Fidelity Investments has announced to reduce the online trading commissions to zero. The company joined the list of firms that reduced the commissions to zero and are competing to control the majority of the market share.
Fidelity said it would cut fees to $0 on online trades of U.S. stocks, eliminating a $4.95 charge for such trades. The Boston based company’s fee changes also include exchange-traded funds and options transactions.
However, according to the wall street journal report, commissions will be cut to zero. It would be applied onwards November 4 for all the investment advisers.
Fidelity’s online brokerage has almost over 21.8 million accounts.
Fidelity’s move comes about a week after Charles Schwab Corp. said it was eliminating commissions on U.S. stocks, ETF and options trades, with rivals TD Ameritrade Holding Corp. and E-Trade Financial Corp. announcing plans to follow the competitors.
According to Kathleen Murphy, president of Fidelity Investments’ personal investing business, is the automatic default of a higher paying cash account, plus Fidelity’s ongoing commitment to best execution.
She further added, “I wouldn’t characterize our move as joining the party.”. Murphy states in a telephone interview, “We’ve upped the bar on who is invited to the party.”
Fidelity has been remarkably transparent about what it offers customers, and what it charges in return, even though they keep their own company finances under heavy wraps.
As reported to the sources, Ram Subramaniam, executive vice president of Fidelity Investment’s personal investing business says, “We need more transparency and we need better practices, or we’re going to get more regulations.”
The fast-fading fees are another round in an ongoing race to shrink broker fees, and Fidelity represents the last major holdout among the behemoths of the brokerage business to go zero-commission.
Two months ago, Fidelity unveiled plans to divert clients’ cash into higher-yielding money-market funds, arguing the step provided a sharp contrast to their competitors’ practice of paying out ultralow rates on cash.