- E-Trade said Wednesday after the closing bell that it would eliminate commissions for online US-listed stock, options, and exchange-traded fund trades. The changes will take effect on October 7.
- The announcement comes one day after rivals Charles Schwab and TD Ameritrade said they would both eliminate commissions on US-listed transactions.
- Interactive Brokers, a smaller competitor, said last week that it would roll out a new offering this month that would provide commission-free, unlimited trades on US-listed stocks and exchange-traded funds.
- The moves have analysts speculating about what broker may be next.
- Visit BI Prime for more stories.
The commission wars have reached a fever pitch.
E-Trade said on Wednesday after the closing bell that it would eliminate commissions for online US-listed stock, option, and exchange-traded fund trades, becoming the fourth major discount brokerage in a week to make such a move.
Following the series of announcements, some analysts speculated that it was likely even more players would follow suit. Fidelity, for one, charges $4.95 for US stock trades.
“It is surprising to us that AMTD matched SCHW’s offering before Fidelity, which tends to be one of the price setters in the group,” Brennan Hawken, a UBS analyst, wrote in a note to clients on Tuesday.
When asked about potential commission cuts on Wednesday, a spokesperson for Fidelity pointed to the firm’s interest rates on its cash sweep accounts. He did not speak to next moves on commissions specifically.
“It’s interesting that Schwab, TD Ameritrade and E*Trade have deliberately chosen not to help the greatest number of their investors by automatically providing the highest interest rate on their cash sweep like Fidelity does,” spokesperson Robert Beauregard said in a statement provided to Business Insider.
He also pointed to Fidelity’s low and zero-cost investing options, including commission-free ETFs and zero-cost index funds. He said Fidelity has opened 10,000 new brokerage accounts each trading day so far this year.
The changes at E-Trade will take effect on October 7. The discount brokerage said it expected such a change would have had a $75 million impact on its second-quarter operating results.
The announcement comes as the race to eliminate or lower fees for trading stocks, managing wealth, and finding financial advice picks up.
Brokers have had to grapple with challenges from zero-commission trading apps like Robinhood, and at least one startup is arguing that stock trading platforms should actually be paying customers to trade.
Rival Charles Schwab said early on Tuesday it would eliminate fees in a similar move effective October 7, with TD Ameritrade following suit later that day with eliminated fees effective October 3.
Interactive Brokers, a smaller competitor, said last week that it would roll out a new offering this month that would provide commission-free, unlimited trades on US-listed stocks and exchange-traded funds.
The individual announcements have rocked shares of all the e-brokerages in recent days. E-Trade, Charles Schwab, and TD Ameritrade shares all plunged in Tuesday trading following Charles Schwab’s announcement.
Leave a Reply
Leave a Reply
This site uses Akismet to reduce spam. Learn how your comment data is processed.
