Two Big NTF Platforms Expand to All U.S. ETFs
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Wednesday, October 2, 2019

Two Big NTF Platforms Expand to All U.S. ETFs

Within days, the teams at two brokerage and RIA custody giants will extend their NTF ETF platforms to all ETFs in the U.S. and Canada.

Walter William Bettinger II
Charles Schwab & Co.
President, CEO
Yesterday morning, Charles Schwab president and CEO Walt Bettinger revealed that on October 7 (next Monday) San Francisco-based Schwab will eliminate commissions (currently $4.95 per trade) on all ETFs listed on U.S. or Canadian exchanges. (The move is timed to the release of founder Chuck Schwab's new book, Invested.) Then yesterday evening, outgoing TD Ameritrade president and CEO Tim Hockey revealed that Omaha, Nebraska-based TD will also eliminate commissions (currently $6.95 per trade) on U.S.-listed and Canada-listed ETFs, though TD will do it first: on October 3 (tomorrow).

The changes apply both to Schwab and TD's online retail (i.e. discount brokerage) clients and to clients of their RIA allies (who use Schwab Advisor Services or TD Ameritrade Institutional as custodians). The Schwab team works with 12.1 million brokerage accounts, $3.72 trillion in client assets, and more than 7,500 RIAs. The TD team works with more than 11 million client accounts, $1.3 trillion in assets, and more than 7,000 RIAs.

For years, both Schwab and TD have let investors and RIAs trade some ETFs for free, but until now such free trading (beyond Schwab's proprietary ETFs) has always been restricted to specific lists of ETFs from specific ETF firms who joined the Schwab and TD NTF ETF platforms. (TD's launched in 2010, while Schwab's ETF OneSource launched in 2013, and rivals like Fidelity and Pershing have NTF ETF platforms, too.) Now, it's not clear what those NTF ETF platforms will offer to Schwab's and TD's partner firms, given that even non-partner firms' ETFs will trade free, too.

Meanwhile, most of the press reaction to Schwab and TD's moves has so far focused on the other things they're eliminating trading fees on: stocks and options. (Are they pulling a Robindhood?) Mister market also seems to have something to say, unevenly, about the news; Craig Siegenthaler, an analyst at Credit Suisse, notes that trading commissions account for seven percent of Schwab's revenues, 17 percent of E*Trade's, and 25 percent of TD's.

Here's a sampling of the coverage:

MarketWatch, "As Schwab slashes commissions, can it get any cheaper to be an investor?";

Financial Times, "Short sellers gain $191m from bets against US brokerages";

Bloomberg, "With $0 Fees, Schwab Risks Blowing Up Brokerage Model It Built";

Citywire, "Schwab ends US stock, ETF and options commissions";

Wall Street Journal, "Free Trades Aren't the End of the World for Online Brokers";

Wall Street Journal, "There Is a Commission-Free Lunch";

ThinkAdvisor, "TD Ameritrade Matches Schwab, Ends Commissions on Many Trades";

Reuters, "Charles Schwab to end commissions for stock trading, shares fall";

CNBC, "Charles Schwab is ending commissions on stock trading and the brokerage shares are tanking";

Financial Planning, "Schwab eliminates commissions on trades for RIA clients";

ThinkAdvisor, "Schwab Ends Commissions on Online and Mobile Trades";

Bloomberg, "Schwab Triggers Online Broker Bloodbath as Price War Escalates";

InvestmentNews, "Schwab cuts online brokerage fees to zero";

Barron's, "Schwab Ends Trading Commissions, and Online Brokerage Stocks Tank";

Fox Business, "Charles Schwab makes stock trading free";

MarketWatch, "Schwab to drop commissions on U.S. stock, ETF and options trades, slamming online broker stocks";

Seeking Alpha, "Online brokers tumble after Schwab cuts commissions to zero";

Investor's Business Daily, "Schwab Announces Zero-Fee Stock Trades; Schwab Dives; TD Ameritrade, E-Trade Crash FacebookTwitterLinkedInShare Licensing";

Wall Street Journal, "Schwab Cuts Fees on Online Stock Trades to Zero, Rattling Rivals";

Bloomberg, "Billionaires Peterffy, Ricketts Squeezed as Schwab Cuts Fees".

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