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Why Did Online Brokerage Stocks (AMTD, ETFC, SCHW) Fall Today?
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Shares of several major brokerage companies—including Charles Schwab (SCHW - Free Report) , TD Ameritrade (AMTD - Free Report) , and E-Trade —fell in early morning trading Tuesday as JPMorgan Chase (JPM - Free Report) unveiled a new mobile application which will feature free trading.
JPMorgan is set to roll out the new digital investing service next week, according to reports from CNBC. The platform will offer a portfolio-building tool, no-fee access to the bank’s stock research, and at least 100 free stock and ETF trades in the first year.
Chase Private Clients will also get unlimited free trades in the app, which is reportedly called “You Invest.”
The app, which CNBC said is more than two years in the making, escalates an ongoing price war in the retail investing industry which has seen costs to buy and sell stocks fall significantly. This battle has been largely inspired by the explosion of Robinhood, a fee-free trading app with 5 million users.
Robinhood’s monumental growth in just a few years has certainly disrupted the industry, but now JPMorgan is set to enter the low-cost trading business with a huge market-share advantage, as the 47 million people using the bank’s existing app will have access to You Invest at launch.
“There are customers out there who may not want to trust their credentials or their money to an app of the month,” JPMorgan executive and You Invest lead Jed Laskowitz told CNBC. “We're thinking about what's right for our customers, helping them get invested, and stay invested and diversified.”
Laskowitz’s comments are clearly directed at the likes of Robinhood, which might still struggle with concerns about its reliability and trustworthiness. But that is the same advantage older digital brokers like Interactive Brokers (IBKR - Free Report) , TD Ameritrade, and E-Trade have over fee-free apps, so it makes sense that investors have deemed today’s news as a bad sign for that group.
All three of these online brokerages saw noticeable losses at the open Tuesday, with legacy brokerage firm Charles Schwab also selling off early.
“It's not good, but it isn't the end of the world. They will all still be profitable, but certainly today the stocks will trade down on the headline risk,” analyst Rich Repetto of Sandler O'Neill & Partners said toCNBC.
“What you also should know is about one-third of trades at TD Ameritrade and E-Trade are derivatives, options trades, which would require a more complex platform.”
Want more market analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Why Did Online Brokerage Stocks (AMTD, ETFC, SCHW) Fall Today?
Shares of several major brokerage companies—including Charles Schwab (SCHW - Free Report) , TD Ameritrade (AMTD - Free Report) , and E-Trade —fell in early morning trading Tuesday as JPMorgan Chase (JPM - Free Report) unveiled a new mobile application which will feature free trading.
JPMorgan is set to roll out the new digital investing service next week, according to reports from CNBC. The platform will offer a portfolio-building tool, no-fee access to the bank’s stock research, and at least 100 free stock and ETF trades in the first year.
Chase Private Clients will also get unlimited free trades in the app, which is reportedly called “You Invest.”
The app, which CNBC said is more than two years in the making, escalates an ongoing price war in the retail investing industry which has seen costs to buy and sell stocks fall significantly. This battle has been largely inspired by the explosion of Robinhood, a fee-free trading app with 5 million users.
Robinhood’s monumental growth in just a few years has certainly disrupted the industry, but now JPMorgan is set to enter the low-cost trading business with a huge market-share advantage, as the 47 million people using the bank’s existing app will have access to You Invest at launch.
“There are customers out there who may not want to trust their credentials or their money to an app of the month,” JPMorgan executive and You Invest lead Jed Laskowitz told CNBC. “We're thinking about what's right for our customers, helping them get invested, and stay invested and diversified.”
Laskowitz’s comments are clearly directed at the likes of Robinhood, which might still struggle with concerns about its reliability and trustworthiness. But that is the same advantage older digital brokers like Interactive Brokers (IBKR - Free Report) , TD Ameritrade, and E-Trade have over fee-free apps, so it makes sense that investors have deemed today’s news as a bad sign for that group.
All three of these online brokerages saw noticeable losses at the open Tuesday, with legacy brokerage firm Charles Schwab also selling off early.
“It's not good, but it isn't the end of the world. They will all still be profitable, but certainly today the stocks will trade down on the headline risk,” analyst Rich Repetto of Sandler O'Neill & Partners said to CNBC.
“What you also should know is about one-third of trades at TD Ameritrade and E-Trade are derivatives, options trades, which would require a more complex platform.”
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>