Marketwatch.com reported that E*Trade Securities Co. (Tokyo JASDAQ: 8701) has said it is lowering its stock-broking fees as of June 1st. This is an obvious "preemptive" attack on the May launch of Nomura Holdings' (NYSE:NMR) standalone brokerage Joinvest, which has previously touted it would be competitive in commissions pricing. There had been doubts that Joinvest could beat E*Trade Japan on price and maybe that discussion is over after today's news. E*Trade Japan is now giving away free trades for transactions totaling less than 100,000 yen (US$850) per day while charging only 315 yen (US$2.70) -- down from 525 yen -- for transactions up to 300,000 yen per day (US$2,555).
This is another situation where consumers benefit from competition. The industry becomes ever more competitive and firms must innovate in order to differentiate or simply keep lowering prices. E*Trade Japan may be able to win on volume but it is squeezing itself and better hope for a prolonged bull market. At least its bold move doesn't bode well for Joinvest, which hasn't even opened for business yet.