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Free Stock Trades for All

Brokerages offering free stock trades are nothing new, but thanks to one online upstart, the concept just might take flight.

This story appears in the January 2007 issue of Entrepreneur. Subscribe »

Online brokerages, such as Ameritrade and E-, were born in the '90s as innovative upstarts, offering low-cost alternatives to traditional brokerage houses. They took great delight in--and made headlines across the financial press for--charging a fraction of what old-school brokerages had been siphoning from us in sales commissions. Now, just a few years later, the prices are heading even lower.

Last fall, upstart launched the first attack in what's likely to be an online brokerage price war, offering free basic stock trades for anyone with at least $2,500 in their accounts. Within days, responded with an offer of free brokerage trades for customers who keep at least $25,000 in a checking, savings or money market account, or in a CD. The plan was initially offered in the Northeast but has since expanded. The TD Ameritrades, E-Trades and Charles Schwabs of the world suddenly find themselves having to justify to customers why they should pay $5 or $10 per trade for services others are providing free.

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