If you are still paying any commission to trade stocks online then you're paying too much. The discount brokerage business, in the span of about a week, has reinvented itself with a business model of zero commissions.
The Charles Schwab Corporation was the first major broker to kill off commissions earlier this month -- although its move came a few days after smaller competitor Interactive Brokers announced a similar plan.
Once Schwab made its decision, rivals TD Ameritrade, E-Trade, Ally Invest and Fidelity all quickly followed suit. They all need to be more competitive with the likes of Robinhood and other popular trading apps that charge no commissions.
Shares of Schwab and its rivals all tanked on the news as investors worried about the loss of a lucrative revenue stream for the brokerage business. But so far Schwab seems to be doing just fine.
The company reported earnings on Tuesday that topped forecasts, and its shares rose nearly 5% on the news.
The move by Schwab was touted as the latest example of how company founder Charles Schwab himself envisioned a market environment where average traders didn't have to pay an arm and a leg to trade stocks.
"From day one, my passion has been to make investing easier and more affordable for everyone," Schwab said in a statement about the decision to go to a 0% model. "Eliminating commissions ensures my ultimate vision is realized -- making investing accessible to all."
Schwab has written more about his philosophy in a new book titled "Invested." He will talk about the book as well as the competitive landscape in the brokerage business with CNN Business correspondent Alison Kosik on the "Markets Now" live show Wednesday at 12:45 pm ET.
In the book, Schwab discussed how he is "more convinced than ever that investing is the individual's path to financial freedom," adding that he still believes in growth stocks.
"In my experience, earnings follow growth, and stock prices follow earnings," Schwab wrote.
Kosik will also be joined by Alicia Levine, chief strategist at BNY Mellon, to discuss the broader market, earnings, the Federal Reserve and the latest developments with trade talks between the US and China.
"Markets Now" streams live from the New York Stock Exchange every Wednesday at 12:45 pm ET. Hosted by CNN Business correspondents, the 15-minute program features incisive commentary from experts.
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