Charles Schwab Corp.'s free trading offer is turning out to be a hit, drawing in new customers at a fast clip.
Clients opened 142,000 new trading accounts in October, a 31% jump over September's pace , according to a report Thursday. Total brokerage accounts climbed to 12.2 million and firmwide assets grew to a record $3.85 trillion.
Schwab escalated the brokerage industry's price war on Oct. 1 when it
eliminated commissions on U.S. stocks, mutual funds, exchange-traded funds and some options. The move is likely to hit revenue but is aimed at wooing new assets to the company, which has been generating most of its income from interest earned on client cash holdings.
Average interest-earning assets were $266 billion in October, little changed from September and up about 1% from a year earlier. The gain in brokerage accounts is just 7% more than October 2018.
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Other brokerages that cut commissions have reported divergent trends in October client activity:
ETrade Financial Corp., which announced zero commission trades shortly after Schwab, posted 9% month-over-month and year-over-year jumps in daily average revenue trades, or DARTs, a key measure of customer activity.
TD Ameritrade Holding Corp.said DARTs were 11% higher in October than September but down 8% from a year earlier.
Interactive Brokerage Group Inc., which announced commission-free stock and ETF trading in September, said DARTs dropped 5% month-over-month and 19% year-over-year.
A more detailed picture of the bottom-line impact of the fee change will be available in January, when Schwab reports fourth-quarter results.
