E-Trade joins the party $0 commission

[genjix]

E-Trade (ETFC) announced Thursday that it will eliminate commissions for its clients. The changes take effect on October 7.
"With this new commission schedule we are further raising the bar, delivering an unrivaled experience at price points that cannot be beat—main street investors will now trade the stocks and ETFs of their choice for $0," said E-Trade CEO Mike Pizzi in a statement

https://www.cnn.com/2019/10/02/investin ... mmissions/

[indexfundfan]

E-Trade (ETFC) announced Thursday that it will eliminate commissions for its clients. The changes take effect on October 7.
"With this new commission schedule we are further raising the bar, delivering an unrivaled experience at price points that cannot be beat—main street investors will now trade the stocks and ETFs of their choice for $0," said E-Trade CEO Mike Pizzi in a statement

https://www.cnn.com/2019/10/02/investin ... mmissions/

The ball is in your court Fidelity.

[Fclevz]

So, just to keep it straight, the list for zero commissions is now?

Interactive Brokers
Schwab
TD Ameritrade
E*Trade
Vanguard (ETF's only)

[indexfundfan]

Free trade for stocks and ETFs without asset qualifications

Firstrade
Interactive Brokers Lite
Schwab
TD Ameritrade
E*Trade

Does not include FinTech startups.

[Hector]

We are going to see a lot more people going with ETFs over mutual funds.

[oldlongbeard]

".....Here, Fido...."

[whodidntante]

We are going to see a lot more people going with ETFs over mutual funds.

The horror!

[genjix]

We are going to see a lot more people going with ETFs over mutual funds.

ETFs would still have ER fees though right?

[yakk0]

Does anyone know if this applies to ESPP plans managed by them too? I know I end up paying ridiculous commissions to sell ESPP and RSUs held at Etrade. And I don't even know how the commissions are calculated. They've been different every time but range between $29-86.

[pward]

Does anyone know if this applies to ESPP plans managed by them too? I know I end up paying ridiculous commissions to sell ESPP and RSUs held at Etrade. And I don't even know how the commissions are calculated. They've been different every time but range between $29-86.

I'm in the same boat, though ours is a $30 flat fee per transaction. But 4x a year for RSU's and 2x per year on ESPP that adds up. My guess is that RSU's and ESPP will likely not be included unfortunately.

[rascott]

I fully expect TDA to buy/ merge with E Trade.

[columbia]

How easy will it be to move your holdings from these various fintechs if/when they go belly up?

[CurlyDave]

I fully expect TDA to buy/ merge with E Trade.

Have they fully digested Scottrade?

That was sure a negative for me. I started out with Datek because I really liked their streaming quotes and little graphs for each position I held. TDA bought Datek (and me as a customer as well) and immediately degraded the streaming. Then they bought Scottrade and the streaming got even worse. Now it is almost completely gone, but I have decades of history with them.

[rascott]

I fully expect TDA to buy/ merge with E Trade.

Have they fully digested Scottrade?

That was sure a negative for me. I started out with Datek because I really liked their streaming quotes and little graphs for each position I held. TDA bought Datek (and me as a customer as well) and immediately degraded the streaming. Then they bought Scottrade and the streaming got even worse. Now it is almost completely gone, but I have decades of history with them.

I generally find TDA the best online broker I've used.... but started gravitating away due to having free trades elsewhere. This new news might entice me to move everything to them.

Wonder when Ally will drop to $0.

[effigy98]

M1 finance plus you can buy partial shares for us poor folk.

[tesuzuki2002]

E-Trade (ETFC) announced Thursday that it will eliminate commissions for its clients. The changes take effect on October 7.
"With this new commission schedule we are further raising the bar, delivering an unrivaled experience at price points that cannot be beat—main street investors will now trade the stocks and ETFs of their choice for $0," said E-Trade CEO Mike Pizzi in a statement

https://www.cnn.com/2019/10/02/investin ... mmissions/

A little late to the party.... but atleast they showed up!!

[galawdawg]

I discovered when looking to move from Vanguard Brokerage to another firm that E*Trade offers 110 Vanguard mutual funds with no transaction fee. I believe they may be the only brokerage outside of Vanguard itself where you can buy and sell Vanguard mutual funds without transaction fees or commissions.

[whodidntante]

".....Here, Fido...."

I bet there have been some contentious marketing meetings at Fido.

[indexfundfan]

".....Here, Fido...."

I bet there have been some contentious marketing meetings at Fido.

Here is Fidelity's canned reply on Twitter

We are committed to providing an exceptional experience and price is one component. With Fidelity, you receive industry-best order execution & price improvement, no investment mins. and zero expense ratio index funds. We’ll continue to enhance our offerings and keep you informed!

[David Althaus]

My guess is these companies have had this gamed out for a long time. Witness TDA dropping commissions within hours of Schwab. Companies don't just blithely agree to take a $200 to $400 million quarterly hit to revenue within eight hours. So, the longer Fidelity goes without a move the more you can read into it. Now we all need pay more attention to spreads--about as important as were commissions a few days back.

All the best

[Harry Livermore]

So, where do we think they will make up the revenue shortfall? Payment for order flow? Bigger spreads? Lower interest rates on sweep accounts? Annual maintenance fees for accounts below $1M? Generally, financial firms have this stuff all figured out. And they try REALLY hard to not make less money. Or is it all about gaining market share? Very interesting...
For the infrequent trader, a $4.95 commission might be less expensive in the long run than whatever they may have cooked up. I assume the big brains here on Bogleheads have already parsed out all of this...
But if it's no strings attached, I'm always happy to pay less!
Cheers

[hicabob]

Everyone can roll their own index funds now at a competitive price.

[SlowMovingInvestor]

My guess is these companies have had this gamed out for a long time. Witness TDA dropping commissions within hours of Schwab. Companies don't just blithely agree to take a $200 to $400 million quarterly hit to revenue within eight hours. So, the longer Fidelity goes without a move the more you can read into it. Now we all need pay more attention to spreads--about as important as were commissions a few days back.

All the best

Spreads aren't decided by these brokers, right ? And they are still required to trade at the NBBO. Put it another way, I don't think they can get more money than they already were out of spreads, order flow etc.

They might push robo-advisors, paid advisory services. etc.

[Alaric]

I just received an email from E*Trade. Special offer: Get 90 days managed free.

The email says after that the annual advisory fee is $1.50 per $500 invested, so 0.30% ER.

[genjix]

I got a promo email as well

Through October 31, get up to $3,000 when you simplify your investing with an E*TRADE managed portfolio.

[Hector]

We are going to see a lot more people going with ETFs over mutual funds.

ETFs would still have ER fees though right?

Right.
Fidelity has their own indexes and funds that track those indexes; they have zero ER. We might see more firms do that going forward.

[Hector]

My guess is these companies have had this gamed out for a long time. Witness TDA dropping commissions within hours of Schwab. Companies don't just blithely agree to take a $200 to $400 million quarterly hit to revenue within eight hours. So, the longer Fidelity goes without a move the more you can read into it. Now we all need pay more attention to spreads--about as important as were commissions a few days back.

All the best

When choosing between ETF and MF, I used to prefer ETFs. I am preferring mutual funds now. I don't need to worry about putting correct limit order. I also like trading using $ amount over # of units. I would do dividend and gain auto re-investment only with mutual funds and not ETFs.

[whodidntante]

".....Here, Fido...."

I bet there have been some contentious marketing meetings at Fido.

Here is Fidelity's canned reply on Twitter

We are committed to providing an exceptional experience and price is one component. With Fidelity, you receive industry-best order execution & price improvement, no investment mins. and zero expense ratio index funds. We’ll continue to enhance our offerings and keep you informed!

So they are going to differentiate by charging commissions? That's adorable!

[arf30]

I wonder if part of Fidelity's agreement with Blackrock is they can't offer other fund companies at zero commission.

[whodidntante]

I wonder if part of Fidelity's agreement with Blackrock is they can't offer other fund companies at zero commission.

They already do.

[stlutz]

I think Fidelity's bigger issue is that they are the only one of the bunch (Schwab, E*Trade, TD Ameritrade) who pays a decent rate on uninvested cash.

They still generate good amount of revenue from their sweep money market funds (ER = .42%), but they would get a lot more if they essentially paid 0 like everyone else. They also don't have any other fees.

So, I'm sure they will go to 0 on commissions. I think they are just figuring out how they are going to claw at least some of that revenue loss back.

[AerialWombat]

So I’ll save $4.95 a month when I make my monthly buy in my solo 401k at E-Trade.

Yee. Haw.

[SlowMovingInvestor]

Since Fidelity is a private company, they may feel less pressure to respond immediately, and can take their time to work out a response.

They may go for another class of account like iBroker did (which will likely require back end IT work to setup) rather than just drop rates to zerof ro everyone.

[abuss368]

Many years ago when we traded individual stocks, we were with eTrade. When I think back to the amount of fees and commissions we paid, it is unfortunate.

[GuyInFL]

We are going to see a lot more people going with ETFs over mutual funds.

ETFs would still have ER fees though right?

My vanguard ETFs have very low fees.

[shess]

I fully expect TDA to buy/ merge with E Trade.

Have they fully digested Scottrade?

That was sure a negative for me. I started out with Datek because I really liked their streaming quotes and little graphs for each position I held. TDA bought Datek (and me as a customer as well) and immediately degraded the streaming. Then they bought Scottrade and the streaming got even worse. Now it is almost completely gone, but I have decades of history with them.

Eh, decades of history isn't worth all that much. I started with TD Waterhouse around 2000, and have been thinking of moving my last account away because the local office keeps bugging us with offers to get in on special management opportunities. If I make one trade a year on that account, I'd be surprised, but it's marginable and has ACH setup and I'm lazy, so ... but if they start calling telling me how their special management opportunities are even cheaper with the free trades, I might finally move on...

[indexfundfan]

I think Fidelity's bigger issue is that they are the only one of the bunch (Schwab, E*Trade, TD Ameritrade) who pays a decent rate on uninvested cash.

They still generate good amount of revenue from their sweep money market funds (ER = .42%), but they would get a lot more if they essentially paid 0 like everyone else. They also don't have any other fees.

So, I'm sure they will go to 0 on commissions. I think they are just figuring out how they are going to claw at least some of that revenue loss back.

Fidelity could be considering to follow the competition by forcing investors into low yielding FDIC sweeps. The only problem is that they have recently been advertising heavily that they offer sweep money market funds.

[indexfundfan]

It looks like Etrade has followed TDA and eliminated the $19.99 short term trading fee.