TD Ameritrade jumps into pricing battle with Fidelity and Schwab

TD Ameritrade Holding Corporation is cutting its online equity and ETF trade commissions to $6.95 from $9.99, and lowering its options pricing to $6.95 plus $0.75 per contract.

The pricing is effective March 6 and applies to the firm’s retail investors as well as its independent registered investment adviser clients, the company said in a release late Tuesday.

At midnight Monday, Fidelity cut its online commissions for trading in U.S. stock and exchange-traded funds to $4.95 from $7.95 a trade, a nearly 40% drop. The nation’s largest online retail brokerage firm, with 17.9 million accounts and $1.7 trillion in client assets as of Dec. 31, had lowered its options fee from 75 cents per contract to 65 cents, and lowered margin rates for investors.

On Tuesday, Charles Schwab Corp. lowered its standard online retail trade commission from $6.95 to $4.95, matching Fidelity. Schwab also matched Fidelity’s cut in fees on options contracts. In its announcement, Schwab emphasized that the management fee on its S&P index mutual fund “is nearly five times less than Vanguard and three times less than Fidelity.”

In announcing its price cuts, Tim Hockey, president and chief executive of TD Ameritrade, said: “There is an effort underway in our industry to redefine value. While some are leading with price, our clients tell us it’s much more than that. They have told us time and again that value is delivered via rich experiences that prioritize flexibility and client choice, coupled with a simple, straightforward price.”