With all these commission wars out there, I just looked at what I paid YTD on commissions in IB and it is scary. It use to be just the cost of doing business and I accepted that. I actively trade intraday and hold for several hours so cents off on the initial entry doesn't matter so so much. Out of the others, IB is the only one that is not offering a desktop platform (their TWS will only be for PRO not LITE) that includes free commissions. No way in heck I could use a website or Mobile app. Too many screens and charts. Now, I've been loyal to IB and TWS (just for executions - charting not so much) but I am taking a long look at making a switch a different "retail" broker. What are others thinking about all this? (news is still fresh to us older folks who remember the old days)
This is my exact situation as well. Curious what others are leaning towards. I have no other experience with these other zero commission brokers
I think I pay almost as much in commission as I net every year. I hope one day this will apply to CDN Brokers and Equities
Commission free = orders are sent to a predatory POF HFT like Citadel that trades against your order to profit at the expense of the trader, they can make a few dollars to hundreds - depending on the # of shares & bid-ask spread. Most brokers were already POF, their customer's will save - although they could save a lot more routing orders to the IEX, dark pools, or by using more complex order types. HFTs back off when volatility spikes, making fills during adverse conditions more problematic. The noobs will take over trading to a whole new level & the scalpers will get fills when price rolls over - they will be the ones getting scalped. Pros will not use CF orders, it would make the true cost of trading rise many fold. Limit orders are better than market, but keep in mind there is a reason why pro trades abandoned plain limit orders long ago.
Were already getting fleeced by having the order flow sold might as well save a few dollars in the meantime
I'm notorious for switching brokers every 4 or so months. I have finally settled in IB for the long haul I think... I'm returning to interactive brokers because after they rolled out IB PRO and looked like they cared I became interested again (I recently went to AMP for a month but their platform offerings left a lot to be desired for my trading style - great company otherwise and top notch trade desk). My main problem was their older offerings really sucked experience wise for someone who's only need was an API and a decent way to place orders (old TWS was really, really aggravating to use). I dont care about zero commissions. I care about execution quality and total package. I will pay $10 dollars less any generated commissions for access to one of the only full blown real time API offerings on the market, high quality execution, and decent customer service. Last I checked IB themselves doesn't take a cut, but their routing system can put you on a market maker's book that does take PFOF. Still significantly better than just about any other offering available in that regard and if you want you can pick where you are routed. Worst case, I am out $50 bucks a month in commissions on a busy month. That's the cost of a middle of the road daily data Quandl offering. While I don't agree with commissions in general I justify IB's absurdly low commission as a data fee. It's cheaper and better quality than Quandl and other offerings and I can control my API. Well worth the price I pay. When you frame it like that, it's clear that a small commission in this regard is reasonable because data is expensive to store, clean, and send.
You can just switch to IB lite and then switch back to IB pro once per quarter without changing brokers.
Can Robinhood survive zero-commission trades? By Sean Allocca October 09, 2019, 11:28 a.m. EDT As investment industry giants adopt commission-free trading, low-cost investing startups will be pressured to widen their offerings or face extinction. Some of the largest fintechs providers, like Robinhood and Acorns, grew in popularity on the premise of offering trading and wealth management services for free. These fintechs now face a similar predicament to that of independent robo advisors, like Betterment and Wealthfront. These firms were built to disrupt traditional wealth management with bargain basement prices — only to see incumbents match similar technology to the same price points. Even before incumbents like Schwab and TD Ameritrade entered into commission-free trading, a number of trading and lending apps tacked on a buffet of financial services, like credit, debit and retirement products. But have the incumbents effectively disrupted the disruptors? ADVERTISING inRead invented by Teads “There’s a lot of soul searching going on,” says Josh Rowe-Huepler, general manager of investing at MagnifyMoney. “Folks certainly have less incentive to move their money. The startups are going to have to figure out how to add more value than just free trades.” Top fintechs will likely need to find new growth trajectories, experts say. Robinhood launched a new cash management product this week to do just that. Its savings and debit card gives clients the ability to invest, spend and earn interest through a Robinhood brokerage account. By teaming up with a bank partner, the trading app now offers a 2.05% APY on cash, access to 75,000 fee-free ATMs and FDIC insurance up to a $1.25 million, according to its website. “We’ve certainly seen the rise of customer-centric fintech companies push the industry in a more client-friendly direction, part of that is lower fees,” says Adam Grealish, director of investing at Betterment. The winners could be fintechs that best leverage technology to achieve lower operating costs — and pass those savings onto customers. “It’s forced incumbents to follow suit,” Grealish says. The cash product is Robinhood’s second attempt at offering banking services. Its first product — which advertised an enticing 3% interest rate — quickly encountered backlash over whether and how it could be insured. The company was forced to backtrack on its plans to release the service. However, the hiccup didn’t stop Robinhood Markets from closing its latest funding round in July, valuing the company at $7.6 billion — up from a $5.6 billion valuation in 2018. The company raised $323 million in the most recent deal. ETFS Race to zero: Schwab, TD Ameritrade drop commissions on RIA client trades It's the latest move in the race to offer products at the lowest possible prices. By Sean Allocca October 1 Betterment and many of its competitors added their own cash products in recent months, where clients earn high-yield APYs sometimes as much as 2% more than traditional accounts at incumbent banks. Wealthfront advertised its account as the highest-yielding in the market when it opened and says it attracted $1 billion in assets as a result. The micro-investing app Acorns has continually diversified its offerings into a suite of services, like checking and debit cards, as well. Acorns now has over 6.2 million accounts and $1.7 billion in AUM, and its robo-generated “smart portfolios” cost as little as $1 a month, according to the firm. “The changes taking place across the brokerage industry reflect a focus on the customer that‘s been inherent to Robinhood since the beginning,” says firm spokesman Jack Randall. “We remain focused on offering intuitively designed products that reduce barriers to our financial system, including account minimums and commission fees.” Robinhood clearly gained the most traction with commission-free trading, experts say. They also may have the most to lose. “Robinhood has had so much success with acquiring clients. They’re ahead of the game here,” says Eric Sandrib, an analyst with Aite Group, pointing to the ease and simplicity of the firm's onboarding process. Robinhood has over six million brokerage accounts, as of last year, according to the spokesman. The average client age is 32. While Robinhood may have the scale necessary to withstand a new onslaught of incumbents offering zero-commission trades, smaller players may not be as lucky, experts say. ROBO ADVISORS Will Vanguard’s new robo squeeze out smaller players? The mutual fund giant’s automated advice plan could price independents out of the market — and commoditize advice even further. By Sean Allocca September 19 The change to no-commission pricing created a credit negative for the retail brokerage industry, according to a Fitch Ratings report. Brokerages may be pressured to emphasize other sources of revenue and will likely face further industry consolidation, according to the report. “When growth rates go down, consolidation usually comes after,” says Robb Baldwin, CEO of the custody and clearing firm TradePMR. “When scale starts to matter, the smaller players will need to team up with competitors to get themselves in a position to have sustained growth.” One way discount brokerages could make up for lost revenue is by pushing clients into their managed portfolios. Schwab has shifted more of its revenue toward recurring fees and made waves in April when it made the fee for its robo-advisor Intelligent Portfolios subscription-based. E-Trade lowered several of its investing barriers, including a new $500 minimum for its core and mutual fund portfolios. Brokerages make money when customers trade more frequently, says Grealish. That means firms will need to learn how to better influence customer behavior. “If offering free trades encourages clients to trade more frequently, the client is more likely to perform worse and the brokerage will still be generating revenue through activities like selling order flow.” Traditional discount brokers have long earned additional revenue in ways that aren’t always easy for investors to understand, experts say. Those include collecting interest on client cash accounts, selling buy-and-sell information to high-speed traders and channeling orders through the most lucrative exchanges. Robinhood has generated as much as 40% of its revenue from payment for order flow, according to Bloomberg. ROBO ADVISORS Ally's no-fee robo takes a page from Schwab's playbook To attract clients, digital-first advice firms are borrowing tactics from incumbents and putting a spin on traditional industry offerings. By Sean Allocca September 18 To be sure, the path forward could be rocky for all financial service providers competing on such thin margins — including the incumbents. Schwab expects an approximate $100 million loss in quarterly revenue. Its largest competitors projected similar outlooks: TD Ameritrade anticipates a $240 million loss per quarter, while E-Trade estimated losses in revenue would have been approximately $75 million in the second quarter due to the drop in commissions fees. There may also be another wave of disruption on the horizon. Other startups are looking to take the floor off of the so-called race to zero. All of Us, a new social media trading platform, pays investors to trade. The firm charges a 50 basis points fee but will return other profits made from assets back to investors, according to its website. All of Us is currently raising capital, with major investments from Apex Clearing. Similar pressures are emerging in the equally competitive index fund marketplace. Salt Financial, which currently runs a $10 million ETF, plans to actually pay clients to invest in its funds. During the first year, holders will receive 50 cents for every $1,000 invested, according to an SEC filing. Ultimately, fee compression on products and trades may yield a positive result for the wealth management industry, says Baldwin. As firms look to make up for lost revenue, asset-under-management fees will begin to look more and more enticing. Schwab’s recent move to subscription pricing for Intelligent Portfolios could be an early sign that low-cost brokerages will shift revenue toward wealth management revenue. “All of this is going to drive revenue growth back to the advice side,” Baldwin says. “It will be really positive for these firms to actually start getting paid for that piece.”
Since I always place limit orders, I'm totally fine with whatever Citadel or any other HTF does with my order as long as I get filled. What keeps me at IB is the API and cash sweep interest rates. But I'd probably save money by moving my non IRA accounts to TD. I might do that at some point.
I still use IB extensively but only for futures trading. For equities, I used to use Robinhood, but not much anymore since I opened an account with TradeZero. I have TradeZero Pro with $0 commission on stocks AND options and $0 platform fee. Nice and fast platform compared to the garbage mobile RH app. Those are my only 2 $0 comm brokers.