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TD Ameritrade CEO on Schwab slashing fees: This price point isn't anything new

TD Ameritrade CEO: We're all about the client experience

Shares of online broker TD Ameritrade fell more than 9 percent on Thursday after competitor Charles Schwab announced it would cut trading commissions.

Even though many were surprised by Schwab's move in the waging investing price war, TD Ameritrade CEO, Tim Hockey, remained relatively unfazed.

"There's been a lot of discussion around price movement, especially as interest rates rise, but let's face it, this price point isn't a new price point," Hockey told CNBC's "Closing Bell" on Thursday. "There's precedence in the marketplace, and in fact Scottrade is already at the seven-dollar price point. This is clearly a move by Schwab to redefine what their value proposition is."

Hockey attributes most of the competitive pricing action to rising rates from economic policies and markets.

"The rate changes we've already had, whether it be the Fed fund increase or the overall increase across the yield curve, has an effect on our revenue stream," Hockey said. "There's a significant portion of our cash balances that's essentially repriced for us. As a result, that's why we had anticipated this type of more competitive pricing action might take place about now. So frankly, we're not all that surprised."

To remain competitive, Hockey said the company is focused on maintaining client experience, where establishing the right price plays a huge part.

"We're constantly trying to redefine our value proposition. We're all about the client experience and price is part of that. But it's not the biggest part," Hockey said. "Think about the industry, Schwab, and ourselves, we were all formed in the time when price was a really big factor, going from 3, 4, $500 per trade, going down to the price points where now you're in a very, very small, tight range that for less than the price of a coffee, you can make a difference between trades. It's around the tools, capabilities and experience, and all those factors. There are different price points for different combinations of those things."