plans to slash the prices it charges active traders when the company rolls out a new rate schedule July 1.
The move marks the company's latest attempt to grab a greater share of the active trader segment. At the beginning of July, the company's Power E*Trade service will charge investors who complete at least 75 trades a quarter a base commission of $9.99 a trade.
That's down from a range of $9.95 to $19.95 under the current commission structure. Power E*Trade charges a base commission of $14.95 to $19.95 for the first 29 trades, $9.95 to $14.95 for the next 45 trades, and $4.95 to $9.95 for all additional trades. Under the two-tiered schedule, the lower rate applies to limit orders, which are executed at a set price, while the higher rate applies to market orders, which are executed at the best price available.
The lowered prices for active traders come amid growing competition and declining profits throughout the online trading sector. Anemic volumes and a declining stock market have squashed earnings, leading to a round of consolidation and a scramble to grab active traders.
E*Trade recently bulked up its active trader segment when it agreed to acquire online brokerage firm Tradescape. The acquisition will give E*Trade an additional 100,000 trades a day, bringing its overall transactions to more than 200,000 a day. E*Trade is also
customers, advertising on its home page a "special offer for Ameritrade and Datek customers" who transfer their accounts to the company's Power E*Trade platform.
E*Trade's new base commissions are on par with Datek's active trader fees, but cheaper than what Ameritrade and
E*Trade gained 2.1% to $7.25 Monday. Ameritrade rose 6.3% to $5.23, while Schwab closed 4 cents higher at $11.05.