Content area
Full Text
INVESTING
A commission war has broken out among the online brokerage firms. TV and print advertising has been filled with banners touting the new low rates. Last month, Charles Schwab cut its online trade commissions to $6.95 from $8.95. Within a few weeks, Fidelity lowered its rate to $4.95 from $7.95. Schwab responded a few hours later by matching the $4.95. TD Ameritrade got in on the action by reducing its standard commission from $9.99 to $6.95, while E-Trade's rates followed the same path, with "active traders" now offered a $4.95 commission.
What is the reason for this sudden race to the cheapest rate? The firms are seeking to accumulate assets and increase market share. For example, trading commissions at Schwab represent only 11 percent of revenue. While Schwab and others will take a...