Fidelity Joins Commission-Free Trading Craze

The broker is the fifth US firm in the past month to have launched such a service

Fidelity Investments announced on Thursday that it would be joining the commission-free trading frenzy with its own discount offering for retail traders.

The US broker said that it would not charge any commissions for the trading of stocks, options, and exchange-traded funds. On top of that, the firm promised higher yields for cash deposits and better execution speeds.

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Fidelity even put a number to its claims, saying that it will provide 1.58 percent interest to clients via a money-market fund.

“With this decision, Fidelity is taking a different path,” said Kathy Murphy, president of personal investing at Fidelity.

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“We are providing customers unmatched value while challenging industry practices that appear to give value in one place when they are actually having customers pay in other ways.”

Jumping on the bandwagon

Fidelity is the latest in a series of US retail brokers to have started offering a commission-free trading service.

In the past month, E*TRADE, TD Ameritrade, Charles Schwab and Interactive Brokers have all launched a similar set of products.

The shift in the retail trading industry is indicative of just how seriously these firms are taking nascent stockbrokers like Robinhood and Acorns, the former having pioneered commission-free trading in the US.

Some controversy remains around the business model, however, with many pointing out that such offerings generally have a catch to them. Robinhood, for example, sells vast swathes of client order flow to high frequency trading firms. Others charge for bonus features and better execution.

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