-=Bank Of America (BAC) expands commission-free trading for Preferred Reward members

Bank of America said Monday its Merrill Edge Self-Directed platform will expands its offer of zero-dollar online trading, offering unlimited commission-free stock, exchange-traded fund and options trading. About 87% of trades on the platform were already commission-free through benefits offered to members of the company's Preferred Rewards program, the company said in a statement.


The news comes after Charles Schwab (SCHW), Fidelity Investments and TD Ameritrade had eliminated commissions on online trading earlier this month to lure clients amid increased competition from several fintech startups that offer quick and cheaper services.


In addition to moving to zero-dollar trades for all members of the program, Merrill Edge Self-Directed clients not enrolled in Preferred Rewards will now receive flat-rate pricing of $2.95 for online stock and ETF trades, down from $6.95, with no trade or balance minimums.

TD Ameritrade (AMTD) and E*Trade (ETFC) eliminate trading commissions

 On October 2, shortly after the market closed, E*TRADE Financial Corp announced that its online brokerage would cut its base commission rate to $0, following in the footsteps of Charles Schwab and TD Ameritrade. 

• Now that E*TRADE, TDA, and Interactive Brokers offer some form of free trading, the industry is closely waiting for Fidelity, TradeStation and other online brokers to respond. 

E*TRADE Financial Corporation (NASDAQ: ETFC) today announced it will eliminate retail commissions for online US listed stock, ETF, and options trades. It will also reduce the options contract charge to $0.65 per contract for all traders while maintaining its active trader pricing at $0.50 per contract. These changes will take effect on October 7, 2019.

• Press release; October 2, 2019
• investopedia.com article
• charts https://finviz.com/screener.ashx?v=211&t=AMTD,ETFC,IBKR,SCHW&ta=0&o=-change

The current commission schedule shows tiered rates, depending on the client's trading frequency. The base rate was $6.95, dropping to $4.95 for clients who traded more often than 30 times per quarter. Options were charged at $6.95 per leg with $0.75 per contract; active traders paid $4.95 per leg with $0.50 per contract. 

TD Ameritrade's commission-free trading starts October 3.

=Interactive Brokers (IBKR) will offer zero-fee trades on stocks and ETFs

Interactive Brokers (IBKR) will offer zero-fee trades on stocks and ETFs via a new service, as it looks to broaden its appeal with retail investors. IBKR stock retreated slightly Thursday, with TD Ameritrade (AMTD), E-Trade (ETFC) and Charles Schwab (SCHW) falling harder.

The new IBKR Lite service will offer unlimited trades on U.S.-listed stocks and exchange traded funds for a zero trading commission. It debuts in October. It will have no account minimums or inactivity fees.

Interactive Brokers will rebrand its existing low-fee stock trading offering as IBKR Pro.

Fee wars have engulfed financial services firms. But to date, online brokers Schwab, TD Ameritrade and E-Trade only allow customers to trade select ETFs for no commission. They've also lowered fees or removed minimums to trade stocks and ETFs, as investing apps like Robinhood capture a new generation of investors.

Customers can switch between IBKR Lite and IBKR Pro, subject to conditions. Pro clients will get potentially better pricing on stock trades through smart routing technology. Price improvement may matter less to regular investors.

Interactive Brokers' stronghold is active traders and institutions, but it's looking to tap a broader audience.

IBKR Stock, Brokerage Stocks Lagging
Interactive Brokers stock fell 0.4% to 51.51 on the stock market today, well off intraday lows of 49.36. Charles Schwab stock lost 2.2%, E-Trade stock tumbled 4.8% and AMTD stock dived 6.5%. Schwab charges $4.95 for stock trades, and has relatively high exposure to asset management. E-Trade and Ameritrade charge $6.95 per trade.

J.P. Morgan Chase (JPM) unveils its new investing app, You Invest

Shares of Charles Schwab fell 4 percent, TD Ameritrade fell 6.7 percent, E-Trade fell 4.8 percent and Interactive Brokers fell 3.1 percent in premarket trading. The move by J.P. Morgan aggravates a cold-blooded price war, with the globe's largest managers fighting for clients with low-cost options. J.P. Morgan will launch its new service next week.

• J.P. Morgan’s new digital brokerage service comes with free trades, portfolio building tool and access to equity research.
• The bank’s new trading service starts next week and will be available to its 47 million mobile or online users.
• All customers get 100 free stock or ETF trades in the first year. Those with Chase Private Client get unlimited trades.
• CEO Jamie Dimon hinted at this move in 2016, citing Amazon Prime as his inspiration.

   

The move, more than two years in the making, instantly intensifies the price war that is occurring throughout the investing landscape. Whether it’s executing trades, managing portfolios or simply owning mutual funds and ETFs, costs have been collapsing on Wall Street. Among brokerages, the free trading app provided by Robinhood Markets has gained attention recently for attracting more than 5 million users, and a $5.6 billion valuation, in just a few years. 

J.P. Morgan, the biggest U.S. bank, has a distinct advantage over many competitors: It already has financial ties with half of American households. When its engineers flip a switch in coming days, more than 47 million people who already use the company’s banking app or website will gain access to the new service, called You Invest.

“There are customers out there who may not want to trust their credentials or their money to an app of the month,” said Jed Laskowitz, a J.P Morgan veteran who runs You Invest. ”We’re thinking about what’s right for our customers, helping them get invested, and stay invested and diversified. ”