Discount brokerage titan Charles Schwab (NYSE: SCHW) said on Tuesday that it's cutting its commission fees on U.S. stocks and ETFs to zero beginning Oct. 7.
Rivals TD Ameritrade (NASDAQ: AMTD) and E*Trade (NASDAQ: ETFC) plummeted 26% and 16%, respectively, following Schwab's blockbuster announcement.
Schwab's move to offer commission-free trading follows a similar move by Interactive Brokers (NYSEMKT: IBKR), which recently launched a free stock trading service. Still, Interactive Brokers fell 9% on Tuesday. Investors were probably hoping that the company's new commission-free service would help it gain market share from its higher-cost rivals. But with Schwab also now eliminating commissions -- and with TD Ameritrade and E*Trade likely to follow suit -- those share gains are unlikely to materialize.