Wednesday, November 4, 2009 11:20 AM
Charles Schwab allows its brokerage clients to trade Schwab ETFs for free
Shirley Won
When U.S. financial services giant Charles Schwab Corp. launched its first four exchanged-traded funds on Tuesday, it did so with a new twist.
Its discount brokerage arm allows its clients to trade Schwab ETFs listed on the NYSE Arca exchange without a commission. And it also has aggressively undercut some of its competitors on similar ETFS.
The first Schwab ETFs included Schwab U.S. Broad Market ETF SCHB-N ; Schwab U.S. Large Cap ETF SCHX-N; Schwab U.S. Small-Cap ETF SCHA-N and Schwab International Equity SCHF-N. The first two have management expense ratios of 0.08 per cent while the others charge 0.15 per cent.
Jeff Mortimer, chief investment officer at Schwab Investment Management, said that charging its clients no commission for trading Schwab ETFs is for real. “This is not a teaser rate." he said. "This is not a promotion.” (See interview.)
In Canada, Bank of Montreal in June listed its first ETFs and rolled out more last week. It is currently the only bank involved in the ETF game, and it too has a discount brokerage arm. Time will tell whether BMO or other discount brokerage players will get into Schwab’s game.
