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PRICE WAR

American investors will soon be able to trade for nothing

Reuters/Mike Blake
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  • John Detrixhe
By John Detrixhe

Future of finance reporter

Published This article is more than 2 years old.

When it comes to retail investing, the likes of brokers and asset managers are in a battle to charge their customers as little as possible. Today, JPMorgan Chase brought out the heavy artillery—the biggest US bank is rolling out a digital investment service that provides free trades, according to CNBC. Share prices for major US brokerages fell after the report, a sign the price war in asset management may rumble on.

JPMorgan’s new service comes after two years of development and will start next week, according to CNBC. It includes a tool for portfolio building and access to the firm’s stock research at no cost. Users are also eligible for at least 100 free trades in the first year via the bank’s website or mobile app. More than 47 million customers who use the bank’s app or website will have access to the service, called You Invest, when it goes live.

Shares in major brokerages including Charles Schwab, E-Trade, and TD Ameritrade suffered in trading, falling as much as 6% on the news:

The battle over investment fees has intensified in recent months, with Vanguard offering commission-free online trading for most ETFs, and Fidelity announcing two new stock-index funds with expense ratios set to zero. JPMorgan’s new service is also a retort to upstarts like Robinhood, a free trading app with some 5 million users.

New customers can sign up through the app in about three minutes, with no account minimum, and also access investments held in outside accounts, according to CNBC. Clients can make 100 free stock or exchange-traded funds trades in the first year and can get the same deal in subsequent years if they maintain account balances of at least $15,000. Chase Private Client customers, an account that typically requires at least $100,000 in holdings, are allowed unlimited free trades.

Just last year, the bank charged $24.95 for online trades. Fidelity, by comparison, charges $4.95 for stocks and options, according to its website, while some Fidelity and iShares ETFs are commission-free (other ETFs cost $4.95 per trade).

JPMorgan’s new service also includes an automated tool to help users set up a portfolio of ETFs and stocks based on a customer’s investing plans and stomach for risk, CNBC said. The bank plans to launch its own robo-advisory service under the You Invest umbrella in January. CEO Jamie Dimon has said that automated investing advice could be offered free, or as part of a package.

Story was updated to show that Robinhood has more than 5 million customers instead of 4 million. 

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