Online Financial Services Price War: Harbinger of Consolidation

 |  Includes: AMTD, ETFC, SCHW
by: Todd Sullivan

In the past this has been a harbinger of consolidation:

E*TRADE FINANCIAL Corp. (NASDAQ: ETFC) today announced new pricing that eliminates its $12.99 commission tier and account activity fees, and increases simplicity, value, and transparency for current and prospective customers of E*TRADE Securities LLC.

Commencing February 8, 2010, all customers of E*TRADE Securities will benefit from $9.99 or less per stock and options trade pricing (plus a $0.75 per options contract fee), while higher volume traders will continue to enjoy the current $7.99 per trade rate. In addition, E*TRADE Securities has eliminated annual IRA account fees; a per share commission formerly applied to market trades larger than 2,000 shares; and, effective in the second quarter of 2010, all account service fees.

“Our simplified pricing provides a cost-effective, transparent solution for investors,” said Michael Curcio, President, E*TRADE Securities LLC. “The new pricing structure complements our innovative product offering and high quality service, and reinforces our commitment to offering a compelling value proposition to our customers.”

This move follows a similar move at Schwab (NYSE:SCHW) and preceded Fidelity’s move to lower commissions. Ameritrade (NASDAQ:AMTD) has not moved lower but that is because the others are coming down to where they already are. Now AMTD has no pricing advantage over its rivals. They ought to see subscriber growth slow dramatically. The easiest way to grow now? Merge…

Disclosure: No positions