There are corner cases, of course, but a typical active trader's blend of commish and margin would be much cheaper in aggregate at IB than at ETFC SCHW AMTD.
Schwab, Fidelity and TD have offered commission free equity trading for a while. Accounts needed to be size - generally $5million or more and it was almost always done to lure an account over from a competitor. I was at optionsXress when Schwab bought them and it was almost always done as a one off competitive offer. If the 10 year ever gets back to a 4% yield expect free equity trading to become much more common. you are already seeing commission free trading on in-house etfs with activity limitations, but that is clearly an asset gathering move. it was less common in options and futures, but it was unknown
So now we have online brokers cutting prices and phone companies as well....this is getting to be awesome....they have ripped off consumers for years, finally now we are seeing prices come down!!
Funny how a $5 million account can trade for free, however a $15,000 account has to pay $10 a trade . typical....people who have millions always get that extra bonus even though they don't even need it....
I get the underlying feeling. But as someone who has to wrestle with this account size vs cost to service question in my day job, believe me. The amount of time and effort to service one $5M account vs. 330 $15K accounts is night and day. Even if the $5M account is the neediest client ever.
Looking at it another way, but much money does the larger account generate? If all its doing is holding long term securities, then I think the rapid fire day trader is actually bringing in more commissions. This is especially true with professional equipment. Its the amateurs that buy it all who don't really need it that drive the revenues. If pro equipment was only ever bought by pros, the prices would be obscene as the equipment wouldn't be subsidized by the wannabe's adding heavily to the company's bottom line. With trading, perhaps what these big accounts add is that line about assets in customers accounts to make the firm look big, but purely in terms of generating commissions, I think the smaller accounts do just as much to the bottom line as the bigger accounts.
This is due to the high exchange fees charged by the CBOE for the SPX. If you are trading SPX or VIX options you can be much better off with higher commissions at firms that don't pass on the exchange fees.