space.

Voigt expected E*Trade might drop “meaningfully,” as TD Ameritrade and Schwab were the two most likely acquirers and the stock may have been the “most crowded long in the space, mostly on a takeout potential.”

Cowen, Jaret Seiberg

“We expect antitrust regulators will approve this deal though it could take until summer,” Seiberg wrote. He sees the biggest risks as “political push-back during the election and a bigger spotlight on payment for order flow.”

He noted the deal would come as “intense competition is driving down costs for consumers without apparent harm to the fiscal health of the industry.” Though antitrust regulators “will ask lots of questions and demand significant analysis to ensure the merger does not disrupt this ideal state,” they’ll probably okay the transaction as they’ll have a hard time proving it will harm consumers.

Cowen sees no risk of approval going past the 2021 inauguration and becoming an issue for a new administration if President Donald Trump doesn’t win. However, he added that it’s easy to see how the deal might get drawn into an “anti-big business campaign” among Democratic candidates including Senator Elizabeth Warren. “No company wants to become the target of political attacks especially from a potential new president,” he said.

Vital Knowledge, Adam Crisafulli