How Low Can Those ETF Fees Go?
January 14th at 3:00pm by Tom Lydon
Charles Schwab entered the exchange traded fund (ETF) business with a bang, offering commission-free trades on funds traded at Schwab. But now the provider has made another move that could ignite a price war where there’s one winner: investors.
Charles Schwab plans to lower its commissions on all online stock and non-proprietary ETF transactions to $8.95 per trade, reports Jed Horowitz for Investment News.
The reduced commission, which applies only to online trades on stock and non-Schwab ETFs, will take effect Jan. 19, and is aimed at attracting more customers interested in deep-discount brokerages. The target competition is T.D. Ameritrade, which offers $9.99 across-the-board pricing on Internet equity trading and Scottrade which has $7 commissions for online equity and ETF trades. [Is criticism justified?]
Currently, Schwab charges $12.95 per trade to clients who hold less than $1 million in household assets at the firm or made fewer than 120 trades a year. The brokerage also adds charges for orders above 1,000 shares. Schwab noted that the program could lower its first-quarter revenue by between $15 million and $20 million.
This is another example of how more competition within the ETF industry is a great catalyst for the best possible product and service. By offering these lower fees, Schwab has set the customer service bar a notch higher and investors can expect more moves such as these to come from providers across the board if they wish to keep up with their competition. [Is Schwab's entrance into the ETF industry a big deal?]
For more stories about new ETFs, visit our new ETF category.
