Brokerage Stocks Tumble as Charles Schwab Eliminates Commissions

Brokerage stocks are having one of their worst days on record.

TD Ameritrade for example is down 21%, or $9.74 to just under $40.  E-Trade Financial is down nearly 18%, or $7.68 to $36 a share. Charles Schwab Corporation just slipped 8% to $38.37.

Even Interactive Brokers is now down 7.5%, or $4 a share to $49.72.

All after Charles Schwab said it plans to cut all commissions for stock trading, ETFs and options on its mobile and web platforms.  That’ll begin on October 7, 2019, and will be made available for securities listed on U.S. and Canadian exchanges.

The move comes just a week after Interactive Brokers Group rolled out its IBKR Lite service, which also cut commissions for U.S. listed stocks and ETFs.  All as the entire industry faces heavy competition from upstarts like Robinhood.

For Schwab, “From day one, my passion has been to make investing easier and more affordable for everyone,” said Charles Schwab, as quoted by the company. “Eliminating commissions ensures my ultimate vision is realized — making investing accessible to all.”

On October 7, the new program will roll out with no minimum account size.

Blood in the Street Opportunities

While the news came as a shock to brokerage stock investors, it may create a blood in the streets opportunity to buy once the smoke clears.  For example, TD Ameritrade just gapped to a low not seen since mid-2017. Eve ETFC is now down to lows traders haven’t seen in two years.

While the news is certainly a shock to the system, once it’s priced in – and we get a better understanding of what’s next for the industry – we could be presented with an opportunity to buy great blood in the streets stocks.

Stay tuned for more on this developing story.