Ally To Remove Commission On Stocks, ETFs & Options

Following on from announcements made by Charles Schwab, TD Ameritrade, and E*Trade, Ally Bank has announced that it will be removing commission on all online US listed Stocks, ETFs & Options. Options contracts will still be charged at $0.50 per contract (which is lower than Schwab, E*Trade, & TD who charge $.65). These changes will go into effect on October 9th, 2019.

I expect we’ll see everyone else follow along with this as well.

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Yidong Ren
Yidong Ren (@guest_821500)
October 10, 2019 04:04
BrokerMania
BrokerMania (@guest_818922)
October 5, 2019 14:49

TradeStation and interactive brokers (lite) have also removed commissions.

Peter
Peter (@guest_818702)
October 4, 2019 18:23

Yay for me having just spent $4.95 with Fidelity yesterday…

Matt
Matt (@guest_818734)
October 4, 2019 20:14

If you wanted to, you could call up Fidelity and likely get them to refund that $4.95. I don’t know how big of a deal it is for you, but they’ll likely refund it if you call. Even before this, brokerages handed up free trades like candy to anybody proactive enough to call and ask for them.

SamL
SamL (@guest_818662)
October 4, 2019 17:01

Ally probably wishes they’d stuck with banking and didn’t buy that brokerage (TradeKing). It might be a liability now that they just want to sell.

Matt
Matt (@guest_818730)
October 4, 2019 20:07

Brokerages don’t make their money with commissions. Back in the 1980s and earlier, sure, commissions were a big part of a brokerage business. But that hasn’t been the case for a long while.

Charles Schwab, for example, generated around $100 million in commissions during its most recent quarter. That sounds like a lot, but it actually isn’t. It’s only about 4% of Schwab’s total net revenue.

Of course, Schwab would prefer to keep generating that $100 million each quarter. Of course. But what I’m saying its that it’s not a huge part of their overall business.

One of the secrets about brokerages is that if you called up and simply asked, they would often just throw free trades at you to keep you happy. 50 free trades here. 100 free trades there. It wasn’t a huge deal for them. They keep you happy with free trades and make their money with their percentage-fee services. Now those free trades are just the industry norm.

Matt
Matt (@guest_818737)
October 4, 2019 20:27

(Too late to edit my first reply to you.)

For Ally Bank specifically, they had to have known that a $0 trade world was approaching when Ally Bank purchased TradeKing in 2016. The industry — long before 2016 — had been trending towards the $0 trade being standard industry practice. Maybe they didn’t know it would happen specifically in October 2019, but they had to have known that this was an inevitability.

TomJ
TomJ (@guest_818795)
October 5, 2019 00:08

Except the whole free trade concept had been tried before and didn’t last very long. Several brokerages came and went using a free model or one that was extremely cheap.

I was fortunate when Ally bought MB Trading to be grandfathered into the MB commissions which were lower than Ally’s. I never thought we would see free trades again.

Matt
Matt (@guest_818820)
October 5, 2019 02:06

Several startups came and went using the free model. They went away not because of the free trades, but because they couldn’t make money on other products and services. These big brokerages don’t have that problem. They already make the vast majority of their money from things other than commissions. They make their money from services that charge percentage fees (rather than a flat $5 for a trade).

Amol
Amol (@guest_818659)
October 4, 2019 16:56

Wonder if Ally will now cancel the transfer bonus + free trades promo it began a week back.

SamL
SamL (@guest_818666)
October 4, 2019 17:12

The transfer bonuses are not new. They’ve been around for a while. Obviously the free trades are now redundant.

Amol
Amol (@guest_818775)
October 4, 2019 22:33

But until last week, I don’t think existing Ally Invest customers could take advantage of those.

K.M.
K.M. (@guest_818657)
October 4, 2019 16:53

wow great ripple effect happening.

SideShowBob233
SideShowBob233 (@guest_818642)
October 4, 2019 16:24

Damn Fidelity get with the program. Don’t make me move all my money elsewhere.

Fidelity
Fidelity (@guest_818653)
October 4, 2019 16:40

You really want your order flow resold? Free trades aren’t free. Fidelity price improvement wins the day. I really hope they don’t give in.

Ben
Ben (@guest_818720)
October 4, 2019 19:41

How do you know they don’t resale currently and that they will resale Ovid they do change? I thought they are going commission free given that they are becoming less and less part of their revenue anyway. Plus, they are increasingly profiting on the deposited cash that gets loaned at at higher rates then what they pay on brokerage cash accounts.

BrokerMania
BrokerMania (@guest_818923)
October 5, 2019 14:52

Excess cash at Fidelity is auto swept into money market that earns a decent rate, around 1.5% recently. Cash is immediately available for trading, Fido is pushing this feature as a differentiator.

Rob
Rob (@guest_840830)
November 13, 2019 08:58

I really really don’t get this “order flow” concern, I think people like you are just trying to sound smart because ALL brokers sell order flow, all of them, and the quantity you lose is so minute, It’s hundredths of a cent, that it’s basically completely inconsequential to a normal investor, and if anything if you’re using limit orders your order can only be filled at the price you specified anyway, so what is all this silly talk? The free commissions more than make up for any hundredth of a cent you might lose when buying a stock because an algo bought and sold it to you for $0.0001 more, but hey, people need to criticize and be upset with everything and anything, even if it benefits them.

Mist Soalar
Mist Soalar (@guest_818703)
October 4, 2019 18:35

I’ve done ACAT twice this year already. Feels like laundering.

Celia
Celia (@guest_821566)
October 10, 2019 10:12
Bob Roberts
Bob Roberts (@guest_821578)
October 10, 2019 10:42

About time!!!