NEW YORK, Nov 13 (Reuters) - TD Ameritrade Holding Corp may expand into Asia if its surplus cash grows as much as it expects after U.S. interest rates start to rise, the head of the discount brokerage firm said on Thursday.
The "next big thing" TD Ameritrade could invest in is "geographic extension," Chief Executive Officer Fred Tomczyk told investors at a conference sponsored by Bank of America Merrill Lynch.
"It is not an unnatural move for us to try to do it in another part of the world, particularly in Asia," he said, but cautioned that it would take five years or so before an overseas business contributes notably to the bottom line.
He did specify when a decision might be made on overseas expansion but said TD Ameritrade's management and board are now discussing scenarios for use of excess cash.
TD Ameritrade inherited a Singapore outpost with its 2009 acquisition of options brokerage firm thinkorswim. "We are currently looking at ways in which we might expand this operation," spokeswoman Kim Hillyer wrote in an email. She did not say whether that was the business Tomczyk was discussing.
Charles Schwab told Reuters late last year he had preliminary talks with Chinese officials about expanding his eponymous firm into Shanghai. A Schwab spokesman did not respond to requests for comment on the status of the company's efforts there.
In the next 12 months, TD Ameritrade will invest exclusively in cloud computing, social media and other technology projects, Tomczyk said. Its active trading customers make more than 10 percent of their trades on mobile devices and big-data analysis helps TD Ameritrade customize its online product pitches and sites, he said.
Although the thinkorswim options business fuels more than 35 percent of current revenue, Tomczyk said he has not seen attractive acquisition candidates lately. TD Ameritrade expects to continue returning some 80 percent of profit to investors through dividends and stock buybacks, he said.
The company will not follow rivals into selling mortgages and other bank products. "No disrespect to BofA," he said of Merrill Lynch and its parent Bank of America Corp, "but if you knowingly become a bank today you need to have your head read."
Toronto-Dominion Bank owns just over 40 percent of TD Ameritrade, enough for Tomczyk to say he understands the intense regulatory scrutiny that banks attract. (Reporting By Jed Horowitz; Editing by Tom Brown)