Fidelity slashes commissions, does away with tiering

Fidelity and Schwab commissions are still too high for an active trader/investor.

Interactive Brokers charges $0.50 per 100 shares ($1.00 minimum) and $0.70 per option (no ticket charge, plus exchange fees or minus exchange rebate).

Lightspeed Trading charges $0.40 per 100 shares ($0.40 minimum) and $0.50 per option contract (no ticket charge).

Thanks, that's amazing. I wonder if it really is a free lunch, or whether some other Fidelity benefits are cut back. Seems like it could undercut their index mutual funds... if you can use a remotely similar ishare etf then you can use it just as flexibly, such as buying in many free increments. Furthermore you could protect it with a stop loss and trailing loss (with a one-cancels-the-other option), and be well ahead of the fund game.

They expand on the ticker info on

My guess is that Fidelity made a complex deal with iShares. This benefits iShares substantially, of course, as Fidelity clients are more likely to use iShares funds than others if there are no commissions. As far as the costs for the actual transactions, I'm guessing that there's some substantial cost savings on Fidelity's part if they are Authorized Participants for the creation of the iShares ETF Creation Units. If Fidelity can increase their own volume of buys and trades of the various ETFs, first off, of course, Fidelity can match buys and sells within their own client base, but also, as a broker, Fidelity can match buys and sells of the underlying assets used in the creation and destruction of the ETF shares more efficiently (and perhaps pocket some of the spread, too). They must be making a gamble that they can at least break even through some of that efficiency and volume.

Schwab shot the first shot across the bow. They have their own line of ETFs, and are charging zero commissions on them to their own brokerage customers. Fidelity took it up a huge notch, but since Fidelity didn't have their own line of ETFs to use, they must have made this deal with iShares. Schwab only has a handful - this batch from Fidelity is much more diversified and useful.

For what it's worth, there are several of those iShares ETFs that I like a lot and use all the time, a couple of which really have no competitors out there at all (ie. TIP).

This is great news for Fidelity customers, myself included.

Fidelity has one, both literally and somewhat figuratively (ONEQ). I figured that they didn't include it in their zero-commission list because it would look embarrassing, but you've likely come up with a better explanation.

Mark Freeland snipped-for-privacy@nyc.rr.com

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Easy to match mutual fund trades which always happen at sychronized times of day, but how many matches for etf trades any second of the day? I hesitate to bring the question up, but could Fidelity be ignoring attractive ishare trade matches from the outside world in the attempt to match you up with a trade within fidelity? It would be hard for me to suspect that, with fidelity seeming as trustworthy as it's name for years. Actually I have an example that didn't cost money in a trade, but cost timely execution (and that can cost money, as the price wanders).

Probably wrong, but I just think of a recent ishare trade (IIRC) that I just could not get fidelity to execute in a dozen or so attempts. I kept resetting a limit amount that was increasingly unfavorable to me relative to the market price being tracked on fidelity and another real time source. It was so ridiculous that I talked it over with a fidelity rep; something I didn't even do when getting around 15% price below market during the crash (which the SEC or somebody made them refund to me even with no complaint... and I think that was with a non- fidelity broker). I eventually did a market trade which was lots more favorable than my limit approach (set to worse than market price just to avoid getting even worse below market).

P.S. fidelity must have the ishares prospectus only emailed and never snail mailed.

I got seduced away from domestic TIP to intnl WIP for a while, but now it appears WIP has spent most of it's lifetime as third rate.

A better deal right now is Wells Fargo. When you sign up for their linked PMA checking account, you get 100 free transactions per year (stocks, ETFs, and mutual funds), per investment account. That includes IRAs. The checking account itself has its fee waived if the combined account value (includes the balances in the brokerage accounts) is $25,000 or more.

Brian

Wow, I'g grateful to hear about new brokerage offerings, esp since each one I deal with has annoyed me recently. Another minor thing with beloved Fidelity (probably same for all brokers) was they charged me multiple commissions on the same trade... which actually sent an IRA cash balance below zero (illegal?)! I had switched off the all-or- nothing option (due to the difficulty of getting them to execute limit orders even when market prices were met) and when it was executing over multiple days, they charged commission on a per day basis!

Oh well, I can po> Schwab shot the first shot across the bow.  They have their own line

OK, not too bad but I w> A better deal right now is Wells Fargo. When you sign up for their

Wow, that seems amazing

Working for me.

Depends. As far as ending the deal, I suppose, although you'd know and could switch (paying the transfer fee). Any brokerage can adjust their fee schedule, so I don't consider that to be a relevant worry.

The "balance glitch" would only affect the monthly fee for the PMA account itself, so the worst that would happen is a $25 fee. My account level is such that I HOPE that's not a problem. A bigger concern is having the PMA account go "inactive". WF doesn't consider most transfers, whether internal or external, to be account activity. You need to do something like use the ATM card or write a check every six months or so.

This deal has been going a few years now at WF.

Brian

Good question, but I trust them that far at least. Nevertheless, one thing they can capture on trade matching for ETFs that they cannot capture for open-ended funds is spread. It may be good and narrow for highly liquid high-volume ETFs, but it's still there.