E*Trade Financial Corp will cut trading fees for low-volume customers, the U.S. online brokers said on Friday, making its move in a pricing war that erupted among rivals in recent weeks.
The company said all customers will pay $9.99 or less for a stock or options trade, down from $12.99, starting on Monday. Options trades have an additional 75 cent fee. Highly-active traders will still pay $7.99 per trade, E*Trade said.
The broker will also eliminate annual IRA account fees, and commissions for larger trades. In the second quarter, it will drop all account service fees.
The move, announced late on Friday, comes days after mutual fund giant Fidelity Investments said it planned sharp price reductions and about a month after Charles Schwab Corp , the biggest online brokerage, announced a cut of about $4 per trade.
E*Trade, which has reported a string of quarterly losses due to bad bets in the mortgage market, said the move is meant to streamline pricing by eliminating its tier-based structure. It increases simplicity, value, and transparency for current and prospective customers, E*Trade said in a statement.
Analysts mostly expected the move, which amplifies the industry's recent shift toward flatter fee plans that could play into the hands of smaller investors.
The recent price cuts come as individual investors face uncertain markets, and reflect a battle for market share as online brokers struggle with low trading volumes and interest rates.
Fidelity plans to charge $7.95 per equity trade, down from a previous tiered fee structure of $8 to $19.95, while Schwab began last month began charging $8.95.
E*Trade's move leaves TD Ameritrade Holding Corp , the second-biggest U.S. online brokerage, as a notable exception to recent cuts. TD Ameritrade Chief Executive, Fred Tomczyk, said on Thursday it does not plan to cut fees because rivals came down to its price of $9.99 per trade.
E*Trade shares slipped a penny to $1.45 on the Nasdaq after the close of markets.
(Reporting by Jonathan Spicer; editing by Andre Grenon, Leslie Gevirtz)