NEW YORK (
opted to change its commission and fee structure late Friday in the latest sign of pricing competition among the online brokers.
The move follows a
earlier this week by mutual fund giant Fidelity Investments to charge a flat fee of $7.95 for all of its online U.S. equity trades.
In a press release issued after Friday's closing bell, E*Trade said on Monday it would start charging $9.99 or less per stock or option trade, eliminating its $12.99 commission tier. High-volume customers will continue to pay $7.99 per trade.
E*Trade also said it's eliminating annual IRA account fees and a per share commission previously tacked onto market trades larger than 2,000 shares. In the second quarter, it plans to get rid of all account service fees. In its announcement on Tuesday, Fidelity unveiled a joint venture with
that calls for its customers to be able to trade certain iShares ETFs on a commission-free basis for at least three years.
The stock closed the session at $1.46, up a penny, on volume of 49.1 million. Year-to-date the shares are down nearly 18%.
"Our simplified pricing provides a cost-effective, transparent solution for investors," said Michael Curcio, the president of the company's E*Trade Securities business. "The new pricing structure complements our innovative product offering and high quality service, and reinforces our commitment to offering a compelling value proposition to our customers."
ushered in the latest round of price-cuts among the online brokers when it moved to a price of $8.95 for all of its online equity trades on Jan. 19. The other major publicly traded player in the industry,
has a flat-rate pricing system in place already, charging $9.99 for its online trades.
The recent trend to cut prices for lower volume customers isn't likely to make a huge impact in terms of lost revenue as high-volume traders, who were already getting discounted terms for their activity, generate the majority of the trading fee revenue for the online brokers. Fidelity remains ahead of E*Trade, TD Ameritrade and Schwab with its pricing schedule but Scottrade, a private firm, offers $6.99 trades.
There is sentiment, however, that the lower per share pricing for low-volume traders is good way to entice them to open accounts, which in turn can lead to them bringing other assets to a firm, such as IRAs.
Written by Michael Baron in New York.