On Friday shares of retail brokerage firms Etrade Financial (NASDAQ:ETFC), Charles Schwab (NYSE:SCHW) and TD Ameritrade (NASDAQ:AMTD) were trading on the down. This was a result of the announcement that Interactive Brokers will be making any amount of stock trade without commission charges.
Charles Schwab plunged 2.2% while ETrade Financial lost 4.8%. TD Ameritrade was the most affected and the shared shed 6.5%.
IBKR Lite to offer trades at no fees
Interactive Brokers indicated that the new product they call IBKR Lite will offer unlimited trades at no commission on Exchange Traded Funds and exchange-listed stocks. The company said in a statement that IBKR Lite will have no commission fee on ETFs and listed stocks, no inactivity charges, no minimums on accounts, unrestricted market data as well as other additional features.
Interactive CEO and Chairman Thomas Peterffy stated that they are seeking to attract a huge audience, so they sought to remove impediments for opening IBKR account. The CEO indicated that the company is seeking to give both retail and professional investors top pricing options.
The company will make IBKR available for both current and new customers. Investors will be able to swap between the services for around three times once each quarter. Peterffy indicated that the company offers customers a chance of not paying commissions. They will still have their orders channeled to market makers just as with most retail brokers do.
Brokerage firms dealing with market volatility
Since IBKR Lite will be free, it will attract many investors who will boost the company’s financials. This will come in handy, especially now that interest rates are low, and there is increased volatility of the market that is hurting the industry.
Other brokerage firms such as Ameritrade, Charles Schwab, and ETrade are also contending with the same macroeconomic headwind ss and with the launch of this new product they have another concern to worry about. Of late the companies have reduced commission fees or done away with minimums in trading ETFs and stock but still there other conditions that investors have to fulfill.