Charles Schwab to End Online Stock, ETF, Options Commissions

So Charles Schwab is the next broker to go commission free. I’m not sure how the incumbents can afford to remove such a big part of their revenue model and still keep the same cost base though.

Charles Schwab to End Online Stock, ETF, Options Commissions - Bloomberg

The take from the CEO of StockTwits is:

E*Trade sinks 14% , TD Ameritrade slides 14% , Interactive Brokers falls 4.6% , and Charles Schwab falls 6.1%

This morning the e-brokerages age each losing billions in market cap. They were lazy investing 100’s of millions in new products and acquisitions and now free commission only gets them on par with a new breed. Their customer acquisition models still antiquated and product teams bloated.

quote from here

Do we think this is bad for Robinhood too?

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TD Ameritrade just followed suit, apparently this is 15% of their sales that they’ve just got rid of -

Or if you’re more into memes -

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kind of proves that they have all been overcharging for years


Robinhood’s response -

They got the tone a lot better than Slack when Microsoft launched teams imo -

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An excellent response, that is the best way to handle this kind of announcement. It places them at the front of innovation and puts out the message they are trying to change an industry.

It must have gotten to a point where CS and co couldn’t justify why they charge fees at scale compared to the competition. I guess you can say you don’t sell order flow or other perks you get by being a customer, unless it simply wasn’t true and they were double dipping on profits.

More price innovation is never a bad thing.


Could this be the move to zero commission squeezing margins and making competition unsustainable for the incumbents