TD Ameritrade,* Schwab, and ETrade now offer zero-commission trading for equity trades (equity, etf, and some options trades) in their retail accounts.
Each of the houses reduced their per-trade charges, from $4.95-$6.95 to zero. The changes apply to retail (DIY, self-managed) accounts.
Believe it or not - there are folks out there who consider this "bad news." Their primary rationale? Investors who trade their own accounts aren't rational. Without the "discipline" of high cost trading, they are likely to over-trade. I suppose there will be a few of those -- but for the most part, I call BS. Most of the self-traders I talk to didn't pay much attention to the per transaction fee as a trading barrier to begin with.
In case you are wondering - trading fees were about 3-4% of total revenue for each of the firms.
Interest rate spreads generate the bulk of the firms' revenue. The "plan" is: 1) lower fees induce induce greater deposits; 2) greater deposits provide more $s on which to realize interest spread income. 3) The increase interest spread income compensates for the lower fees. In at least one case (Schwab) there is strong evidence the plan works.
*1) Disclosure - Steven is an Investment Advisor Representative (CRD #6499051), COO, CCO and Managing Member of Cambyses Financial Advisors, LLC (CFA, CRD #230786).
TD Ameritrade provides custodial services to CFA. CFA has no affiliation or business nexus with either Schwab or ETrade.