Another price war may be breaking out in the online brokerage sector.
, the nation's largest discount brokerage, fired the first shot in the latest skirmish by announcing Wednesday that it was reducing some commission trading fees. The San Francisco-based broker says it is reducing its maximum fee on many stock trades to $12.95, down from $19.95.
The basic commission charge stays at $9.95. The broker says it's also eliminating a number of service fees, including charges for ATM withdrawals, various checking services and electronic bill payments.
In early trading, shares of Schwab were up 30 cents, or 2%, to $14.88.
A year ago, the online brokers were involved in a tit-for-tat price war, to see which firms could slash trading costs the most in a bid to attract customers and drive trading. Schwab's newest fee reductions could spur
to respond in kind, especially since there's indication that some online customers already may be jumping out of the market.
For instance, E*Trade Financial said on Wednesday that its customers made fewer trades in May, the month the markets began to tumble. It says daily average revenue trades fell by 3% in May from the April tally. E*Trade also said customer assets fell 5% in May to $184 billion.
By contrast, Schwab says customer trading rose 3% in May.
In morning trading, shares of E*Trade were down 88 cents, or 4%, to $19.74. Ameritrade was down 50 cents, or 3%, to 3.5%.
Investors appear to fear that a combination of lower fees and reduced trading levels could squeeze profits at some online firms, if the market selloff continues.