As reported by New York Times, Fidelity is lowering its online stock trading commission to $7.95 in response to Charles Schwab's earlier move of cutting commission to $8.95.
In addition, Fidelity is upping the ante by aggressively competing in ETF trading as well. In fact, it is now offering free trades on 25 iShare Exchange-Traded Funds (ETFs) managed by BlackRock.
Those ETFs available for commission-free trade represents a wide spectrum of asset classes:
I'm not sure how other people read this, but Fidelity is really changing the rules of the ETFs. Before, ETFs, although carring ultra-low expense ratio, has the trading commission as the biggest disadvantage. Since every ETF trade costs investors money, ETFs are not good vehicles for those who commits to dollar cost averaging. Now I will seriously consider buying iShares through Fidelity the next time I want to do some index investing.
P.S. How did Fidelity pull this off? According to the footnote on Fidelity's promotional page, it receives "soft dollars" from BlackRock.
Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with a marketing program that includes promotion of iShares ETFs and certain commission waivers. Additional information about the sources, amounts, and terms of compensation is described in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice.