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Commission Wars


I remember back when I first started in the stock market, it was late 1996.  My dad had given me $2500 worth of shares in a Canadian Bank, Royal Bank of Canada, as a graduation gift to help me upgrade from my beat-up 1985 Blue Toyota Pickup Truck.

I opened a Fidelity account and deposited the shares and then, a couple months later, sold them when I needed the downpayment for my car loan.  I still remember the commission to sell my shares: $29.95.

As a side-bar: That one act of opening an account is one of the biggest hurdles for most people who don’t invest…and yet it takes less than 30 minutes of your time.

I don’t remember the year, but E*Trade came into the mainstream consciousness and offered $9.95 trades.  I wasn’t trading heavy at the time, and it cost money to withdraw money from E*Trade, so I never switched over.

Fidelity eventually dropped their trading commission to $9.95 and then $7.95, along with all the other full-service broker-dealers.

Just announced yesterday, Fidelity dropped their commission rates to $4.95.

There are many low-priced brokers out there, and this full-service broker is competing well with them.

By the way, I am not getting paid for this…just thought it was an interesting move on their part.  I am also considering TastyWorks for my option trading, where they charge $1/contract to open a position, and $0 to close.  Their stock trading commission is $5/trade, so that’s comparable to Fidelity’s.

Source: Trading & Brokerage Services – Fidelity