Fidelity Investments is following its rivals in the brokerage industry by eliminating commissions for online trades, but it’s also sweetening the deal.
“We are providing customers unmatched value while challenging industry practices that appear to give value in one place when they are actually having customers pay in other ways.”
In a trend that was started by the online stock trading startup Robinhood, brokerage firms have been eliminating trading fees in part to cut into the success the startup has seen. Fidelity announced, in a tweet, it is eliminating commissions on trades involving stocks, options and exchange-traded funds.
— Fidelity Investments (@Fidelity) October 10, 2019
Fidelity is the latest in a long line of firms to join what Credit Suisse research analyst Craig Siegenthaler called “The Race to Zero” in a recent note. Charles Schwab, TD Ameritrade, E-Trade and Interactive Brokers have already made the change to their trading practices.
Fidelity’s total assets over 21.8 million accounts totals $6.8 trillion, and the firm was charging $4.95 per trade, according to CNBC.
“With this decision, Fidelity is taking a different path from the industry,” Fidelity Investments’ personal investing president Kathleen Murphy said in a statement. “We are providing customers unmatched value while challenging industry practices that appear to give value in one place when they are actually having customers pay in other ways.”
The firm also announced it would automatically direct money from clients into higher-yielding money market accounts.
“This is why – in addition to offering zero commissions for online trading – we will continue to automatically offer retail investors choice for their cash at account opening and default them into the higher yielding option, as well as provide customers with the industry-leading trade execution that does not sacrifice customer interests. This combination is something that no other firm offers,” Murphy said.