E*Trade's US Power E*Trade active-trader service is revising its commission structure down to favour investors who trade frequently with the firm. Traders making at least 75 trades a quarter will pay just $9.99 for each of their trades. At present the $9.99 rate only kicks in after 75 trades, and the first 30 trades cost between $14.95 and $19.95.
The revised structure is indicative of the fierce competition between on-line brokers in a market-place which has seen significant consolidation and a shrinking client base since the glory days of 2000. E*Trade's new prices seem to be partly aimed at taking customers away from rival Ameritrade, which has just agreed to buy closely-held Datek Online Holdings Corp. E*Trade meanwhile has agreed to acquire most of the operations of closely-held Tradescape Corp., New York.
An E*Trade spokeswoman said the price changes had been "in the works for a long time," but the company has made it a point of going after clients of Ameritrade and Datek. After Ameritrade, based in Omaha, Neb., announced its acquisition of Datek, E*Trade ran an advertisement on its Web site that said, "Ameritrade and Datek customers, mergers are beyond your control. Luckily, there's Power E*Trade."
On Thursday, E*Trade shares fell 18 cents, or 2.3%, to $7.52, after shedding 6.7% on Wednesday. Ameritrade stock fell 12 cents, or 2.3%, to $5.02, after dropping 4.1% on Wednesday. Schwab stock, which fell 3% on Wednesday, rose 1 cent, or 0.1%, to $11.36.
It wasn't immediately clear whether the new commission structure would apply to E*Trade's other worldwide operations, which include offices in Hong Kong, Europe, Australia and Bermuda, although not much has been heard of the latter operation recently.
As well as securities trading, E*Trade offers on-line banking services in the US, where it also operates 11,000 ATMs. The company has been in discussion with the Hong Kong authorities over the introduction of banking services there.
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