In the latest round of an industry battle over fees, Omaha-based TD Ameritrade is eliminating commissions for online trading of U.S. stocks, exchange-traded funds and options.
Investors will benefit from lower costs after the moves announced hours apart Tuesday, first by Charles Schwab and then by TD Ameritrade.
TD Ameritrade estimates that it will lose about 15% of its revenue — roughly $220 million to $240 million — per quarter in the process.
Asked about the impact of the revenue loss on the local workforce, director of corporate communications Becky Niiya said job cuts are one way to reduce expenses but are “always a last resort.” The company employs roughly 2,300 people in Omaha and 10,000 around the country.
“We’ve been able to keep headcount expenses down through normal attrition by thoughtfully considering each new and backfilled role and ensuring every job we post is absolutely essential,” she said.
She added that TD Ameritrade is focused on efficiency and long-term resiliency.
“As demonstrated in the past, TD Ameritrade’s sound financial position, disciplined expense management and long-term view will help us successfully navigate through various market cycles and offset any potential revenue headwinds,” she said.
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Tim Hockey, TD Ameritrade’s president and CEO, said in a statement that the company had been taking market share with a premium price point and, with a zero price point and level playing field, “We are even more confident in our competitive position and the value we offer our clients.”
Steve Boyle, the company’s chief financial officer, said more information about the fiscal 2020 plan will be part of a fourth-quarter earnings release later this month.
TD Ameritrade said it will drop its commissions to zero from $6.95 starting Thursday — four days ahead of Schwab’s commission drop to zero from $4.95 — for online trading of stocks and ETFs listed in the U.S. and Canada.
TD Ameritrade’s stock fell 25.8% Tuesday after Schwab’s announcement. Schwab shares fell 9.7%. E-Trade shares fell 16.4%.
The industry has been cutting investment fees since a Silicon Valley startup launched with zero fees in 2013. CNBC reported that this week’s zero commission announcements came after Interactive Brokers took the same step Thursday, J.P. Morgan Chase announced a free trading app in August and Vanguard Group said last summer that online platform users could trade commission free. A Credit Suisse analyst called it “Finishing the Race to Zero.”