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TD AMERITRADE Holding Corporation (NYSE:AMTD)

Acquisition of thinkorswim Call

January 8, 2009 8:30 am ET

Executives

Bill Murray - Managing Director, IR, Corporate Communications

Fred Tomczyk - President and CEO

Bill Gerber - CFO

Lee Barba - Chairman and CEO of thinkorswim

Analysts

Rich Repetto - Sandler O'Neill

Daniel Harris - Goldman Sachs

Mike Vinciquerra - BMO Capital Markets

Mike Carrier - UBS

Howard Chen - Credit Suisse

David Trone - Fox-Pitt

Brian Bedell - Merrill Lynch

Operator

Good day, everyone, and welcome to today's TD AMERITRADE conference call. Today's conference is being recorded. At this time, I would like to turn the call over to Mr. Bill Murray, Managing Director, IR, Corporate Communications. Please go ahead, sir.

Bill Murray

Thanks, Dana. Good morning, everyone. Thank you for participating today at such short notice. This morning we are announcing an important step in the delivery of our growth strategy, the acquisition of thinkorswim.

Today's presentation is available on our corporate website at amtd.com. Because today's presentation involves forward-looking statements, I ask you take the time to review our Safe Harbor statement, which addresses the risks and assumptions of any of these statements.

Our President and CEO, Fred Tomczyk and our CFO, Bill Gerber will review the strategic and financial details of the transaction with you this morning. Following their presentation we have asked thinkorswim Chairman and CEO, Lee Barba to say a few words as well. Then, we'll open it up for Q&A.

Now, I'd like to turn the call over to Fred. Fred?

Fred Tomczyk

Thank you, Bill. Good morning, everyone. Thank you for joining us on the call today. We have some exiting news to share with you. TD AMERITRADE has entered into the tentative agreement to acquire thinkorswim. Before we talk about the strategic benefits of the deal, let me tell you a little bit about thinkorswim.

They are an industry leader in active trader technology and investor education. Their business includes industry leading software for the active trader, web-based and mobile retail brokerage platforms, as well as state-of-the-art investor education suite of products and services.

Over a 12-month period ended September 30, 2008 the company generated $380 million in revenue and $87 million in pre-tax income. And for the last two years, they have been the fastest growing player in the online brokerage industry.

We believe this is a very compelling transaction, bringing together two strong companies to become even stronger. This is something you don't see a lot of in today's difficult economic environment.

TD AMERITRADE and thinkorswim are a good strategic fit, and this deal is financially attractive to shareholders on both sides. In fact, while the consideration to thinkorswim shareholders will be approximately 35% cash and 65% equity, it is TD AMERITRADE'S intention to initiate a share repurchase program to buy back the 28.3 million shares of AMERITRADE stock that we will issue to thinkorswim shareholders.

Based on our strong balance sheet and excellent cash position, we believe that this is in the best interest of our shareholders, in light of the market environment and our current cash position.

Before I get into the specifics of the deal, I want to take a few minutes to put us into context of our long-term strategy. For those of you following the presentation, we are now on slide 4.

As many of you know, TD AMERITRADE'S mission is to become the investment firm of choice for the mass affluent retail investor. We focus on two aspects of our business, the trading side and the investing side or the active trader and long-term investor segments.

Our goal on the trading side is to maintain our number one position in trades per day. We built that position up over time, by leveraging our technology capabilities and by being an aggressive consolidator of the industry.

Now, there are two kinds of acquisitions, those that had scale and those that had capabilities. This deal does both. But it is the enhanced capabilities, and they are leveraging a brokerage and investor education that attracted us to thinkorswim.

Our goals remain to be maintain our number one position in daily average revenue trades and to become a premier asset gather. We've already started to gain momentum on asset gathering, and this will continue to be a key focus for us. It should come as no surprise to anyone one on the call today that our approach to achieving these goals has been to look at growing both organically and through acquisition.

Now, if you turn to slide 5, you can see how this acquisition of thinkorswim directly aligns with our long-term growth strategy. It advances our leadership position on the trading side of the business and improves our competitive position not only for the current environment, but also for when we come out the other side of this cycle.

As I said before thinkorswim is a perfect set with TD AMERITRADE. They are the fastest growing player in the online brokerage industry, unique capabilities including a best-in-class, options trading platform and a best-in-class education program. The deal is financially attractive to shareholders on both sides, with accretion in the low- to mid-teens following conversion and realization of synergies.

Now, we will get into the details of that in a few minutes. We also believe we have a long-term opportunity to expand the education offering to include programs for long-term investing, helping us with our asset gathering strategy and efforts. We recognize thinkorswim's outstanding achievements in trader technology and education, and we will support their continued development and innovation.

We are extremely pleased that key management at thinkorswim will join TD AMERITRADE after close, including thinkorswim founders, Tom Sosnoff and Scott Sheridan. Current thinkorswim Chairman and CEO, Lee Barba will stay on in an advisory role reporting directly to me to help with the integration.

I'd like to turn to slide six. As I mentioned, thinkorswim is a rapidly growing leader in the online brokerage space, but more importantly in services that cater to the active trader. We believe that option tools and services will be a welcome compliment to what we already offer our existing clients. And nobody in financial services has an investor education program that comes close to the Investools side of thinkorswim.

We're offering, which include one-on-one coaching, coaches courses that are design and integrated what their trading platform and daily real-time sessions have helped and sustain high client engagement, increase client loyalty and grow new accounts and trades.

We're able to offer these cutting edge tools and services to our nearly 7 million client accounts when the transaction is complete. We also expect this to fast track several initiatives and our long-term trading plan, including enhanced options trading, futures, foreign exchange trading and portfolio margining with this acquisition.

The integration will require some infrastructure updates on our end but our completely integrated offering post convergence will be very attractive to both traders and investors alike. Our combined education offering with the focus on coaching and the products and tools available will help more investors for together trading and long-term investing strategies that suite their individual goals and objectives. In our view at investments banks are trading in investor education strategy by several years.

Slide seven shows you the strategic impact of this deal on client trades. TD AMERITRADE is already number one in trades per day. Thinkorswim is number one in retail option trades per day. A combination of our firms will further advance our leadership position.

Moving onto slide eight, you can see that thinkorswim is the fastest growing online broker and one of the fastest growing segments of the online brokerage space options. Their option trades have grown at a remarkable 172% compound annual growth rate over the last two years compared with the industry growth of 44%.

Now I'd like to turn the call over to Bill Gerber, our Chief Financial Officer who will walk you through the terms of a deal.

Bill Gerber

Thanks Fred. And now that you heard the strategic reasons why we are doing the thinkorswim deal, I'd like to walk you through summary of the terms on slide nine. We are paying approximately $606 million for all the outstanding shares of thinkorswim.

The consideration mix is $225 million in cash and approximately $28 million shares of TD AMERITRADE stock. The value is based upon our share closing price of $13.48 as of yesterday.

As Fred said, this is more of a product and capability acquisition versus a scale acquisition. We are enhancing the AMERITRADE platform with thinkorswim's date of year options and education businesses.

As a result, we expect more modest synergies in this transaction than a scale transaction. We are expecting approximately $55 million in combined revenue expense synergies. The revenue synergies arise by providing thinkorswim education and trading platforms to our approximately 7 million client accounts and the expense synergies result from eliminating duplicate cost mostly in clearing technology and general corporate function.

The net results of adding thinkorswim's revenues and expenses, net of the synergies and the share buyback, which I will discuss in a moment is accretion of approximately 3% to 7% in fiscal 2010 and approximately 10% to 15% for the 12 months following the integration.

Since we don't expect the deal to close for six months, there won't be a material impact on the 2009 fiscal year. We anticipate to complete the integration within 18 months after closing. Customary approvals are required to complete the deal. Thinkorswim shareholders must approve the transaction as well as our regulators.

On the stock buyback, as you know we generate significant amount of cash annually and currently have about $1 billion of cash on hand. Also our cash is earning very low yields in this current environment. As such, we initially offered this as an all cash deal with thinkorswim, but their board and management team believes strongly in the benefits of the combined firm and thus we negotiated the 65:35 equity/cash split.

Including the fact that issuing this equity will dilute AMERITRADE's current shareholders and our strong cash position, we are gong to initiate a share repurchase program post-closing for approximately the same number of shares being issued in this transaction. We believe this is the prudent thing to do and a good use of some of our cash. More details will be provided on the buyback as we near the closing of the thinkorswim transaction.

Slide 10 will give you a sense of what the two separate organizations contribute to the combined entity. You should note that the information relates to the last 12 months ended at September 30, 2008 and the combined column, excludes the synergy benefits I just discussed.

From a P&L perspective, the combined entity would have nearly $3 billion in revenues, over $1.3 billion in pre-tax income, which equates to a 46% pre-tax margin. As for the key metrics the combined entity would have 350,000 trades per day, 73,000 or 21% of which would come from options trading. Client assets would be approximately $281 billion, spread across 7.1 million client accounts.

Once the deal is closed, we'll begin to incorporate thinkorswim into our operating results and we will also update guidance through our normal process. So what are the key takeaways for this scale and capability acquisition?

The addition of thinkorswim advances our trading and education strategy by several years. This was the typical make versus buy decision. It also extends our leadership position in the active trader space with a best-in-class options trading platform and invest in class Education Program.

As a result of the integration, we'll leverage the capability of the thinkorswim in enhanced options trading, futures, foreign exchange and portfolio margining, across the TD AMERITRADE client base. This combination is also financially attractive to both sets of shareholders.

Thinkorswim shareholders are receiving a premium over their recent stock price and TD AMERITRADE shareholders will benefit from an estimated accretion of at least 10% after integration is completed. And finally this deal underscores our strong position, as an industry consolidator.

And with that, I will turn the call back over to Fred.

Fred Tomczyk

Thank you, Bill. And at this time, I would like to introduce and ask Lee Barba, Chairman and Chief Executive Officer of thinkorswim, to say a few words.

Lee Barba

Thank you, Fred. I'm extremely excited to be here today making this announcement with TD AMERITRADE. We think this is the right deal, with the right partner, at the right price and the right time. We have long respected your organization and believe this partnership, will allow us to provide and even greater level of service to active traders and educated investors.

The combination represents a tremendous, strategic fit that enhances our potential growth opportunities. The deal delivers a significant premium to our shareholders. The equity component gives SWIM investors stake in the future of the combined businesses. We are strong believers in this deal and thinkorswim shareholders who have long believed in our strategy, now will have the opportunity to continue to participate in our future growth and that of the industry.

Our tremendously talented and dedicated employees also will have opportunities to be a part of this premier brand. We started, what is now thinkorswim about 25 years ago, with a vision of creating a unique active trading and investor education model. Now we are taking that vision to the next level for the benefit of our clients, shareholders and employees. And the future is even more promising.

I'll now turn the call back over to, Fred and Bill to take your questions. If any of you have questions for me, I will handle them through individual calls later today.

Thank you, Lee. As you can tell we're excited about this deal and we look forward to working with you and your team. With that, I'll turn the call back over to the operator for questions.

Question-and-Answer Session

Operator

(Operator Instructions). We'll take our first question today from Rich Repetto of Sandler O'Neill.

Rich Repetto - Sandler O'Neill

The first question is, outstanding platform, but the thinkorswim stocks prices certainly been impacted by an SEC investigation. I'm just trying to understand your due diligence and how you come out with the comfort level in dealing with that issue?

Fred Tomczyk

As with any acquisition and due diligence, we did a pretty thorough investigation by a particular point and we are fairly comfortable where things are at right now. I think to call any further on that, I think it'll be inappropriate at this time, to go in any depth on it. We normally don't comment on things that are in process from a legal point of view.

Rich Repetto - Sandler O'Neill

Understood, okay. The next question is, you went through the synergies, it makes a lot of sense what you talk about because thinkorswim has a unique platform. But on the breakout could you get into, just in general terms, is it half revenue synergies and half expense synergies and of the expenses, is it mostly just the clearing expense?

Bill Gerber

It's about 70% revenue and the expense certainly is the biggest pieces from expense clearing, but it's again the clearing tech and the corporate functions make up the 100% of the cost.

Rich Repetto - Sandler O'Neill

Okay. My last question Fred is, you led it out grade, it makes sense that you are the skill player as far as trading. Did you have the balance and how this moves forward, the asset gathering, or how do you look at balance? I can guess its revenue safe, but do you balance the goals and asset gathering as you add skill on the trading side here?

Fred Tomczyk

As I have been saying, we are trying to become a premier asset gatherer, but not by jettisoning our leadership position in the trading side. The reality is that everything that we're trying to build today, as we look all over the next two to three years on the trading side, this transaction gets us there. When we look that, we actually, we basically said well, that's actually is easier for us. We can get the integration done with the fair number of our people and allow a large portion of our organization to continue to focus on the asset gathering side.

I think, we are believers that over the long-term and when we talk to Lee and his team, they have some proven statistics that there is a lot appeal for investor education, really in the retirement space and the long-term investor space. We see over time and we haven't built anything into this is significant potential here in the retirement business for the investor education side. So, we think this can help us with both sides over time.

Rich Repetto - Sandler O'Neill

Okay, great. Congrats. You again have to get a yellow and green to raise the [concise stock] now from now on.

Fred Tomczyk

We already got some point.

Operator

And we will take our next question from Daniel Harris with Goldman Sachs.

Daniel Harris - Goldman Sachs

Good morning, guys, congratulations on the deal. I was wondering if you could just go into a little bit more detail on the level of synergies or the accretion, however, you want to talk about it? Relative to prior transactions I know that this is a very different platform from what you guys have acquired in the past. But it seems like those numbers are a little bit lower than what we would have otherwise expected, given what you guys have done with [Tech] and TD?

Bill Gerber

Great. This is Bill. I think it's really the difference between the platforms, the idea with thinkorswim of course is that with their bringing us things that we don't have and which are on the education side. They are bringing to our platform just a tremendously stronger options business.

Outside the areas for synergies are really different in this one than really a scale transaction, which they track are certainly more of a scale transaction than TD Waterhouse was. Certainly we hope then that we're going to be able to exceed these synergies there is no doubt. But right now, we think that those numbers are where the management team is as looked at it and we've decided that's where we're going to be right now.

Daniel Harris - Goldman Sachs

Okay. Based on that then, can you help me understand, given the time frame that you guys have talked about here both to get the deal closed and then to integrate and then to achieve the synergies. How do you guys intend to get those revenue synergies and sort of what are they? Is it just selling your clients on the platform that SWIM has? Or is there anything else that we should be thinking about?

Bill Gerber

I think that you are exactly right correct. What we intend to is certainly start educating our highest end clients who were using options today as to the benefits of what SWIM is bringing to the table. So, when you look at the client profile and the sophistication in the trading activity of the SWIM clients, their profile and everything else is very much in concert with our high end clients. Their trading activity is materially higher and that's because of the education that they have done and the fact that they have a multi-leg options very easily done, which is not as easily done on the AMERITRADE platform. So, essentially, that is the real benefit from the revenue synergy side.

Daniel Harris - Goldman Sachs

Okay. Lastly for me, as part of this process, can you sort of walk me through, was this competitive a bidding process or did you guys just come together as something you guys talked about for a while?

Fred Tomczyk

I am not sure how to answer that question. We have been talking to Lee and Tom Sosnoff often for a while. We have been eyeing this particular company for quite a while. We have been very, very interested in it. I think, there have also been another people who interested in this company given their growth trends and their capabilities. And at the end of the day, we came to an agreement to consummate this transaction.

Daniel Harris - Goldman Sachs

Okay. Congratulations on the deal guys.

Fred Tomczyk

Thank you.

Operator

We will take our next question from Mike Vinciquerra with BMO Capital Markets.

Mike Vinciquerra - BMO Capital Markets

Thank you. Good morning. Bill, judging from when you are going to recognize the synergies, it looks to me like you're probably just going to let the clearing contract that thinkorswim has in place run through to expiration at the end of 2010. Is that accurate?

Bill Gerber

Yes, we expect to stay with retention for at least a couple of years.

Mike Vinciquerra - BMO Capital Market

Okay. What are you planning on doing -- could you talk a little bit about the brands and what you're going to do in terms of your advertising. I know its early stages here but do you have any initial expectations you can share with us?

Fred Tomczyk

The brand will be TD AMERITRADE. We will have to come up with a very appropriate branding name for the active trader segment and platform that we use, which will be the thinkorswim software platform.

Mike Vinciquerra - BMO Capital Market

I see, okay. Any worry about what the reaction of thinkorswim's clients might be, because obviously when you go to a firm like thinkorswim you do get to and in some sense get away from the kind of the average platform out there and kind of the broader base marketed platforms.

Fred Tomczyk

That's one of the main reasons that we want to leverage that platform, use that platform and retain the thinkorswim people. Talent is an important part of this, because they do have very talented people both in the education business and in the options business. So retaining them and Tom Sosnoff and Scott Sheridan are staying on, and they will continue to be very evolved with the active trader space with us. In fact Tom will lead our active trader segment.

Mike Vinciquerra - BMO Capital Market

Excellent, okay thanks very much.

Operator

And we'll take our next question today from Mike Carrier with UBS.

Mike Carrier - UBS

Thanks guys. Most of the questions have been asked -- just two questions, one is, just in terms of the cost to trade is going forward on the thinkorswim platform versus the AMERITRADE particularly on the options -- like any outlook on that side and then the other one is just, given where volumes are right now for the industry and just the part of the cycle that we're in on the economic side and just in the retail side, just any outlook on volumes when you come up with this synergies and the accretion.

Fred Tomczyk

Let me take the first one, which is pricing. Just about any transaction, we've ever done there is differences in the pricing between the two companies. We will reconcile those, at the right time and deal with that. But, it would be, inappropriate for us to make pricing comments right now. Until the two companies are closed, they will continue to operate separately and as competitors and according to all these regulatory processes and rules here.

With respect to volumes, we will be doing our call in a couple weeks on earnings and we will comment on trading volumes and levels in the market at that time.

Michael Carrier - UBS

Okay, thanks guys.

Bill Gerber

Okay then.

Operator

And we will take our next question from Howard Chen with Credit Suisse.

Howard Chen - Credit Suisse

Good morning, everyone.

Fred Tomczyk

Hi, Howard.

Howard Chen - Credit Suisse

Congratulations on the announcement this morning. Bill, apologies if I missed this in your prepared remarks, but what exactly, are you assuming in terms of standalone growth for the SWIM franchise in that 3% to 7% deal accretion assumptions, and also what are you assuming in terms of revenue or client attrition and are you assuming any legal reserves into that analysis?

Bill Murray

Your questions are big ones. So, we actually took the growth rate down from the historical growth rates and so we probably cut that by about a third. Just to be, we think to be conservative. The second part of your question, relative to--

Howard Chen - Credit Suisse

Revenue and or client attrition assumption and if your historical you've used something like 4% to 6% in prior deals I think?

Bill Gerber

We've used 5% to 10% and we did that again in this one and on legal reserves we're certainly looking at that and as Fred alluded to as well, we look at the legal situation, we look at all the cases and every target we acquired has and we will look to see if there is an appropriate reserve that it will need to be set up at the time of the acquisition.

So, (inaudible) from there.

Howard Chen - Credit Suisse

Okay.

Bill Gerber

So, always away from that.

Howard Chen - Credit Suisse

You mentioned in your prepared remarks AMERITRADE's management desire to do an all cash transaction and obviously, you've announced the repurchase program this morning. What's the current appetite in and I know you just announced this deal today, but what's your current appetite and/or flexibility to do any further deals here given the current environment?

Fred Tomczyk

I think there -- it's Fred and I think -- from our point of view this doesn't preclude us from doing other transactions. I think in the current environment we've said, we've been keeping our powder drive, we've been building our cash. We plan to take advantage of the current environment to build our competitive position and improve us for when we come out of this cycle. We'll continue to do that and if some thing else came along that made strategic sense for us which is financially attractive, we would take advantage of that opportunity given current market prices.

Howard Chen - Credit Suisse

Okay. Finally with respect to the repurchase program, I know details are still scarce today, but what's on the table? Is this more just kind of an open market program or do you think that there is potential to do a kind of tender like program upon deal close?

Bill Gerber

You're exactly right. We are looking at the different methods by doing that and have not settled in on which one to do yet. But, those two are two or probably four that we are evaluating and certainly by the time we close the transaction we will have settled them on one and will be ready talk about it at that time. So right now, we have not established which way we are going to do we just know that, we are going to do it.

Howard Chen - Credit Suisse

Okay. Thanks so much and congrats again, everyone.

Operator

And we'll take our next question from David Trone with Fox-Pitt.

David Trone - Fox-Pitt

Thank you. Mine too have been answered, but I just wanted to be clear on a couple of things. You talked about the ability to do or desire to look at other things that come down the road, if they make sense. But in terms of the technical integration wouldn't another on top of this be difficult?

Fred Tomczyk

It depends on the nature of the transaction and we would plan those accordingly, I mean a lot of that depends on the nature of the transactions. The reality is with thinkorswim's growth rate and the fact that we're buying capabilities if we had to, we could actually, just run it for a while separately and circle back and do the integration, because the expense synergies are not a primary reason for this deal, it's really all about the revenue synergies. So, we'll probably focus on the front-end and leave the back-end and come back to it after we did the other integration if that was required.

David Trone - Fox-Pitt

Okay, great. On the buyback trading and I apologize, if you already have mentioned this. Am I correct in assuming, you'll try to get the buyback done and as it is mentioned the deal so it ends up being essentially all cash?

Fred Tomczyk

We will look to do the buyback either near or just after the acquisition is completed. So if we did it, we want to make sure obviously we're issuing the shares. So we'll have to wait for the thinkorswim shareholder vote, the regulatory approval etcetera. But it'll be near the completion of the acquisition.

David Trone - Fox-Pitt

Okay. So then you could have a quarter or two of temporary dilution then.

Fred Tomczyk

Right.

David Trone - Fox-Pitt

Okay. And then, the SEC issue is there any worry that the deal and now you're putting yourself in position to be seeking approval. Does that give the SEC any more leverage to maybe get some corrective actions more so then they otherwise would have?

Fred Tomczyk

I don't want to answer a hypothetical question David. I think we'll deal with the SEC and the regulators on that file with the thinkorswim management team, when we get there. Right now, they are doing that and it would be inappropriate for me to speculate on that. But we did go through into our own due diligence and we're fairly comfortable we'll get through that. I mean in our mind, given current market prices and current market environment, this is a very attractive transaction. It [was an] attractive asset, at an attractive price. It's basically us taking advantage of the current market with our cash position and strong balance sheet.

David Trone - Fox-Pitt

Okay. One last question. The severe drop in the equity markets here over the last few months. How does that effect the options business as it applies to a thinkorswim client?

Fred Tomczyk

I'm not sure where you're leading with that. But I would tell you and will talk about this in a couple of weeks. Trading volumes have continued at a healthy pace and retail traders and investors continue to be engaged in the market from a trading perspective.

David Trone - Fox-Pitt

Okay. So you're not seeing any kind of behavioral or even psychological difference between, a thinkorswim client and as standard AMERITRADE client?

Fred Tomczyk

I think as I've always said, as long as there is the volatility and news and information in the market then active trader is going to trade.

David Trone - Fox-Pitt

Okay, great. Thank you very much.

Fred Tomczyk

Thanks David.

Operator

And we will take our next question from Brian Bedell with Merrill Lynch.

Brian Bedell - Merrill Lynch

Most of my questions have been answered also, but a little bit on the growth assumptions, you are cutting that by one third, there is standalone growth rate by about one third, can you just be more specific on which growth rate you are talking about, and over sort of what time frame you are doing that for?

Bill Gerber

I mean, the modeling that we have done, I am not going to go into a lot of the great detail, but it has been more towards industry levels as opposed to their levels which again we think we are being conservative here.

Fred Tomczyk

Let me just add a little color to Brian, I mean, values that we are getting, a company that's an options by other means. Just the option market has been growing at a healthy pace. We have paired not only industry growth rate for options, and we assumed that the brokerage side of thinkorswim will grow at a rate consistent with the industry -- the option industry.

Brian Bedell - Merrill Lynch

Okay. Just like to basically overall option volumes is what you are thinking?

Bill Gerber

That's' right.

Fred Tomczyk

Based on our historical growth rate that's pretty conservative.

Brian Bedell - Merrill Lynch

That's pretty conservative, yeah, I agree. Just to go back to -- actually one more revenue synergy side, what is your timing of those revenue synergies for the 70% of the 55 million, is that -- does that happen sort of in a straight line fashion between six months and eighteen months or is it more back end loaded.

Bill Gerber

It is more back end loaded, of course here we start on day one and then start ramping it up, but it's certainly throughout year one, but by the time you get to the beginning of year two you're fully engaged.

Brian Bedell - Merrill Lynch

Okay, great.

Fred Tomczyk

And our integration planning, we will be looking to advance the revenue synergies as much as we can.

Brian Bedell - Merrill Lynch

Where you can do some things that get ahead of the deal, I know it's been planning and I guess. Just in terms of the platforms also, so basically you're probably shutting down your current options platform and plugging their option platform into your overall platform. Is that the way we should think about?

Fred Tomczyk

Not really. No, I think the way you should think about this is that we will use our self clearing over time for all of our stuff that we do today and well the options trading onto our clearing platform where will leverage pension over time. We'll continue to be in the foreign exchange and future side. We don't think it's with us to build all that functionality into our clearing systems.

Brian Bedell - Merrill Lynch

Right. So they view synergies from recent investment burden that would have otherwise had. Is that included in any of the expense synergies in terms of what you would have spent just to build out this business or is that [non-limited] to dead line?

Fred Tomczyk

Not really.

Brian Bedell - Merrill Lynch

Okay.

Fred Tomczyk

No, we haven't. We have not included in the synergies cost, we have avoided here.

Brian Bedell - Merrill Lynch

I mean obviously there's one another major options, play optionsXpress, any comment on why you choose thinkorswim versus optionsXpress?

Fred Tomczyk

Why would we choose optionsXpress. When you look at thinkorswim's growth rate and the fact that they've blown right by them in the last two years and actually it blew right by us in the last two years in options trades. This was clearly the most attractive option player and the most attractive asset from our point of view.

Brian Bedell - Merrill Lynch

Right, okay. And then also just on your overall acquisition strategy and then I could hear pretty clear that doesn't preclude you from doing other types of deals, but was that part of your consideration when you did that? In other words was this more of an completely opportunistic acquisition or you're thinking, your grand strategy of acquisition given the low fund cash, given the cash you build up and this is sort of part of your overall sort of game plan in acquisition.

Fred Tomczyk

I think, as you are aware. I mean, we are always looking at lots of transactions and we always keep our eyes very close to opportunities in the market. It has been a part of our history, and will continue to be important part of our strategy. And it did enter into our consideration, if we did this one would have preclude another one and the management team said no.

It's not to say, you could do anything you wanted. But, we felt very comfortable particularly because it was a capability play, that if another one came along, we could handle it and with their growth rates and the growth in the options business that we could continue to do this and as I said work on the front end and leave the back end heavy lifting with respect to the conversion until after we got the other one, done.

So management felt pretty comfortable with that. And as we looked at, I mean we've been -- to be straight here, we've been watching this company for two years. We've never been able to pull anything together with them and in the current environment we're able to do that and we are quite excited about that.

Brian Bedell - Merrill Lynch

Okay. Yeah and that seems like just like good timing given the -- though it's actually would low your fund cash and alternatives. Great, thanks very much.

Bill Gerber

Okay, Brian. Thanks.

Operator

That appears to be all the questions we have time for today. Mr. Tomczyk. I will turn the call back to you for any additional or closing remarks.

Fred Tomczyk

Well thank you everyone and thanks for joining us this morning. As you can tell, we are quite excited about this transaction and it advances our trading strategy by several years. We think we got a very attractive company here with best-in-class education program, a best-in-class trading platform for the active trader, and it advances our strategy significantly and we're quite excited about the day we have to take advantage of it in the current market environment, with big volumes to our strategy about maintaining a strong balance sheet, excellent cash position.

And that -- in times like this when in financial services, you got to take advantage of what the market brings you here. So, we are quite excited about it and we'll talk to you in a couple of weeks. Thank you.

Operator

And that does conclude today's conference call. Thank you for your participation.

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