Swiss bank UBS AG announced today that it will acquire Charles Schwab SoundView Capital Markets, the capital markets division of U.S. brokerage Charles Schwab Corp., for U.S.$265 million in cash.

The transaction is expected to close in the fourth quarter of 2004, subject to regulatory approval. The division will be integrated in the equities business of UBS’s investment bank.

The business comprises equities trading and sales, including a third-party execution business, and Schwab’s Nasdaq trading system. It currently handles over 200 million shares a day in trade volume and makes a market in over 11,000 stocks. With this transaction, UBS expects to become one of the top traders in Nasdaq securities. UBS is already among the top three in the trading of NYSE-listed securities and is the largest secondary equities house worldwide.

As part of the sale, the parties have entered into a multi-year execution service agreement for the handling of Schwab’s equities and listed options orders. This transaction will add significant scale to UBS’s business flow from third party brokers and on-line brokers, making UBS one of the top providers of execution services for U.S. retail brokers.

Schwab is to focus on its retail business. Commenting on the sale, Schwab chairman and CEO, Charles Schwab said, “The company has made the strategic decision to intensify its focus on Schwab’s core business of serving individual investors and independent financial advisors who work with them. The sale of our capital markets business reflects an important outcome of that decision.”