On Tuesday, Charles Schwab
Charles Schwab, which holds about $3.72 trillion in client assets, stated that the commission fees only make up 3% to 4% of net revenue each quarter and that they will be still able to offer the same quality service to users even after lower investment barriers.
Before Charles Schwab joined the movement, JP Morgan Chase
Commission fees are charged by a brokerage when you buy or sell a stock, ETF, our other type of investment. With the charges ranging in price depending on the company used by the investor, commissions usually barred certain trades and made the investor more prudent. By eliminating fees, more lower level investments can be made by 'do-it-youself' traders which can open the stock market up to more users that were deterred by the cost of commission.
"This is our price. Not a promotion. No catches. Period," Charles Schwab & Co. CEO Walt Bettinger stated. "Price should never be a barrier to investing for anyone, whether an experienced investor or someone just starting on the investing path."
Tyler Gellasch, the executive director of Healthy Markets, stated that, "a commission is the explicit spread or profit a broker dealer charges. When that goes to zero, that naturally means there's going to have to be some other way for them to keep the lights on," or in other words make a profit.
Advisors are mixed on whether this is a good move forward for large brokers to make it easer for inexperienced investors to overtrade or make risky stock bets that extra fees could prevent. This change to the way trading platforms offer services also heightens market fears surrounding the impeachment inquiry into President Donald Trump, the continuing trade war with China that has recently damage to U.S. sectors in September, and the signs of a global economic slowdown in the near future.