Fidelity Cuts Commissions; Sweeps
Fidelity Investments issued a press release entitled, "Fidelity Becomes the Only Firm That Offers Zero Commission Online Trading, Automatic Default to Higher Yielding Cash Option for New Accounts and Leading Trade Execution." It says, "Fidelity Investments, the largest online brokerage firm with 21.8 million accounts, ... announced that it is the only firm to offer zero commissions for online U.S. stocks, exchange traded funds (ETFs) and option trades, automatically direct retail investors' cash into higher yielding alternatives available for new brokerage and retirement accounts, and provide industry-leading best execution practices with zero payment for order flow for stock and ETF trades. The commission changes take effect on October 10, 2019 for individual investors and will be available on November 4, 2019 for registered investment advisors." Kathleen Murphy, president of Fidelity's personal investing business, comments, "With this decision, Fidelity is taking a different path from the industry. 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.... This is why -- in addition to offering zero commissions for online trading -- we will continue to automatically offer retail investors choice for their cash at account opening and default them into the higher yielding option." The release explains under the header, "Challenging Industry Practices on Investor Cash," that, "Fidelity is the only online brokerage firm to take a customer-first approach by automatically directing investors' cash into higher yielding alternatives available for new retail brokerage and retirement accounts.... Cash investments at Fidelity could earn 158x more than TD Ameritrade and E*Trade, and 13x more than Charles Schwab cash sweeps (as of Oct. 8, 2019. For accounts up to $24,999)." For more recent Crane Data Brokerage Sweep News, see these articles: "Brokerage Sweep Rates Continue Inching Lower; More Sweep Mentions" (10/1/19), "Fidelity Cuts Sweep Rates, Robos Down Too; More on Brokerage 'Cash'" (9/25/19), "Cash of the Titans Part II: Merrill Hit By Lawsuit Over Brokerage Sweeps" (9/3/19), "Cash of the Titans: Schwab vs. Fidelity; MF Yields Dip Below 2.0 Percent" (8/13/19), "Fidelity Now Sweeps to Money Fund" (8/8/19) and "Schwab Completes Shift from Money Funds to FDIC; LPL Changes Sweeps" (7/18/19).
