Charles Schwab to end commissions for stock trading, shares fall

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© Reuters. A man walks past a Charles Schwab investment branch in Chicago© Reuters. A man walks past a Charles Schwab investment branch in Chicago

(Reuters) – Discount brokerage company Charles Schwab Corp (N:) said on Tuesday it is eliminating commissions for online trading of stocks, ETFs and options listed on U.S. or Canadian exchanges.

The company’s shares fell 10% in early trading, dragging down those of its rivals. TD Ameritrade (O:) shares slumped 22%, while E*Trade (O:) slid 19%.

Schwab will reduce the commission to zero from $4.95 per trade, starting Oct. 7, the company said.

“We estimate that this pricing reduction is equivalent to approximately $90-100 million in quarterly revenue, which roughly translates to 3-4% of total net revenue,” Chief Financial Officer Peter Crawford said in a statement.

The company, which provides brokerage and financial advisory services, reported an 8% year-on-year jump in second-quarter net income at $937 million.

It managed total client assets of $3.75 trillion, as of July end.

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