How much do you pay to trade stocks? Fidelity, the latest broker to cut commissions

Fidelity Investments is the latest major broker to scrap commissions on online stock trades, joining an all-out price war between rivals.

Fidelity announced Thursday that it will no longer charge clients to trade U.S. stocks, exchange-traded funds (ETFs) or options.

The company, one of the world’s largest asset managers, joins a growing list of brokers who have cut online trading fees in quick succession.

Charles Schwab last week eliminated commissions for trading stocks, ETFs and options on its mobile and web platforms. TD Ameritrade and E-Trade also dropped commissions.

E-Trade charged commissions of $6.95 per trade, while Fidelity charged $4.95. Fidelity claims to have more than 20 million online brokerage accounts.

The pace of change in the industry has confounded investors, who are worried about how it will affect the profits of these companies.

TD Ameritrade stock has fallen 27% since the end of September. Charles Schwab shares are down 10% and E-Trade shares are down 14%.

The challenge for brokers is to differentiate themselves in an increasingly crowded market where price is no longer a selling point.

“In a world of equals, it’s all about what you offer,” TD Ameritrade executive Steve Quirk said in a recent interview with CNN Business.

Startups have popularized the no-fee trading model so investors now expect free trades. But they have a very different cost base than traditional brokers.

“Incumbents will find it harder to implement and operate the commission-free model,” said Viktor Nebehaj, co-founder of UK-based online brokerage Freetrade.

“As a mobile-only startup, the technology allows us huge savings and a different cost structure,” he added.

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