The Vanguard Group, a mutual fund giant, has officially announced that customers will be capable of free trading of both options and stocks. With this, the “bidding war” between the various brokers has been given a new contender in eliminating trading commissions. It’s come to the point that no-free trading has become an eventuality.

Stepping Into The New Broker Ring

The no-fee trading structure shift will come into full effect come Thursday. With it, accounts of all sizes will be wiped of Vanguard’s charges per trade. Formerly, the trading charges ranged from $2 to $7. Option traders won’t be so lucky, however, with a $1 fee having to be paid per contract, though the commissions within it are eliminated.

Before the full free-trading shift, the Vanguard brokerage had a commission-free offering with its exchange-traded funds. However, this move has shifted into full throttle, with the mutual fund known as a heavyweight ETF broker making ever more assets cheaper to invest in. As sad as it is to realise, this move wasn’t made to help the consumers. The move was to prevent loss of business in the wake of its discount rivals in the brokerage industry. The move comes to try and stay ahead in an ongoing capitalistic free-for-all between Charles Schwab, Fidelity, TD Ameritrade and E-Trade.

Evolving From Lackluster Free Options

In the past, Vanguard had offered around 25 to 100 free monthly trades per trader. This was allowed to investors that held more than a million USD in their respective brokerage accounts. Now, this will be a thing of the past, with no restrictions to trades, and no minimum trades when making use of the free-trading feature.

Karin Risi, the Managing Director of the Vanguard Retail Investor Group, gave a public statement about the matter. He explained that the company has been dedicating itself to lowering the cost of active and index funds, advice, ETFs, as well as brokerage services. This, Risi says, was to reach better outcomes. Risi also states that the group’s expansion of its commission-free trading platform is a testament of Vanguard’s “unwavering commitment” to help its clients.

Terms and Conditions

With this move, Vanguard joins most major US brokers that have started to arrange its business model much like Robinhood’s. Robinhood makes money from securities lending, a small amount of payment coming from order flow, as well as interest from customer accounts. Vanguard had little choice but to evolve its business model to allow for free-trading offers to stay competitive in the industry. The model’s success can be seen by Robinhood’s rampant success, having surpassed E-Trade in user numbers after it exploded to over 10 million users last year.