Schwab, in Bid for Younger Clients, to Allow Investors to Buy and Sell Fractions of Stocks
October 17 2019 - 2:17PM
Dow Jones News
By Lisa Beilfuss
Charles Schwab Corp. will let investors buy and sell fractions
of shares in coming months as part of an effort to attract younger
clients.
Founder and Chairman Charles R. Schwab told The Wall Street
Journal Thursday that fractional share trading would soon be
introduced, along with other several other new programs, as the
online brokerage looks ahead after it eliminated trading
commissions earlier this month. Mr. Schwab discussed the firm's
future after speaking about his new book, "Invested," in New
York.
"I wanted to take commissions out of the formula," Mr. Schwab
said. "We've been on that path for 40 years," he said, reflecting
back on the company's start as one of the first discount
brokerages. Now, he said, Schwab is focusing on efforts to win
business from young people.
The move would be the first by a major online brokerage to allow
investors to buy and sell fractions of stocks. Some of the most
well-known and popular companies have very high price tags, making
owning a share impossible for some would-be investors. A share of
Amazon Inc., for example, costs $1,792.
When Schwab said this month that it would nix trading
commissions, it acknowledged competitive pressure from new
entrants. Digital upstarts such as Robinhood Markets Inc. helped
popularize the zero-commission model in the online-brokerage
business, and some others have already allowed for fractional share
trading. One such company is M1 Finance LLC, a Chicago-based online
brokerage that splits every share into one-one hundred thousandth
of a share.
Schwab didn't specify when the program would launch. "We're
constantly working on new services designed to appeal to our
evolving client base," a spokeswoman said.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
October 17, 2019 14:02 ET (18:02 GMT)
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