JPM JP Morgan Chase and Co

By Emily Glazer and Lisa Beilfuss 

JPMorgan Chase & Co. is boosting its online investing service with free trades for customers, a move that sent the world of online brokerages into disarray on Tuesday.

The bank is trying to bring in more first-time investors, like millennials, as well as bank customers who invest elsewhere. JPMorgan's move could accelerate the pricing war buffeting rivals like TD Ameritrade Holding Corp. and Charles Schwab Corp., which have already been cutting fees in a fierce competition for customers. Fintech startups offering low-fee or discounted trading have only accelerated the competition.

Shares of TD Ameritrade, Schwab and E*Trade Financial Corp. tumbled on the news, with TD Ameritrade falling more than 7% in afternoon trading.

The JPMorgan service will offer any bank customer at least 100 free stock or exchange-traded fund trades for one year, with no account minimums, said bank spokesman Darin Oduyoye. The free trades are a sea change in the bank's pricing. It had charged $24.95 for online trades as recently as last year, according to CNBC, which reported the news earlier.

Certain wealthier bank customers will be eligible for unlimited free trading, Mr. Oduyoye said. The service, dubbed You Invest Trade, will be embedded in the bank's app and website.

Charles Schwab charges $4.95 per trade, and TD Ameritrade and E*Trade Financial Corp. both charge $6.95 per trade, according to their websites. Bank of America Corp. launched Merrill Edge, its lower-cost online brokerage platform, in 2010. It costs $6.95 a trade, with certain trades free for clients with balances of at least $20,000.

Firms offer trading discounts to bring in customers who sometimes become more lucrative clients if they take advantage of other services ranging from investment advice to margin loans.

"There's a lot of competition now to get people on their platforms," said Denise Valentine, an analyst at research firm Aite Group who focuses on wealth management. "It captures their attention and once you hook them, you have the opportunity to keep them."

If JPMorgan customers exceed 100 free trades a year, they'll be charged $2.95 per trade.

Schwab said in a statement it "will continue to aggressively lead the way in improving how people invest and manage their wealth." A TD Ameritrade spokeswoman said in a statement the company "continually evaluates its offerings and pricing." "The competitive environment will likely continue to shift, and we will remain nimble," she said.

Schwab, the biggest e-broker, reported 11.2 million active brokerage accounts at the end of the second quarter and said clients executed an average of 704,000 trades a day. That amounts to roughly 45 million trades and an average of about four trades per client account during the quarter or 16 for the year.

Schwab and TD Ameritrade have seen lower revenue per trade as pricing pressure heats up. At Schwab, average revenue per revenue trade (which excludes certain transactions) fell to $7.30 in the latest quarter from $7.96 a year earlier. For TD Ameritrade, that metric dropped to $7.40 from $7.83 in last year's quarter. But lower prices have been offset by higher activity, with both firms posting solid increases in overall revenue.

After sitting out most of the nine-year bull run, more individual investors started pouring in at the end of last year. Schwab, TD Ameritrade and other online brokerages reported surges in trading activity that carried into 2018, and they attributed much of the activity to individual investors who opened brokerage accounts for the first time.

JPMorgan also plans to launch a type of robo-investing service embedded in its app and website called You Invest Portfolios to assist customers with investing.

The products have been in the works for some time. At a June 2016 investor presentation, CEO James Dimon said he was considering no-cost brokerage trades or a free automated investing program.

At JPMorgan's annual investor day presentation in February, Ms. Lake said the bank offers an online trading service to wealth management clients and would launch with other customers this summer. Ms. Lake said that less than 10% of the retail bank's customers have investments with JPMorgan, and that a two-year-old $300 million investment into digital capabilities "will accelerate our ability to capture more of their investments."

Write to Emily Glazer at emily.glazer@wsj.com and Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

August 21, 2018 15:55 ET (19:55 GMT)

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