What happened
Schwab moved first on Tuesday, saying it will scrap online trading commissions as rivals and app-first brokers press in. The firm is moving fees on U.S. and Canadian stocks and exchange traded funds from $4.95 to zero starting Monday.
Within hours, TD Ameritrade said it would match the change, and on Wednesday E-Trade stepped in with the same plan. At that time, both TD Ameritrade and E-Trade priced online trades at $6.95. E-Trade plans to cut its U.S. commissions to zero starting Monday, while TD Ameritrade's move takes effect on Thursday.
Market reaction and the math
Traders reacted fast. Schwab closed Tuesday down about 10%, while TD Ameritrade slid nearly 26% and E-Trade fell about 16%.
Schwab quantified the move as removing roughly $90 million to $100 million in revenue each quarter, which it said equals about 3% to 4% of its top line. According to TD Ameritrade's CFO, Steve Boyle, the shift is expected to trim revenue by $220 million to $240 million each quarter, roughly 15% to 16%. E-Trade put the quarterly hit at about $75 million.
Why firms say they acted
Schwab Chief Financial Officer Peter Crawford cast the decision as pro client, saying, "It's the right thing to do for clients, removing one of the last remaining barriers to making investing accessible to everyone and continuing our tradition of challenging the status quo on behalf of individual investors." He also pointed to pressure from both legacy e-brokers and newer players.
Those newer entrants include Robinhood and Acorns, which pitch commission free or low cost investing through mobile friendly apps aimed at younger users. Crawford said Schwab is not yet feeling pressure from them, but added, "It has seemed inevitable that commissions would head toward zero, so why wait?" Schwab already lets clients trade hundreds of ETFs without a commission.
As costs and tools evolve, investors who adapt can find meaningful advantages. We're hosting our first ever investor livestream on 11/17 to show you how to use ChatGPT and Claude to invest like a pro, hosted by Briefs Finance CEO Jaspreet Singh. Save your seat.
TD Ameritrade CEO and president Tim Hockey said, "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."
Before TD Ameritrade and E-Trade weighed in, JMP Securities analyst Devin Ryan said rivals were likely to respond, given how their stocks were trading. In a client note, he described the development as the onset of a commission-price battle driven by free trading becoming the norm, adding that the change is manageable for Schwab. "Given Schwab's stated focus that price does matter and its roots as a low-cost provider, we think this decision was an inevitability over time as the company does not want to be in the minority in charging customers for trading," he wrote.
What this means for your portfolio
In plain English: a fee that was $4.95 or $6.95 for many online trades goes to zero at these firms, and Schwab already had hundreds of commission free ETFs. Lower trading costs can change how you allocate orders and which platform you choose, even if other factors like interest on cash and order execution still matter.
Learning to use smarter tools can be a simple way to stay competitive. On 11/17, our CEO Jaspreet Singh goes live for our first ever investor livestream on how to use ChatGPT and Claude to invest like a pro. Register to join him.
