Not too long ago, Charles Schwab Corp. helped to usher in the golden age of low-cost, online stock trading.

Now, the brokerage may help to kill off the fee-based business model altogether.

On Tuesday, Schwab said it will eliminate commissions on trades for all U.S. stocks and exchange traded funds. The announcement -- which was quickly matched by rival TD Ameritrade Holding Corp. after markets closed -- sent shock waves across Wall Street. Shares of E*Trade Financial Corp. slumped 16%, while TD Ameritrade lost more than a quarter of its stock market value. Schwab’s share price also took a hit, tumbling nearly 10%.

The gambit is just the latest in an intensifying, industry-wide war over fees for everything from stock trades to index funds and financial advice. And it’s squeezing not only the likes of Schwab, but also BlackRock Inc. and Fidelity Investments. These types of aggressive price cuts -- admittedly a small boon for ordinary Americans routinely nickel-and-dimed by financial firms -- have some observers wondering whether anyone can win in a business where more and more services are handed out for free.

For Schwab, it’s a bold, but risky move. The firm, which relies less on trading commissions than its competitors, is betting it can offset any decline of revenue by attracting more clients. It can then use their assets to generate interest income, an essential feature of its business that’s come under pressure recently as interest rates have declined.

“Maybe because of the inception and growth spurt of online brokers during the dot-com boom, there’s a romanticization of the individual trader,” said Michael Wong, an analyst at Morningstar Inc. “There’s still a mindset among the investing public around the importance of commissions,” which is less important to Schwab.

While trading costs have declined across the board, Schwab comes from a position of relative strength. The firm takes in just 7% of its net revenue from commissions. That’s far less than Interactive Brokers Group Inc. or TD Ameritrade, which both collect more than a third from trading fees.

Schwab estimated it could lose up to $400 million in revenue a year from its zero-fee offering. Wong said that in the current rate environment, the firm would need roughly $20 billion or more in new deposits to offset that loss. Currently, over half of Schwab’s net revenue comes from interest earned on its assets. The firm, which oversaw $3.72 trillion as of Aug. 31, took in almost $20 billion in net new assets that month.

Schwab last cut its trading commissions in February 2017, when it reduced them to $4.95 per trade from $6.95 to match Fidelity. Since then, assets at the firm have grown by about $800 billion from a combination of market gains and net new inflows.

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