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Schwab Eliminates Commissions on Stocks, ETFs and Options

Does this signal the end of the race to zero?

Less than a week after Interactive Brokers Group launched a new commission-free app and desktop service, Charles Schwab is following suit, eliminating commissions for U.S.- and Canadian-listed stocks, exchange traded funds and options for investors trading on mobile and the web. The same pricing will apply to the firm’s registered investment advisors who custody with Schwab.

(Editor's Note: After this article had already gone to press, TD Ameritrade announced a similar move to remove commissions on its online exchange-listed stock, ETF and options trades. The change, effective Thursday, Oct. 3, applies to both its retail brokerage and registered investment advisory clients.)

 “This is our price. Not a promotion. No catches. Period,” Schwab CEO and President Walt Bettinger said. “Price should never be a barrier to investing for anyone, whether an experienced investor or someone just starting on the investing path. We’re proud to provide clients with a full-service, modern investing experience that delivers on our no trade-offs combination of service, simplicity and superior value—backed by a satisfaction guarantee.”

Schwab currently charges $4.95 to trade U.S. stocks, ETFs and options, with no account minimums. Investors will still pay 65 cents per contract to trade options. The new pricing takes effect Oct. 7, and investors don’t have to open a new account to qualify.

Over the past few years, the major online brokerages have been slashing their trading fees and options pricing, including Fidelity, Schwab, E*Trade and TD Ameritrade.

Just last week, Interactive Brokers eliminated commissions in a move considered by some to be an effort to compete with zero-commission trading app Robinhood. The service is called IBKR Lite, and it will be available in October.

JPMorgan Chase launched YouInvest last year, with a limited number of free trades.

TAGS: Equities
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