(Adds nut graf, CEO, CFO comments)
Oct 1 (Reuters) - Discount brokerage company 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.
The company's shares were down 8.5% in morning trading and weighed on rivals. TD Ameritrade shares slumped 22%, while E*Trade slid 17%.
Schwab's decision marks an inflection point for online brokers, as newer, nimbler rivals attempt to gain market share by offering zero or low-equity commissions to customers.
"It has seemed inevitable that commissions would head towards zero, so why wait? We have a business model that doesnt depend on commission revenue, a long-term orientation and a history of being willing to disrupt ourselves," Chief Financial Officer Peter Crawford said in a statement.
The move to remove commissions would translate into a reduction of roughly $90-$100 million of quarterly revenue, which is about 3-4% of Schwab's total revenue, Crawford added.
Schwab will reduce the commission to zero from $4.95 per trade, starting Oct. 7, the company said.
"This is our price. Not a promotion. No catches. Period. Price should never be a barrier to investing for anyone, whether an experienced investor or someone just starting on the investing path," said Chief Executive Officer Walt Bettinger.
The company, which provides brokerage and financial advisory services, reported an 8% year-on-year jump in second-quarter net income at $937 million.
Schwab managed total client assets of $3.75 trillion, as of July end.
(Reporting by C Nivedita in Bengaluru; Editing by Sriraj Kalluvila)