Fidelity cut its brokerage fees again. Despite the claims of online brokerage CEOs, there is a price war unfolding in the sector. Details, incremental stock impact and a quick comment:
Fido cuts fees
After cutting online trade commissions for its "silver level" clients from $14.95 to $10.95 per trade, Fidelity announced additional changes:
- the asset threshold for these fees is now $50,000
- to avoid an annual account maintainance fee of $50, clients will now only need to hold assets with Fido of $25,000 versus $30,000 previously.
Incremental stock impact:
- Toughest on Schwab, as Schwab and Fido compete for similar investors and have similar branch-heavy networks. Schwab itself has gone through multiple fee cuts in an attempt to restore competitiveness and stem account attrition. This move by Fido makes it harder for Schwab at the margin.
- Less of a concern, but still negative for Ameritrade and E*Trade. Those firms have trading fees at or below the level Fido now charges, particularly for active traders. So it's unlikely they'll lose accounts. But some new accounts will go to Fido instead of Ameritrade and E*Trade, so at the margin this reduces expected account growth.
Quick comment
Is it ever sensible to hold stocks in the middle of a price war? Think Netflix/Blockbuster.
Year-to-date chart comparing SCH, AMTD and ET below. SCH is the green line, ET the blue line, AMTD the orange line.
Full disclosure: at the time of writing I'm long ET, short SCH.
