Walt Bettinger and his team are working on a way to make marketing fees, no commissions, off of non-Schwab ETFs. Quiet meetings spearheaded by Charles Schwab[profile] have been taking place where the firm is trying to convince ETF providers to join a new network that will make ETFs commission-free, reports Reuters.

Sources knowledgeable of the talks told the wire service that providers will have to pay Schwab a marketing fee which they say is too high, thus making them reluctant to join.

According to Reuters, an ETF network could be a financial boon for Schwab since fees paid by ETF providers generate a source of steady revenue. While it is common in the mutual fund world for asset managers to pay a fee (known as 12b-1) to brokerages that sell and promote their funds, it is rare in the ETF market. Most brokerages market ETFs for free and make their money by charging investors a trading commission.

AdvisorShares' Noah Hamman said "this is the next area for price competition."

Schwab proposes that ETF providers would pay fees ranging from five to ten basis points.

To learn more about this development, go to reports Reuters. 

Edited by: HFD


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