Brokerage Stocks Crushed As JPMorgan Rolls Out Digital Service With Free Trades

Competition in the mobile trading space is getting even hotter after JPMorgan Chase & Co. JPM announced a brand new free digital trading application.

CNBC's report of the new app sent shares of online brokerage stocks tumbling on Tuesday.

What Happened?

JPMorgan said the new trading service called You Invest will launch next week, CNBC's Hugh Son reported, and all customers will receive 100 free trades in the first year. Chase Private Client customers receive unlimited free trades. In addition to the free trades, mobile banking users can get free access to a sophisticated portfolio construction tool and JPMorgan’s stock research materials.

Why It’s Important

The new JPMorgan app is the latest shot fired in an all-out war going on in the mobile and online trading space. Trading fees have been plummeting in recent years, and apps like Robinhood have gained popularity by offering completely commission-free trades. JPMorgan already has 47 million online or mobile banking customers who will immediately gain access to You Invest next week.

JPMorgan is hoping its reputation will give You Invest an advantage over competitors.

“There are customers out there who may not want to trust their credentials or their money to an app of the month,” You Invest head Jed Laskowitz told CNBC.

What’s Next?

Stocks of online brokers reacted predictably negatively Tuesday following the news:

• TD Ameritrade Holding Corp. AMTD was down 6.4 percent.
• E*TRADE Financial Corp ETFC was down 4.7 percent.
• Charles Schwab Corporation Common Stock SCHW was down 3.9 percent.
• Interactive Brokers Group, Inc. IBKR was down 2.7 percent.

Investors will now be watching closely to see if other big banks following JPMorgan’s lead in launching their own free digital investment services.

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