E*Trade Joins Rivals in Cutting Commissions to Zero
October 02 2019 - 04:56PM
Dow Jones News
By Lisa Beilfuss
E*Trade Financial Corp. said Wednesday that it would eliminate
trading commissions, matching bigger rivals' moves a day
earlier.
Beginning Oct. 7, E*Trade will offer zero commissions on stocks,
exchange-traded funds and options listed on U.S. exchanges.
The decision comes after Charles Schwab Corp. -- the biggest
publicly traded electronic broker -- said Tuesday that it was
nixing trading commissions. TD Ameritrade Holding Corp. quickly
followed. Another rival, Interactive Brokers Group Inc., set the
stage for the moves last week when it said it would launch a
zero-commission stock-trading service.
Trading commissions are the latest front in a fierce price war
that has been playing out across the financial sector. Brokerages
and money managers have been whittling prices on ETFs and financial
advice, wooing new and younger clients with fee-free products and
services. The popularity of commission-free trading apps such as
from Robinhood Markets Inc. has put increased pressure on firms
still charging commissions, which has made up about one-fifth of
E*Trade's overall revenue.
The announcement by Schwab sent shares across the industry
reeling, adding more pain to an industry already under pressure
because of economic worries that have hurt stock-trading volumes.
Interest-rate cuts by the Federal Reserve are further cutting into
e-brokers' profitability.
This week, E*Trade's stock has lost 19%. It fell another 3.5%
after the close of trading Wednesday following the pricing news.
Shares of Ameritrade have dropped 29% while Schwab's stock is off
12%. Schwab makes significantly less revenue from commissions than
its rivals.
(END) Dow Jones Newswires
October 02, 2019 16:41 ET (20:41 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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