May Day (Brokerage Deregulation)


On May 1, 1975, the U.S. Securities and Exchange Commission mandated the deregulation of the brokerage industry. The mandate abolished high fixed fees for trading stocks and allowed market competition to dictate commissions. Charles Schwab, founder of his namesake company, was one of the pioneers of the discount brokerage industry.

Deregulation eventually gave rise to online trading--introduced by Schwab in 1996--which revolutionized the discount brokerage industry. Today, some of the major players in discount brokerage include:

Discount brokerage has become a highly competitive industry, and as a result, the average price per trade has dropped dramatically. Schwab, for instance, charged $60 per trade in 1998 but only $14 in 2006. Traditional retail bank powerhouses Bank of America and Wells Fargo introduced free trades to a segment of its retail banking clients. It is estimated that about one-third of Bank of America's clients will qualify. The entrance of the retail banks are expected to further drive trading commission prices down, as Bank of America has banking relationships with half of all U.S. households. Wells Fargo has similar penetration in retail banking.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki