Bloomberg News

San Francisco - Charles Schwab Corp. may buy another brokerage and build a business with institutional investors after daily trading through the No. 1 discount broker slumped to the lowest in almost three years.

The Wall Street Journal reported Schwab has talked to Los Angeles-based Jefferies Group Inc., which it could buy for more than $1 billion. Schwab is considering expanding its institutional trading business through a joint venture or acquisition, chief financial officer Christopher Dodds said yesterday in an interview.

``This is part of the overall industry consolidation,'' said Pratik Gupta, head of Asia-Pacific Internet research at Salomon Smith Barney Inc. ``At the peak of the dot-com bubble, there were too many players and now a shake-out is inevitable.'' Schwab paid $2.8 billion last year for money manager U.S. Trust to attract wealthy individual investors who were using full- service brokers such as Merrill Lynch & Co.

Commission trading at Schwab dropped for the sixth time in seven months in July as falling stocks discouraged individual investors from trading. Trading revenue fell in the past three quarters. In the first nine days of August, average daily trades fell an additional 9.8 percent from the July average to 112,000, the lowest since October 1998. Schwab spokesman Glen Mathison and Jefferies CFO Joseph Schenk declined to comment on the report.

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