In its never-ending quest to serve as the ultimate value broker, Fidelity (read our review) has lowered its regular stock trade commissions from $7.95 down to $4.95, a 38% reduction. Alongside lower rates for equity trades, margin rates are being cut and options contract fees are being reduced from $.75 to $.65 per contract.

Charles Schwab was the first to announce lower commission rates at its Winter Business Update less than a month ago, moving from $8.95 to $6.95 per trade. Firstrade followed shortly thereafter with rate cuts of its own from $6.95 to $4.95 per trade.

UPDATE 02/28/17 – Charles Schwab has lowered its equity commissions to $4.95 in response to Fidelity’s price reduction.

Here’s a summary table of Fidelity’s new commissions rates structure compared to Charles Schwab, TD Ameritrade, E*TRADE, and Scottrade.

fidelity-commissions-comparison

And the new margin rates,

fidelity-margin-rates-table

Without question, there is now significant pressure on TD Ameritrade (AMTD) and ETRADE (ETFC) to reduce their commission rates which both run $9.99 per trade currently. Fidelity’s new $4.95 rate is half the price of both brokers (E*TRADE publicly offers $6.99 trades to customers if they place at least 1500 trades per quarter, which even then still doesn’t come close to matching Fidelity’s new pricing).

Ram Subramaniam, president of Fidelity brokerage, commented,

With these unprecedented price cuts Fidelity is continuing to transform the brokerage industry, bringing the best value to retail clients. Our active trader clients who make hundreds of trades each year will particularly benefit from our dramatic price reductions, and all clients who trade will be able to keep more money in their pockets.

With equity trade rates remaining relatively unchanged since 2010, it is great to see a fresh wave of price reductions which benefit retail investors across the board.

Whose next to reduced their rates? Time will tell.

SOURCE:
Fidelity Signficantly Cuts Online U.S. Equity Trade Pricing to $4.95 and Lowers Options and Margin Pricing for Retail Clients
https://www.fidelity.com/about-fidelity/individual-investing/fidelity-signficantly-cuts-equity-pricing
Tuesday, February 28th, 2017