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JPMorgan to Increase Competition by Offering Free Trades

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Raising competition to new highs among discount brokerage firms, JPMorgan Chase & Co. (JPM - Free Report) is likely to launch a new online investing service — You Invest — that would allow users access to stock research and conduct trades, free of cost.

Per an article by CNBC, it took JPMorgan almost two years to get the digital service rolling. In June 2016, CEO Jamie Dimon had indicated plans to provide no-cost brokerage trades or a free automated investing program, inspired by Amazon Prime and its mixed bag of free services.

People who download JPMorgan’s mobile banking app or are already using the bank’s website, will be eligible for at least 100 free stock or ETF trades in the first year. The offer would become permanent for customers holding Premier-level bank accounts, which require at least $15,000 to be held at the bank. Moreover, clients with at least $100,000 balance in Chase Private Client accounts, will be eligible for unlimited free trades. Existing mobile or online banking service users of JPMorgan, more than 47 million, will also gain access to the new service.

The digital service would be allowing its users to construct diversified portfolios with the help of an automated tool named portfolio builder by providing information about their risk tolerance preferences and personal goals.

The app would also provide clients details about the number of free trades they are left with. Also, if in case a user crosses the 100 free trades mark, he would be charged a nominal amount of $2.95 per trade. As recent as last year, the Wall Street biggie used to charge $24.95 for online trades.

Other online discount brokerages firms have witnessed sharp fall in their shares prices as news of JPMorgan’s free trade offering broke the market. TD Ameritrade Holding Corporation (AMTD - Free Report) lost 7% while shares of E*TRADE Financial Corporation closed 4.4% lower. Also, The Charles Schwab Corporation (SCHW - Free Report) , which charges $4.95 a trade, closed 2.4% lower in yesterday’s trading session.

JPMorgan faced intense competition from others in the same space, specially Robinhood which is a fee-free trading app with 5 million users. This new service might help the bank expand its client base and influence them to avail other services it provides.

JPMorgan’s shares have gained 7.9% so far this year compared with the industry’s growth of 1.5%.

Currently, JPMorgan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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