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Interactive Brokers Salvo In Free Stock Trading War Hits Ameritrade, E-Trade, Schwab

Interactive Brokers (IBKR) will offer zero-fee trades on stocks and ETFs via a new service, as it looks to broaden its appeal with retail investors. IBKR stock retreated slightly Thursday, with TD Ameritrade (AMTD), E-Trade (ETFC) and Charles Schwab (SCHW) falling harder.

The new IBKR Lite service will offer unlimited trades on U.S.-listed stocks and exchange traded funds for a zero trading commission. It debuts in October. It will have no account minimums or inactivity fees.

Interactive Brokers will rebrand its existing low-fee stock trading offering as IBKR Pro.

Fee wars have engulfed financial services firms. But to date, online brokers Schwab, TD Ameritrade and E-Trade only allow customers to trade select ETFs for no commission. They've also lowered fees or removed minimums to trade stocks and ETFs, as investing apps like Robinhood capture a new generation of investors.

Interactive Brokers CEO Thomas Peterffy said in a statement, "In the past few years, many financial firms have lowered their fees, and some have even introduced so-called free trades. But there's usually a catch, such as a limited number of transactions. IBKR Lite clients will be able to trade US exchange-traded stocks and ETFs as little or as much as they want and it won't cost them a dime."

Customers can switch between IBKR Lite and IBKR Pro, subject to conditions. Pro clients will get potentially better pricing on stock trades through smart routing technology. Price improvement may matter less to regular investors.

Interactive Brokers' stronghold is active traders and institutions, but it's looking to tap a broader audience.

IBKR Stock, Brokerage Stocks Lagging

Interactive Brokers stock fell 0.4% to 51.51 on the stock market today, well off intraday lows of 49.36. Charles Schwab stock lost 2.2%, E-Trade stock tumbled 4.8% and AMTD stock dived 6.5%. Schwab charges $4.95 for stock trades, and has relatively high exposure to asset management. E-Trade and Ameritrade charge $6.95 per trade.

IBKR stock and Schwab stock are above their 50-day lines. E-Trade stock and AMTD stock tumbled below that support level Thursday. All four already trade below their 200-day line.

Brokerage stocks, including IBKR stock, have lagging RS lines. The relative strength line, tracking a stock's performance against the S&P 500, is the blue line in the charts provided. All four online brokers are seeing decelerating or declining profit growth.

Investing app Robinhood pioneered zero-fee stock trading. Robinhood had been eyeing an IPO last year before getting embroiled in a checking account controversy.

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