
E*Trade Announces $0 Base Commissions for Online Stock, ETF, and Options Trades - troydavis
https://about.etrade.com/newsroom/press-releases/article?qmodStoryID=5545607436705191
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omarhaneef
Maybe all of you read every word Matt Levine writes as I do, but in case you
don't, here is his explanation:

[https://www.bloomberg.com/opinion/articles/2019-10-02/the-
tr...](https://www.bloomberg.com/opinion/articles/2019-10-02/the-trades-will-
be-free-now)

~~~
simonebrunozzi
I love reading his stuff. I would honestly pay up to one of two dozen dollars
a month for his very high quality thinking.

~~~
1123581321
Are you saying that as a Bloomberg subscriber?

~~~
perl4ever
I think his interests are not exactly in alignment with Bloomberg...that's why
you can subscribe to his column for free, without paying for the rest of
Bloomberg. I have a feeling it won't last forever.

~~~
1123581321
I suppose. I see his articles as paywalled but I take it there is another way
to them. I could certainly see him successfully moving to something like
Substack.

~~~
qwhelan
There's no paywall if you sign up for his newsletter:
[http://link.mail.bloombergbusiness.com/join/4wm/moneystuff-s...](http://link.mail.bloombergbusiness.com/join/4wm/moneystuff-
signup)

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mrep
Right along with charles schwab [0]. Amazing what a little competition from
Robinhood can do.

[0]: [https://www.cnbc.com/2019/10/01/charles-schwab-is-
eliminatin...](https://www.cnbc.com/2019/10/01/charles-schwab-is-eliminating-
online-commissions-for-trading-in-us-stocks-and-etfs.html)

~~~
basch
Id venture robinhood is getting a little too much credit here.

The order this happened in was Interactive Brokers, Schwab, TD Ameritrade, E
_trade. They were obviously all prepared to do it in the event one of them
went for it. Interactive Brokers did this more to give themselves a
competitive edge over Schwab, TDA, and E_ Trade. That lasted about a day.

~~~
windexh8er
I don't think so. None of these brokers would have gone down this path without
the pressure that zero fee brokers have been bringing. It was easy to call
that ETrade was cornered to follow after Schwab announced last week [0]. And
like I mentioned in another comment: just because Schwab and ETrade have
better tooling and many more features that doesn't always matter for some. I
still use tools outside of ETrade and for certain trades will continue to run
them through Robinhood. Now there's less incentive though, which is great for
me as the consumer.

[0]
[https://news.ycombinator.com/item?id=21142786](https://news.ycombinator.com/item?id=21142786)

~~~
basch
It was a race to the bottom, it may have taken longer, but they all would have
been shaving a dollar off at a time till somebody hit zero.

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User23
Maybe next the brokers will stop asking almost 6% above Libor for a loan
that’s better secured than most mortgages. I get offers in the mail for
unsecured personal loans that are better rates than margin from any broker
besides Interactive Brokers. Warning about them though: I hear they are
extremely aggressive on margin calls and skip right to liquidation so be
smart.

~~~
charlesdm
That's only for the "smucks", though. If you have a proper banking
relationship, you'll get great rates.

~~~
Waterluvian
I learned this lesson recently. I had to go into a bank to get a prime + 0.5
line of credit secured against my home's equity. Nowhere on the internet would
an online formula give me anything close.

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k0stas
Required reading about discount brokerage revenue streams from patio11:
[https://www.kalzumeus.com/2019/6/26/how-brokerages-make-
mone...](https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/).

~~~
blub
I found Levine's article which was posted by someone else shorter and clearer.

Had to give up 1/4th of the article in for this one, it just goes on and on
for something that can be summarized in two paragraphs.

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thisisit
Does this apply to RSU accounts opened by companies for their offshore
employees too?

The brokerage some of my colleagues pay to E*Trade is huge. $15 per trade to
sell RSUs. And sometimes it gets too costly for them to sell RSU because of
the brokerage costs.

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hw
Thinking of moving from Fidelity to Etrade/TD Ameritrade but hanging around a
bit and seeing if (when) Fidelity would follow suit with implementing 0
commission trades.

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notyourwork
What’s wrong with fidelity or why are you thinking of moving?

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benmanns
Does anyone (outside Robinhood) do 0 commission options trades?

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scotch_drinker
TD Ameritrade just started doing it.

[https://www.tdameritrade.com/why-td-ameritrade/free-stock-
tr...](https://www.tdameritrade.com/why-td-ameritrade/free-stock-trading.page)

~~~
StevePerkins
Read their fine print. There's still a "contract charge" of $0.65/contract.
Apparently many of these players are eliminating commissions by using a
different word for it instead.

As far as I know of, only Robinhood and Firstrade have true zero-cost option
trading. And even then, there can be fees involved if you actually exercise
options.

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innagadadavida
This is great news indeed. However their mobile UI is really horrible and hope
they fix it

~~~
SOLAR_FIELDS
Their desktop one isn’t too great either, it took me awhile to figure out how
to do basic stuff - they have way too much stuff going on and it doesn’t seem
very well logically separated to me.

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Animats
So how do they make their money? Front-running? Payments for order flow?

~~~
maxerickson
Interest.

[https://www.kalzumeus.com/2019/6/26/how-brokerages-make-
mone...](https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/)

~~~
alphabettsy
I found the writing pretty hard to follow and overly complicated.

~~~
mrfusion
Anyone want to share the gist of that article?

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maxerickson
Discount brokerages mostly make money on interest.

~~~
mrfusion
Interest on what though? Isn’t most money immediately invested or put in money
market funds?

~~~
toast0
A lot of people leave some money in the sweep account, so it's liquid for
future trades. Or leave it for a few days after a sale before transferring it
out.

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knadh
We've been doing $0 broking in India for a while now. Nithin (founder)
recently shared his perspective[1] on this, albeit largely in the Indian
context.

TLDR: While going $0 was long time coming, US brokers have other avenues of
earning, unlike their Indian counterparts.

[1] [https://zerodha.com/z-connect/rainmatter/the-race-to-zero-
ca...](https://zerodha.com/z-connect/rainmatter/the-race-to-zero-can-indian-
brokerage-industry-survive)

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justboxing
E*Trade, Schwab, and pretty much every other brokerage is playing catchup with
RobinHood, which has had free trades on stocks and options from the very
beginning. This has caused a steady exodus of users on these commission
charging platforms, crossing over to RH. It's especially pronounced with
Millenials and Gen-Z / "Post millenials".

You may not always get the best pricing, and also there are no market trades
as of this writing on RobinHood, but the RH UI handily beats everyone else in
terms of ease of use and simplicity.

The options trading functionality, for instance is very simple. You select
options and then it presents you with a list of (screen) options on whether
you think stock will go up, down, or sideways. Based on that, they show you
low risk, high risk call options, put options or stangles and straddles. You
can place a trade with a couple of taps. If you want to get more specific and
sophisticated, you can choose the expiry dates and select your own call / put
options.

Compare this to TD Ameritrades UI and Schwab's UI, it looks like some guys
from the 90s, stuck in the 90s, are still working on the UI team.

Truly clunky, horrible, confusing and annoying.

~~~
fourstar
I think this logic is hilarious.

You really believe that the “millennials and zoomers” actually have enough
capital to compete with these traditional brokerages?

Robinhood doesn’t event pay out dividends.

You’re overselling it. Their education for options is basic at best. PLUS
anyone who is serious about playing options should actually invest time in
learning it.

If anything, its cleaner ui makes it easier for said demographic to LOSE
money.

You may think RH is large, but I’m guessing your vantage point is from within
the tech bubble.

~~~
ac29
> _Robinhood doesn’t event pay out dividends._

Hmm? Of course they pay out dividends. I don't even see how it would be legal
for a broker to keep a customers dividends.

[https://support.robinhood.com/hc/en-
us/articles/360001227206...](https://support.robinhood.com/hc/en-
us/articles/360001227206-Dividends)

~~~
jacurtis
Yes, can confirm that they pay dividends. I use Robin Hood and get dividends
on several stocks. I’d imagine it would be illegal to withhold dividends.

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ummonk
If you’re not paying for it, you’re the product. In this case they’re selling
your order flow.

~~~
robjan
That only really matters if you only place market orders. And even then the
routing may result in a better execution price than going straight to the
exchange.

~~~
perl4ever
My understanding is it would be illegal if it _didn 't_ result in a better
price.

