Fidelity Investments Inc and Charles Schwab Corp made moves in quick succession on Tuesday to slash trade commissions, accelerating the race to zero and foreshadowing a more important battle to win clients for potentially more lucrative services. Fidelity cut its commissions to trade stocks and exchange-traded funds to $4.95, from $7.95 a trade, a 38 percent reduction for its retail brokerage clients. Rival Schwab swiftly followed by slicing its own fees on standard online trades to $4.95, from $6.95. Both companies also reduced pricing on options. The deep cuts intensified an already fierce competition to lower fees in the investment industry, and the shares of Schwab and several other brokerages fell as markets weighed the potential for profits to be strained by discounts. But the announcements also indicated the ambitions of brokers to win over clients to digital investment advice and other fee-based offerings. Mergers and acquisitions could be the next frontier for that battle. "There's this race to zero," said Noah Hamman, chief executive of AdvisorShares, a provider of ETFs, who earlier in his career worked in Fidelity's trading business. "To be in that business you've got to have other services." The industry's top players are "seemingly locked in a price war," with the goal of attracting clients to other services, Citigroup analyst William Katz said in a note. That pricing pressure raises concerns about the companies' earnings power, he said, as M&A comes into focus as a potential strategy to add clients. Shares of TD Ameritrade Holding Corp fell by nearly 10.5 percent on Tuesday, its largest one-day percentage drop since the 2008 financial crisis. E*Trade Financial Corp's stock slid by more than 7 percent and Schwab was down by more than 3 percent, their worst performance since Schwab last lowered its fees on Feb 2. All three stocks charted deeper losses earlier in the day. TD Ameritrade and E*Trade each charge $9.99 per trade. Shares in TD Ameritrade were hit the hardest, as it derives about 42 percent of revenue from trading fees, the biggest exposure of the three listed companies. Boston-based Fidelity's online brokerage business has 17.9 million accounts and $1.7 trillion in total client assets. The company said its efficient processing of trades and other services make it the best value. Fidelity also cut rates for investors who trade on margin, or with borrowed money from the brokerage. San Francisco-based Schwab has 10.2 million active brokerage accounts and $2.83 trillion in client assets. "Please don't miss the bigger picture here," Schwab's chief financial officer, Joe Martinetto, said in a statement calling the fee cuts a "growth strategy." "This is a company that is performing extraordinarily well." The fee-cut announcements offered a reminder of how much trading costs have come down for investors. Robinhood, a commission-free trading app for retail investors, said they were "happy" that Fidelity lowered its fees. "Ideally, they would have eliminated them altogether, along with the required $2,500 account minimum," it said in a statement. http://www.reuters.com/article/us-funds-fidelity-commissions-idUSKBN1670DV
TD Ameritrade Reduces Client Pricing to $6.95 for Online Equity Trades OMAHA, Neb.--(BUSINESS WIRE)-- TD Ameritrade Holding Corporation (NASDAQ:AMTD) announced today that it will reduce its online equity and ETF trade commissions from $9.99 to $6.95, and lower options pricing to $6.95 plus $0.75 per contract effective March 6, 2017. “There is an effort underway in our industry to redefine value. While some are leading with price, our clients tell us it’s much more than that,” said Tim Hockey, president and chief executive officer of TD Ameritrade. “They have told us time and again that value is delivered via rich experiences that prioritize flexibility and client choice, coupled with a simple, straightforward price. We have an award-winning client offering, plus tremendous scale. With our pending acquisition of Scottrade on the horizon, we have a unique opportunity to enhance that experience even further with lower pricing for all of our clients.” “Outstanding trading platforms, innovative tools, a broad product selection, education and 1:1 support, investment guidance and advice – these are the things by which our clients are measuring the quality of their experience with us,” Hockey continued. “We’re proud of that quality, and breadth of service we provide. We’ve been investing in retail investors for 42 years, and our work to push the envelope in this regard will continue as the needs and expectations of investors evolve.” Rates are effective for retail investors, as well as the company’s independent registered investment advisor clients.1 For more information about TD Ameritrade’s solutions for trading, retirement planning and investment guidance, please visit www.tdameritrade.com. About TD Ameritrade Holding Corporation Millions of investors and independent registered investment advisors (RIAs) have turned to TD Ameritrade’s (NASDAQ:AMTD) technology, people and education to help make investing and trading easier to understand and do. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how - bringing Wall Street to Main Street for more than 40 years. TD Ameritrade has time and again been recognized as a leader in investment services. Please visit TD Ameritrade's newsroom or www.amtd.com for more information, or read our stories at Fresh Accounts. http://www.amtd.com/newsroom/press-...-to-695-for-Online-Equity-Trades/default.aspx
