Fidelity Investments is crashing the free-trading party, challenging rivals in a gambit to lure assets by ending commissions.
The firm will offer not only zero commissions for online buying and selling of U.S. stocks, exchange-traded funds and options, but also provide higher yields for cash balances and better trade execution, according to an announcement Thursday.
The move is the latest leg in the price-chopping frenzy engulfing retail brokerages. Fidelity is the fifth major industry player since last month to roll out some form of zero-commission online stock and ETF trading as companies duel to win investors gravitating toward the cheapest products. Fidelity and its rivals have also been slashing other trading commissions and fees.
The Boston-based firm, the largest online brokerage with almost 22 million accounts, boasts in a new ad that retail customers will earn 1.58% on their cash balances automatically swept into a money-market fund, based on yields as of Oct. 8. That tops rates at rivals, the firm said, asserting that customers also save by using Fidelity’s trade execution.
“This combination is something that no other firm offers,” Kathleen Murphy, president of the closely held company’s personal investing business, said in the statement.
The competition among banks, brokerages and money managers has been intensifying. The investing industry crossed a milestone in August as assets in index mutual funds and ETFs surpassed those in actively run vehicles for the first time, and heavyweights like Charles Schwab Corp., Vanguard Group and BlackRock Inc. have stepped up the battle for market share.