TD Ameritrade fires back at Schwab by cutting commissions to zero

After seeing its stock price drop 25%, TD charges headlong into the latest low-fee battle.
OCT 01, 2019
Just 10 hours after Charles Schwab announced it was eliminating trading commissions on U.S. stocks, exchange traded funds and options starting Oct. 7, rival TD Ameritrade Holding Corp. upped the ante by cutting the same commissions starting Oct. 3. TD's announcement late on Tuesday, which mimics the Schwab news right down to the 65-cent option contract fee, followed a day that saw the company's stock price lose 25.8% in a market reaction to anticipated reduced commission revenue. A TD spokesman responded via email Tuesday evening that the company is not accepting interview requests, but a statement from president and chief executive Tim Hockey suggested TD is not backing down from Schwab's low-fee challenge. "We are committed to giving our clients the best possible investing experience, with cutting-edge technology and award-winning investor education and service teams. And now, that experience just got better," Mr. Hockey's statement reads. "We've been taking market share with a premium price point, and with a $0 price point and a level playing field, we are even more confident in our competitive position, and the value we offer our clients." With approximately 25% of its total revenue coming from commissions, TD is viewed by analysts as being particularly vulnerable to a commission price war. Etrade Financial Corp., which derives about 18% of its revenues from commissions, saw its stock price fall more than 16.4% on the Schwab announcement. At Schwab, meanwhile, where commissions represent about 4% of total revenues, the stock price lost 9.7% on a day that saw the S&P 500 Index drop by 1.2% "Every time commissions get cut there's a similar reaction, and each time the reaction is proportionate to the impact on commission revenues," said equity analyst Cathy Seifert of CFRA, when discussing the Schwab announcement prior to the TD announcement. "ETrade and TD will be forced to counter the commission-free trades," she prophetically added. Josh Brown, financial adviser and chief executive of Ritholtz Wealth Management, also predicted earlier Tuesday that "commission rates are going zero anyway." "I would be shocked if Schwab didn't have a response by the end of the year," he added.

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.