Author Topic: IMPACT OF FREE TRADING?  (Read 807 times)

DTEJD1997

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IMPACT OF FREE TRADING?
« on: October 07, 2019, 10:56:05 AM »
Hey all:

Last week a bunch of brokerages in the USA largely moved to "free" trading for individual investors.

This has me thinking are there going to be some unintended consequences?

Could we see trading volume/volatility spike up now that there are almost no costs to trading?

Obviously, brokerages are going to make less money, and the economics of that business have changed for the worse.

Could we see asset managers have to lower fees also?  Could it set off a chain reaction?

Could people expect things for free in other industries?

Could we see more individual investors who generally have small amounts to invest get started?

Going to be interesting to see what happens!


DooDiligence

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Re: IMPACT OF FREE TRADING?
« Reply #1 on: October 07, 2019, 11:48:59 AM »
Also, will the charges for selling order flow go down & will legislation be introduced that makes it illegal?
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KJP

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Re: IMPACT OF FREE TRADING?
« Reply #2 on: October 08, 2019, 08:15:39 AM »

Could we see asset managers have to lower fees also?  Could it set off a chain reaction?


Brokerages can eliminate commissions because they make money in other ways, e.g., selling order flow, interest on float, and ancillary services like margin lending.  This is similar to car dealerships that accept little to no profit on new car sales in order to sell new car buyers on very profitable ancillary services, e.g., financing and service.

Other than management fees, how does an asset manager/hedge fund lawfully make money?  What are the ancillary revenue streams that they would be protecting by lowering asset management fees? 

shhughes1116

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Re: IMPACT OF FREE TRADING?
« Reply #3 on: October 11, 2019, 03:33:23 AM »
Early this morning, I received a message from E*Trade walking back part of the "$0 Commission" move. 

On the 7th, all stocks moved to the $0 commission structure.  Now, they are moving OTC stocks back to the previous commission structure ($5.99 per trade, or something like that.)  Most of my trading involves OTC stocks.   

Anyone seeing this with other brokerages like Schwab, Fidelity, or TD Ameritrade?

Spekulatius

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Re: IMPACT OF FREE TRADING?
« Reply #4 on: October 11, 2019, 06:53:39 AM »
Early this morning, I received a message from E*Trade walking back part of the "$0 Commission" move. 

On the 7th, all stocks moved to the $0 commission structure.  Now, they are moving OTC stocks back to the previous commission structure ($5.99 per trade, or something like that.)  Most of my trading involves OTC stocks.   

Anyone seeing this with other brokerages like Schwab, Fidelity, or TD Ameritrade?

No Fidelity and Schwab havenít walked anything back in terms of commissions. Fidelity does not allow buying noinfo OTC stocks, so keep that in mind, if you consider them. I believe Schwab has no restrictions on what you can buy , but I donít have a lot of experience- I just opened a test account with them yesterday.

I personally would close my Etrade Account if I were you.
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