On October 8, 2019, CNN Business focused us on the newest trend in brokerage and synopsized its significant impact: “There is no such thing as ‘Discount Brokerage’ anymore. In the span of just a few days (in the beginning of October 2019) nearly every major online brokerage company eliminated commissions. It’s now essentially free to trade.”
The retail market continues rolling-out its new ‘No Trading Commissions’ business model. In this new market dynamic -where zero trading fees are now the norm – retail investors are flocking to premium platforms. Those with the most robust features and resources are making ‘discount brokers’ obsolete.
‘Commission-Free Trading’ Retail Roll-Out Details
Charles Schwab Corp. (SCHW) jumpstarted the new trend. On the first day of October this year, Schwab announced that all of its stocks, ETFs and options would become free of any and all commission fees as of October 7th, 2019. This set off an explosion and other big players in retail immediately tried leveling the playing field. TD Ameritrade (AMTD), E*TRADE (ETFC) and Fidelity quickly followed suit.
This paradigm shift to ‘Commission-Free Trading’ is an obvious win for investors; it helps them maximize their investment dollars. This new ‘Commission-Free Model’ relieves traders from any risk inherent in churning their accounts; empowering them to be more active without having to suffer financial penalty (fees) up front, before a trade even transacts.
Announcing: The Retail Winners
CNN Business points out what at first seems to be an ironic outcome to the prevalence of this new trend throughout the retail market. Even if you’re not concerned with increasing your trading volume, you are now able to leverage the services from a premium product (e.g.: TD Ameritrade or E*TRADE) for the same price as a mediocre one (e.g.: Schwab) and/or a no-frills one (e.g.: Robinhood). It’s just human nature to want better value at the same price point.
How ‘Commission-Free Trading’ Translates to Digital Assets
The ‘cryptosphere’ is watching as Ameritrade and E*TRADE’s continually pick-up assets from customers who had previously been loyal no fees (e.g., Robinhood) and/or lower fees (e.g., Schwab). Although the global cryptocurrency market represents $97.71B of daily trading volume currently with high volatility piquing interest across a broad spectrum of people, too many barriers for entry still block too many people from participating in the potential that cryptocurrency has to offer.
Has Anyone in the Cryptocurrency Space Yet Test-Driven the ‘No Trading Fees’ Model?
Existing market shortfalls explain why (to date) only two companies in the cryptocurrency space have offered and/or announced plans to offer ‘Commission-Free Trading’. Robinhood offers a commission-free model that is only offered to US citizens and does not physically settle assets purchased on the platform, so they can never be withdrawn. An emerging player in the global digital asset space - Amplify Exchange – out of Dublin, Ireland – announced its commission-free trading policy that will be offered through their brokerage platform at launch – before the end of 2019. Delivering advanced portfolio tools and profitability calculations that enable traders to be more effective.
Could the Newest Cryptocurrency Brokerage Come in and Win It All?
Amplify CEO, Justin Tabb describes the company’s goal to be: “the only all-inclusive crypto exchange; offering one simple-to-use platform that contains every feature needed, for any kind of trader (from novice through advanced) to make the smartest decisions…. we take a unique approach to the industry…we have worked hard to be able to deliver incomparable value on one platform, in order to spur mass adoption of cryptocurrency. ‘No Trading Commissions’ goes beyond being just a business model for Amplify, it’s also embraced as a philosophy to enable universal access to the opportunities inherent in cryptocurrency. Tabb explains: “In addition to helping users be as profitable as possible through our ‘Zero Trading Fees’ policy, we are integrated with multiple liquidity providers and will quote the best price across these providers, so customer’s trades are executed at the best prices available.” Amplify claims to offer the best experience in a cryptocurrency brokerage available today. I am inclined to believe them after reviewing just some of their state-of-the-art features that we have never seen on any other crypto platform to date, including: portfolio management tools -- empowering informed decisions; deep liquidity paired with a smooth Fiat Onramp/Offramp – saving time and money as well as a quick onboarding process and intuitive user-interface that operates in nine languages.
So, What Does It All Mean for All of Us?
The ‘Zero Trading Fees’ model has begun to define our world. So, let’s sit back and enjoy the ride*.
* We advise trading relative to your personal financial situation – never trade more than you can afford to lose.