Briefing

TD Ameritrade hardest hit in online brokerage sell-off over plans to cancel trading fees

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Its stock fell 26 per cent by close on Tuesday, its biggest drop since 1999, after announcing it will eliminate commission fees for online U.S. stock ETFs and option trades. TD’s announcement came just hours after Charles Schwab, a leader in the space, said it, too, will end commission payments on the same services. E-Trade Financial saw its biggest decline in more than a decade, losing 16 per cent, while Interactive Brokers and Schwab each saw shares drop more than nine per cent. Stocks failed to recover by late afternoon trading on Wednesday. (CNBC)

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Talking point: Nixing commission fees heightens the price war between online brokers, as investors seek the cheapest trading options. Interactive Brokers announced last week that it also plans to scrap online trading fees, while Fidelity Investments, Vanguard Group and JPMorgan Chase have introduced a range of free trading options. The trend leaves TD Ameritrade particularly vulnerable: it generates more than a third of its revenue from commissions, but maintaining those fees could put it at risk of being left behind by cheaper competitors.