Well, that didn’t take long. TD Ameritrade (read our review) has announced it is cutting equity trades to $6.95 (stocks, etfs) from $9.99, effective next Monday, March 6th. Options per contract pricing will remain the same at $0.75 per contract, however the base rate drops from $9.99 to $6.95.
The online broker pricing war started back on February 3rd when Charles Schwab lowered its rates from $8.95 to $6.95. Fidelity followed with its own cut early yesterday to $4.95 from $7.95. Within 10 hours, Schwab cut their rates again down to $4.95 to match Fidelity. And hours before the day’s end, TD Ameritrade has announced its own cut from $9.99 to $6.95.
Here’s how TD Ameritrade, E*TRADE, Charles Schwab, and Fidelity commissions now all compare side by side,
It is important to note though that $6.95 for TD Ameritrade wasn’t random. Clearly the broker feels it provides a high quality experience to justify the extra $2 per trade over Fidelity and Schwab (their recent #1 ranking on our 2017 annual review would support this claim). Furthermore, they acquired Scottrade last year whose three million plus customers were already paying $7 per trade. It all makes sense.
Tim Hockey, president and CEO of TD Ameritrade validates this thinking,
There is an effort underway in our industry to redefine value. While some are leading with price, our clients tell us it’s much more than that. They have told us time and again that value is delivered via rich experiences that prioritize flexibility and client choice, coupled with a simple, straightforward price. We have an award-winning client offering, plus tremendous scale. With our pending acquisition of Scottrade on the horizon, we have a unique opportunity to enhance that experience even further with lower pricing for all of our clients.
TD Ameritrade equity fee reduction aside, this leaves E*TRADE left at $9.99. It seems their hand is now forced and we would expect to see a cut before the week’s end. The natural move here would be to match TD Ameritrade at $6.95, but we will have to wait and see what happens. Stay tuned.
TD Ameritrade Reduces Client Pricing to $6.95 for Online Equity Trades
February 28th, 2017