Fidelity is following its rivals into the world of free stock trades.
Continue Reading Below
The online brokerage firm said Thursday that it would eliminate all commissions for online trading of U.S. stocks, exchange-traded funds and options by individual investors, effective Oct. 10. Investment advisors will see their fees cut to zero starting on Nov. 4.
Fidelity, which oversees 21.8 million brokerage accounts, previously charged $4.95 per transaction.
“With this decision, Fidelity is taking a different path from the industry,” Kathleen Murphy, president of the personal investing business, said in a statement. She described the move as a challenge to "industry practices that appear to give value in one place when they are actually having customers pay in other ways.”
Online brokerage firms have been scrambling to catch up after Charles Schwab announced Oct.1 that it would make stock trades free on its platform. Since then, Interactive Brokers, E-Trade and TD Ameritrade have also said they would be eliminating commissions.
Fidelity says that by automatically directing retail investors’ cash into higher-yielding alternatives and by providing best execution practices it sets itself apart from the other online brokers offering free trades.
No-fee services are expanding amid an increasingly competitive landscape in the industry. JPMorgan Chase last year said it would give customers 100 free stock or ETF trades for a year. The free-trading app Robinhood disrupted the industry when it launched in 2013.