October 1, 2019

Schwab is eliminating brokerage commissions:

Discount brokerage Charles Schwab Corp said on Tuesday it is eliminating commissions for online trading of stocks, ETFs and options listed on U.S. or Canadian exchanges.

Schwab’s latest move is likely to have a knock-on effect across the sector, forcing rivals to follow suit and eliminate commissions, experts warned.

The decision marks an inflection point for online brokers, as newer, nimbler rivals such as Menlo Park, California-based startup brokerage Robinhood have been capturing market share in recent years by offering commission-free stock trades.

The firms are able to offer the free trading by selling their customers’ orders to so-called wholesale market makers, such as Citadel Securities and Virtu Financial, which aim to make a profit on the spread between the bid and the offer on the shares.

“Stocks commissions long ago stopped being a primary revenue item for Schwab, dropping to 8 per cent of revenues last year and currently under 5 per cent. Net interest income from customer deposits and asset management fees are far more important,” added [director of financial institutions research at Argus Research Stephen] Biggar in an email to Reuters.

Schwab made $139 million from selling its customers’ orders in 2018, up 22 per cent from the previous year, according to a regulatory filing.

TD Ameritrade was paid $458 million for customer orders in its last fiscal year, up from $320 million the year before, according to a filing.

Asset Management fees? Yes, Schwab offers ETFs and mutual funds.

Investors will be pleased to remember that there isn’t much chance of such a thing happening here. Why should the bank-owned market-makers pay the bank-owned brokerages for order flow? They get it already! Why should they use asset management to subsidize commission trading? They’ve got it already! Thank you, securities regulators and Competition Bureau for the fine job you’ve done over the years.

Meanwhile, some distraction from impeachment proceedings has been found necessary:

As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!

HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices

Values are provisional and are finalized monthly
Index Mean
Current
Yield
(at bid)
Median
YTW
Median
Average
Trading
Value
Median
Mod Dur
(YTW)
Issues Day’s Perf. Index Value
Ratchet 0.00 % 0.00 % 0 0.00 0 -0.1841 % 1,889.9
FixedFloater 0.00 % 0.00 % 0 0.00 0 -0.1841 % 3,467.8
Floater 6.38 % 6.55 % 47,245 13.16 4 -0.1841 % 1,998.5
OpRet 0.00 % 0.00 % 0 0.00 0 0.1690 % 3,390.8
SplitShare 4.65 % 4.59 % 53,381 3.99 7 0.1690 % 4,049.3
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 0.1690 % 3,159.4
Perpetual-Premium 5.58 % -19.38 % 59,240 0.09 6 -0.0259 % 3,005.3
Perpetual-Discount 5.41 % 5.48 % 69,879 14.53 28 -0.1415 % 3,178.3
FixedReset Disc 5.55 % 5.47 % 168,965 14.36 72 -0.3116 % 2,077.5
Deemed-Retractible 5.23 % 5.79 % 65,015 7.89 27 -0.1908 % 3,151.8
FloatingReset 4.61 % 6.85 % 56,305 7.92 3 -0.1778 % 2,341.2
FixedReset Prem 5.23 % 3.57 % 123,949 1.56 14 -0.0888 % 2,602.1
FixedReset Bank Non 1.97 % 4.09 % 85,818 2.26 3 -0.0554 % 2,679.6
FixedReset Ins Non 5.52 % 8.14 % 100,250 7.86 21 -0.7303 % 2,091.4
Performance Highlights
Issue Index Change Notes
GWO.PR.N FixedReset Ins Non -3.27 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 13.89
Bid-YTW : 9.48 %
TRP.PR.D FixedReset Disc -3.25 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 15.48
Evaluated at bid price : 15.48
Bid-YTW : 6.18 %
HSE.PR.A FixedReset Disc -2.36 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 10.78
Evaluated at bid price : 10.78
Bid-YTW : 7.15 %
IFC.PR.A FixedReset Ins Non -2.10 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 13.54
Bid-YTW : 10.74 %
MFC.PR.J FixedReset Ins Non -2.06 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 18.51
Bid-YTW : 8.14 %
TD.PF.D FixedReset Disc -1.97 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 19.43
Evaluated at bid price : 19.43
Bid-YTW : 5.46 %
MFC.PR.N FixedReset Ins Non -1.92 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 15.81
Bid-YTW : 9.42 %
MFC.PR.F FixedReset Ins Non -1.84 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 12.29
Bid-YTW : 11.12 %
HSE.PR.G FixedReset Disc -1.75 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 17.40
Evaluated at bid price : 17.40
Bid-YTW : 7.13 %
MFC.PR.B Deemed-Retractible -1.51 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.48
Bid-YTW : 6.61 %
TD.PF.C FixedReset Disc -1.33 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 17.04
Evaluated at bid price : 17.04
Bid-YTW : 5.47 %
CM.PR.Q FixedReset Disc -1.33 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 17.85
Evaluated at bid price : 17.85
Bid-YTW : 5.85 %
TD.PF.A FixedReset Disc -1.19 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 17.37
Evaluated at bid price : 17.37
Bid-YTW : 5.35 %
TRP.PR.B FixedReset Disc -1.19 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 10.77
Evaluated at bid price : 10.77
Bid-YTW : 6.25 %
BMO.PR.Y FixedReset Disc -1.16 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 18.78
Evaluated at bid price : 18.78
Bid-YTW : 5.54 %
CU.PR.F Perpetual-Discount -1.16 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 21.35
Evaluated at bid price : 21.35
Bid-YTW : 5.33 %
SLF.PR.J FloatingReset -1.15 % YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 12.89
Bid-YTW : 11.09 %
TRP.PR.E FixedReset Disc -1.15 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 15.51
Evaluated at bid price : 15.51
Bid-YTW : 6.07 %
CM.PR.S FixedReset Disc -1.11 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 17.80
Evaluated at bid price : 17.80
Bid-YTW : 5.61 %
PWF.PR.A Floater -1.03 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 11.51
Evaluated at bid price : 11.51
Bid-YTW : 6.10 %
BIP.PR.A FixedReset Disc 1.17 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 18.10
Evaluated at bid price : 18.10
Bid-YTW : 6.90 %
CGI.PR.D SplitShare 1.20 % YTW SCENARIO
Maturity Type : Soft Maturity
Maturity Date : 2023-06-14
Maturity Price : 25.00
Evaluated at bid price : 25.40
Bid-YTW : 3.35 %
PWF.PR.T FixedReset Disc 1.33 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 17.50
Evaluated at bid price : 17.50
Bid-YTW : 5.67 %
BAM.PR.Z FixedReset Disc 1.34 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 18.85
Evaluated at bid price : 18.85
Bid-YTW : 5.93 %
BMO.PR.T FixedReset Disc 1.54 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 17.11
Evaluated at bid price : 17.11
Bid-YTW : 5.39 %
Volume Highlights
Issue Index Shares
Traded
Notes
RY.PR.H FixedReset Disc 106,689 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 17.60
Evaluated at bid price : 17.60
Bid-YTW : 5.27 %
POW.PR.G Perpetual-Discount 78,223 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 24.61
Evaluated at bid price : 24.87
Bid-YTW : 5.64 %
EMA.PR.C FixedReset Disc 75,130 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 18.15
Evaluated at bid price : 18.15
Bid-YTW : 5.90 %
TRP.PR.C FixedReset Disc 55,963 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 11.45
Evaluated at bid price : 11.45
Bid-YTW : 6.34 %
TRP.PR.J FixedReset Prem 40,245 YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-05-31
Maturity Price : 25.00
Evaluated at bid price : 26.01
Bid-YTW : 3.30 %
RY.PR.M FixedReset Disc 37,655 YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 18.70
Evaluated at bid price : 18.70
Bid-YTW : 5.42 %
There were 39 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
TRP.PR.D FixedReset Disc Quote: 15.48 – 15.99
Spot Rate : 0.5100
Average : 0.3421

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 15.48
Evaluated at bid price : 15.48
Bid-YTW : 6.18 %

IAF.PR.B Deemed-Retractible Quote: 21.87 – 22.53
Spot Rate : 0.6600
Average : 0.5504

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.87
Bid-YTW : 6.30 %

GWO.PR.N FixedReset Ins Non Quote: 13.89 – 14.32
Spot Rate : 0.4300
Average : 0.3224

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2030-01-31
Maturity Price : 25.00
Evaluated at bid price : 13.89
Bid-YTW : 9.48 %

CU.PR.F Perpetual-Discount Quote: 21.35 – 21.79
Spot Rate : 0.4400
Average : 0.3325

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 21.35
Evaluated at bid price : 21.35
Bid-YTW : 5.33 %

MFC.PR.O FixedReset Ins Non Quote: 25.65 – 25.95
Spot Rate : 0.3000
Average : 0.1971

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2021-06-19
Maturity Price : 25.00
Evaluated at bid price : 25.65
Bid-YTW : 4.16 %

CM.PR.S FixedReset Disc Quote: 17.80 – 18.15
Spot Rate : 0.3500
Average : 0.2493

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2049-10-01
Maturity Price : 17.80
Evaluated at bid price : 17.80
Bid-YTW : 5.61 %

6 Responses to “October 1, 2019”

  1. prefQC says:

    To my pleasant surprise, National Bank Brokerage has just lowered transaction fees to $0.95 for customers who (like me) make at least 100 trades per quarter (even though I have < $1M in assets with them).
    This is particularly interesting for preferred shares, where it has up to now not usually been worthwhile undertaking small-volume trading between strong pairs due to the transaction fees.

  2. skeptical says:

    prefQC is there a link available online for pricing. All is see is the following:
    https://nbdb.ca/pricing/commissions.html

    And this is usual pricing.

  3. skeptical says:

    Awesome. Who says there’s no competition. And I’m opening my account as we speak. Thanks so much!

  4. jiHymas says:

    Who says there’s no competition.

    Rob Carrick:

    U.S. commissions were already about half of what they are at the big Canadian online brokerage firms before recent cuts that took them to zero in some cases. The Canadian response so far has been silence, which is to be expected. Whether it’s mutual fund fees, exchange-traded fund fees or brokerage commissions, Canadian firms typically charge more. They always say it’s because our market is smaller than the United States, but the real reason is that they can get away with it.

    The NBDB announcement is one of the first price-related changes we’ve seen in ages on the Canadian online brokerage scene. Too bad it’s just fiddling compared with the price war going on south of the border.

  5. baffled says:

    what is important ? sure i would like for td waterhouse to lower the self directed commissions , but i also like the level of service i get on the rare occasion i need any . i am sure both will decline together . will the savings offset any increased difficulty in getting service ?

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