Stock brokerages have been resilient in race to zero commissions

STOCK brokerages in Singapore are already witnessing commissions hovering around their all-time low, and competition remains intense.

It's deja vu all over again in the past weeks when several brokerage giants in the US cut commissions for all US equities, options and exchange-traded funds (ETFs). Interactive Brokers was among the first to offer zero commission stock and ETF trading via its Interactive Brokers Lite service since late September. But it was Charles Schwab that escalated the price war by announcing zero fees across all stock trading last week - pushing rival brokers TD Ameritrade, E-Trade and Fidelity to follow suit a few days later.

It appears the name of the game is keeping clients and increasing assets under management. In short, it's all about scale. Schwab is betting that the decision to eliminate trading fees will help it attract customers. The cuts are unlikely to dent its bottom line as much as rivals as commissions comprise less than 10 per cent of Schwab's total revenues. It gets nearly 60 per cent of its revenues from interest from its banking business, as well as its asset management business, which generates nearly a third of its revenues. But for rivals such as TD Ameritrade and E-Trade, commissions make up a much bigger chunk of their revenue pie, roughly 40 per cent and 30 per cent, respectively.