Schwab, Fidelity expand commission-free ETF trading

Pixelated acronym ETF made from cubes, mosaic pattern

Both will now offer more than 500 exchange-traded funds on a commission-free basis.

Brokerage platform giants Charles Schwab Corp. and Fidelity Investments issued near-simultaneous announcements Tuesday morning that they are each expanding to more than 500 the number of commission-free ETFs on their respective platforms.

The announcements, landing during the big Inside ETFs conference in Hollywood, Fla., this week, represent the latest examples of the fee compression that’s occurring in the financial services industry.

“For advisers that clear through these brokerage firms, this is great news as it provides more choices to build tactical asset allocation strategies without undue costs,” said Todd Rosenbluth, director of mutual fund and ETF research at CFRA.

Last summer, Vanguard Group set the bar by offering commission-free trading on 1,800 ETFs, up from the 77 commission-free ETFs it had offered to that point.

A week later, TD Ameritrade Holding Corp. CEO Tim Hockey tried to tap the brakes on the fee-cut trend during an earnings call with industry analysts.

“We’re not going to lead [on cutting commissions], but we need to prepare for that downward trend,” he said. At the time, the TD platform offered 300 commission-free ETFs.

Both Schwab and Fidelity are roughly doubling the number of commission-free ETFs they offer. Schwab also said that it would add iShares ETFs to its commission-free platform.

BlackRock Inc., which owns iShares, could be among the biggest winners of the latest commission-free trend. BlackRock had to revise its initial statement Tuesday morning after Schwab’s 8 a.m. ET announcement was followed almost immediately by Fidelity’s announcement.

“This is unequivocally good news for investors and advisers, and iShares,” the BlackRock statement read in part.

“The reduction and elimination of historic barriers to investing enables more people to save, invest and reach their long-term financial objectives using iShares ETFs as key building blocks for their investment portfolios,” the statement continued.

BlackRock, Vanguard and State Street Group, the three largest providers in the $3.7 trillion ETF industry, have all cut fees in a ferocious battle for market share.

But so far, only Fidelity has gone to zero fees, and the $2.6 trillion Boston-based asset management complex did that with mutual funds, not ETFs.