If Pershing does decide to offer a commission-free ETF platform, the broker will join other custodians that offer a range of free ETF trades. For instance, some of the more popular commission-free ETF brokers include Charles Schwab, Fidelity, TD Ameritrade, Raymond James’ RIA business, E*Trade, Vanguard and Merrill Lynch. [Six Popular Commission-Free ETF Trading Platforms]
Meanwhile, ETF providers have been open to providing their products on a commission-free platform as a way to attract investors and quickly grow assets under management. However, with more commission-free ETF platforms coming online, ETF sponsors may grow picky over which distributor to choose. Matthew Fronczke, a director at kasina, points out that this is particularly true for smaller, more specialized ETFs that lack the ETF sales volume with advisor platforms to negotiate lower fees than more established firms.
“RIAs in particular are demanding the lowest possible trading cost, and that’s zero right now,” Fronczke told Ignites, adding that advisor demand is likely to drive other broker-dealers to consider adopting commission-free platforms. “If you’re trying to drive [flows]in a channel, you’re going to have to be competitive with trading costs.”
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Max Chen contributed to this article.