Charles Schwab Corp. and TD Waterhouse Group joined forces Wednesday to acquire a Scottish company that makes markets in British-listed equities.

The two companies, which compete in the United States for retail investors, announced that they had agreed to buy Aitken Campbell from Abbey National PLC for $87.7 million. The deal, which is subject to regulatory approval, should close in the second quarter, they said.

Both TD Waterhouse, which is mostly owned by Toronto-Dominion Bank, and Charles Schwab already have strong retail operations in the United Kingdom, and the companies said owning a market making company would supply more liquidity for their customers and bring in trading revenues.

There has been growing consolidation among companies that make markets in listed stocks on this side of the Atlantic recently.

Goldman Sachs Group said Monday that it plans to buy Benjamin Jacobson & Sons, a specialist company that makes markets in about 90 New York Stock Exchange-listed stocks. Goldman got into the business in a big way in the fourth quarter when it bought Spear Leeds & Kellogg.

FleetBoston Financial Corp., meanwhile, has also bought two Big Board specialist firms in recent years, including M.J. Meehan & Co. last March.

However, Lon Gorman, president of Schwab's capital markets business, said the European market attracted the companies' attention because "the spreads are four to five times higher than in the U.S."

Trading spreads in the United States - where Schwab runs a company that makes markets in Nasdaq-listed stocks - are likely to contract further in the next couple of months as stock prices begin being listed in decimals instead of fractions, he said.

Schwab and TD Waterhouse would use Aitken Campbell of Glasgow as the foundation of their joint market making venture in the United Kingdom. The venture would operate under the name Aitken Campbell, which makes a market in about 250 U.K. securities. Its ownership would be split equally between the two buyers.

"This joint venture provides TD Waterhouse with the opportunity to expand in a new strategic direction that will further our goal of diversifying our revenue streams," said Steve McDonald, its chief executive officer.

On the front end, the companies are fierce competitors, but they have worked together before. Mr. Gorman said that TD Waterhouse has been a Schwab Capital Markets client for more than five years.

Bharat Masrani, vice chairman of TD Waterhouse, said that it teamed up with Schwab and other U.S. brokerage and venture capital firms to form the online investment bank Epoch Partners in November 1999.

Mr. Gorman said the Aitken deal came together quickly and the companies have not begun to explore how the benefits of the deal could flow through to their U.S. operations. Though the companies will continue to explore opportunities for joint ventures, "there is no specific deal in the works," he said.

Mr. Gorman and Mr. Masrani would be co-chairmen of Aitken Campbell, and Archie McSporran would remain its managing director.

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