Bank of America Expands Commission Free Stock Trading

October 21, 2019
500 Views

Following the lead of dedicated platforms like TD Ameritrade, Bank of America (NYSE: BAC) will now offer commission free stock trading to more of its customers.

The company announced the news in a press release on Monday morning, telling the media that it will “expand its zero-dollar online trade benefits, offering unlimited commission free stock, exchange traded fund (ETF) and options trading to clients in all tiers of its Preferred Rewards program.”

There is an increasing shift towards commission free trading as traditional brokers and investment banks try to keep up with market disrupters.

Free Trading Could Open the Stock Market to Wider Interest

Bank of America has offered commission free trading to some of its clients for 13 years. However, today’s announcement will give access to a majority of the bank’s customers.

For those who are still on Merrill Edge Self-Directed accounts, trades will be flat priced at $2.95 per ETF or online stock transaction. This is a reduction from a previous commission of $6.95.

This leaves the bank in an interesting position. There is still a minor barrier to entry when compared to accounts with TD Ameritrade and Robinhood, but it could be argued that Bank of America provides superior investment resources, analytics and advice.

Investors will ultimately need to weigh the pros and cons of going with one of the largest financial institutions, or a smaller online brokerage that is more cost effective but potentially lacking in value added services.

For people who already have accounts with Bank of America, trading within the same ecosystem will be an easy decision.

What Are the Wider Benefits of More Affordable Trading?

Outside of the money savings for individual clients, offering free trading could increase the overall revenue generated by Bank of America. By making its stock trading platform more appealing, it can increase income potential from standard accounts and investment services.

For the wider stock market, making trading affordable could bring more investors on board. More capital in the market could help to sustain the growth that has persisted throughout 2019.

Bank of America’s stock price has grown 23.17% year to date, and with a 2.37% dividend yield, it remains one of the most popular investment options among America’s big banks.

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