Another Online Brokerage Goes NTF For All ETFs, But ...
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Thursday, October 03, 2019

Another Online Brokerage Goes NTF For All ETFs, But ...

Another publicly traded, online brokerage is going NTF (no transaction fee) online for all ETFs, but it's not clear how the change affects the firm's RIA allies.

Michael A. Pizzi
E-Trade Financial Corporation
Yesterday afternoon, E-Trade CEO Mike Pizzi confirmed that New York City-based E-Trade will eliminate retail commissions on U.S.-listed ETF trades (as well as stock and options trades). The move follows similar ones by the teams at Interactive Brokers (who unveiled a stock- and ETF-commission-free platform a week ago) and Schwab and TD Ameritrade (who on Tuesday revealed similar commission elimination plans).

TD's cuts take effect today, while Schwab's and E-Trade's will take effect this coming Monday. (The Interactive Brokers team did not specify the timing of their launch, beyond saying that it comes sometime this month.)

Yet, while the press releases from Schwab and TD specified that the ETF commission elimination (and the other commission cuts) will apply to the clients of their registered investment advisor allies (who use the online brokerages as custodians), E-Trade's release only mentions "retail commissions" for online trades. E-Trade, too, has an RIA support and custody unit, E-Trade Advisor Services (which includes the Trust Company of America business, which E-Trade bought last year).

Like RIA custody and discount brokerage rivals Fidelity, Pershing, Schwab, and TD, the E-Trade team has for years offered a select list of ETFs on an NTF basis. If E-Trade's ETF commission elimination applies to its RIA allies' clients in addition to E-Trade's direct retail clients, it's not clear what the restricted NTF ETF platform will be able to offer ETF shops going forward.

Meanwhilie, Investor's Business Daily wonders what the E-Trade, Interactive Brokers, Schwab, and TD moves mean for the planned IPO of Robinhood, an online brokerage built around the idea of free trading. InvestmentNews muses that the zero-commission fight could hit wirehouses. And Credit Suisse analyst Craig Siegenthaler sees E-Trade taking a roughly 25 percent hit to EPS thanks to the changes.

E-Trade served more than 7.1 million accounts and had $608.1 billion in customer assets as of June 30. That includes $19.4 billion under E-Trade Advisor Services.

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