ETrade follows Schwab, TD, and cuts commissions to zero

Its decision follows a day of hints on social media that such a move was imminent

Oct 2, 2019 @ 4:23 pm

By Jeff Benjamin

Jumping on this week's brokerage industry trend, ETrade Financial Corp. has announced plans to eliminate online trading commissions for U.S. stocks, exchange-traded funds and options starting Monday.

The announcement after the stock market closed Wednesday followed near-identical moves by Charles Schwab Corp. Tuesday morning and by TD Ameritrade Holding Corp. Tuesday evening.

Unlike Schwab and TD, ETrade spent nearly 24 hours suggesting on social media that such a move was imminent.

According to CFRA, commissions represent approximately 18% of ETrade's revenues.

The ETrade announcement estimated the "quarterly pro forma revenue impact of the commission changes to be approximately $75 million."

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Schwab, TD and ETrade all saw their stock prices take an initial hit on Tuesday following Schwab's pre-market announcement. On a day that saw the S&P 500 Index decline by 1.2%, Schwab shares fell by nearly 10%, TD shares lost nearly 26% and Etrade shares declined nearly 17%.

Cathy Seifert, CFRA equity analyst, described Tuesday's market reaction as "proportionate to the impact on commission revenues" at each firm.

"Every time commissions get cut there's a similar reaction," she added.

On Wednesday, when the S&P fell more than 1.7%, shares of all three of the companies posted declines between 3.2% and 3.5%.

ETrade did not immediately respond to a request for comment for this story.

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