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NEW YORK (Reuters) - U.S. discount broker Charles Schwab Corp. SCHW.N is in talks to buy rival TD Ameritrade AMTD.O in a $26 billion deal that would create an online brokerage behemoth, according to media reports.

Both brokerages are used widely by mom-and-pop investors.

Question: Why are the two brokerages thinking of merging?

The discount brokerage business model is facing increasing pressure, as financial technology disruptors like Robinhood pushed legacy firms to cut commissions to zero, and the increased use of technology has required huge spending on platforms. The solution to managing costs is getting bigger and acquiring more clients, which is exactly what Schwab could achieve by acquiring its smaller rival.

Question: Will this affect fees for retail investors?

Customers of both firms already get free online trades of stocks, ETFs and options. Schwab was among the first to cut its fees to zero in early October, forcing TD Ameritrade and others to follow with similar moves. Analysts said it is unlikely the combined firm would raise fees after a merger.

Question: How else can this affect retail investors?

TD Ameritrade clients could gain access to Schwab’s wealth management, asset management, banking and custody services through the deal, according to analysts. Customers of Schwab could also see improvements in trading technology and educational tools for investing -- two things TD Ameritrade has invested in. On the downside, the combined brokerage will have a lot more market power, the impact of which remains to be seen.