The acquisition would strengthen UBS's stock-trading operations and enable it to produce better prices and market insights for institutional clients.
The deal for Schwab Capital Markets is expected to be announced on Monday, the source added. The purchase price would be about one-sixth less than the $321 million that Schwab paid for the unit eight months ago.
The Swiss bank, the world's seventh-largest by market value, plans to significantly scale back the research part of the operation, according to a Wall Street Journal report, citing an unnamed source on Monday.
On Friday, the New York Post, citing unnamed sources, said any transaction would likely include an agreement by Schwab to direct much of its customers' buy and sell orders to UBS for at least three years.
Last month, San Francisco-based Schwab fired Chief Executive David Pottruck and brought back company founder Charles Schwab to reverse a tumultuous three-year decline marked by revenue declines, profit warnings, job cuts and a patchwork strategy that disappointed investors.