Brokerage discount company Charles Schwab Corp ( SCHW. N ) said on tuesday, what cancels commissions for online stock trading, ETF and options, listed on the US or Canada stock exchanges.
Experts warn, what is the last step of Schwab, probably, will have an impact on the entire sector, forcing competitors to follow suit and eliminate commissions.
TD Ameritrade competitors ( AMTD. O ) and E * Trade ( ETFC. O ) decreased by 22% And 18% respectively, while Schwab shares were down 9,7%.
"Sure, sends a salvo to other self-sufficient firms, to follow their example ", – said Stephen Biggar, Director of Financial Institutions Research at Argus Research.
This decision marks a watershed moment for online brokers, since new, more agile competitors, such as Menlo Park, Californian startup broker Robinhood, grabbing market share in recent years, offering exchange trading without commission.
Firms can offer free trade, selling orders of their clients to so-called wholesale market makers, such as Citadel Securities and Virtu Financial ( VIRT.O ), who seek to profit from the spread between the bid and the offer for shares.
This led traditional brokers to follow suit..
Monday Rival Interactive Brokers Group Starts Offering Unlimited Unlimited Stock and ETF Trades, registered in the USA. And last summer, JPMorgan Chase & Co ( JPM.N ) also started offering free stock deals for self-managed accounts through the mobile banking app.
“Commissions on shares have long ceased to be the main source of income for Schwab., falling to 8% income last year and is currently lower 5%. Net interest income from client deposits and asset management fees is much more important ", – added Biggar in an email to Reuters.
According to the statement of the regulator, Schwab earned 139 million dollars from the sale of orders of their clients in 2018 year, What's on 22% more, than in the previous year.
TD Ameritrade received 458 USD million for customer orders in the last financial year, compared to 320 millions of dollars a year earlier.
According to the company, Schwab will reduce commissions to zero from $ 4,95 per transaction, beginning with 7 October.
