Charles Schwab Ending Online Trading Commissions on U.S.-Listed Products
October 01 2019 - 10:20AM
Dow Jones News
By Colin Kellaher and Allison Prang
Charles Schwab Corp. said it would eliminate commissions on
trades made on its mobile and web channels, rattling the online
brokerage industry.
Shares of brokerage companies E*Trade Financial Corp. and TD
Ameritrade Holding Corp. fell by 16% and 20% respectively after the
market opened Tuesday. The move also sent shares of Charles Schwab
down fell 6.2%.
The change applies to commissions for stocks, exchange-traded
funds and options listed on U.S. or Canadian exchanges. The San
Francisco financial-services company currently charges a commission
of $4.95 for online U.S. stock, ETF and options trades.Charles
Schwab said clients trading options will continue to pay 65 cents
per contract.
Charles Schwab said the move, which is effective Oct. 7, is
aimed at making online investing more affordable. It noted that new
firms entering the market often use zero or low commissions as a
lever.
"We don't want to fall into the trap that a myriad of other
firms in a variety of industries have fallen into and wait too long
to respond to new entrants," Chief Financial Officer Peter Crawford
said in a note on the company's website. "It has seemed inevitable
that commissions would head towards zero, so why wait?"
Keeping services less-costly for customers has been a focus of
Schwab's. The company has also tried to make financial planning
cheaper for customers.
Charles Schwab said the pricing reduction is equivalent to about
$90 million to $100 million in quarterly revenue, which roughly
translates to 3% to 4% of total net revenue. However, the firm said
its commissions per revenue trade have been falling for several
years, "so the potential revenue impact in coming quarters could
very well be smaller."
Others in the industry have moved to make trading free of fees.
Last year, JP Morgan Chase said it would give customers 100 free
stock or ETF trades.
Write to Colin Kellaher at colin.kellaher@wsj.com and Allison
Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
October 01, 2019 10:05 ET (14:05 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
TD Ameritrade (NASDAQ:AMTD)
Historical Stock Chart
From Aug 2024 to Sep 2024
TD Ameritrade (NASDAQ:AMTD)
Historical Stock Chart
From Sep 2023 to Sep 2024