Charles Schwab ( SCHW) is putting together a shopping list, but apparently an online broker isn't one of the things it's looking to buy.

The San Francisco-based broker is throwing cold water on speculation that it could use some of the cash it's getting from the sale of its U.S. Trust business to buy an online competitor such as E*Trade ( ET) or TD Ameritrade ( AMTD).

Speaking at a Monday evening investor conference, CEO Charles Schwab says there's little value in buying another online firm. He says such deal would cost well over $10 billion.

The market caps of both E*Trade and Ameritrade are about $10 billion.

Instead, Schwab says he's interested in getting into the 401K administration business, or using some of the proceeds from the U.S. Trust sale to continue buying back the discount broker's shares.

Schwab's comments about the prospects for an online acquisition came as a surprise, says Brad Hintz, a Bernstein analyst, in a recent note.

The news also seemed to surprise investors banking on a possible buyout of E*Trade or Ameritrade. In midday trading Tuesday, shares of both online firms were trading down, with Ameritrade falling 13 cents to $16.75 and E*Trade sliding 39 cents, or 1.6%, to $23.09

Shares of Schwab, meanwhile, are trading higher, rising 11 cents to $18.59.

Two weeks ago, Schwab announced it was selling its U.S. Trust asset management business to Bank of America ( BAC). Schwab, which acquired the asset manager in a deal valued at $2.7 billion some six year ago, expects to record a pretax gain of $1.9 billion from the sale.

The U.S. Trust deal fueled speculation that Schwab was returning to its brokerage roots and would look to use that cash to buy an online brokerage. In recent years, the online brokerage sector has been rapidly consolidating as commission costs keep coming down. It's now harder for smaller firms to generate fat profits.

Others, meanwhile, speculated that the sale could be a way for Schwab to slim itself down for a sale. The U.S. Trust acquisition never really paid off for Schwab. The asset manager's wealthy customers were an odd fit for the broker's midmarket clientele and never traded stocks as much as the broker had hoped.

But Schwab also dismissed suggestions that the broker is looking to put itself up for sale.