Retail broker and social trading company eToro announced on Monday morning that it is launching commission-free trading in stocks and exchange-traded funds (ETFs).
Unlike many other firms operating in the retail trading market, eToro has offered direct access to stocks and ETFs, rather than just contracts-for-difference, for some time.
But, until now, the firm had charged a mix of fees for access to those financial instruments.
Monday’s announcement means that the firm will no longer charge commission or management fees. The social trading company also said that it would absorb any stamp duty costs.
“We want to encourage more people to invest in stocks,” said Iqbal Gandham, UK managing director at eToro. “Going commission free is an important first-step, but it’s not enough. We need to get people excited about investing.”
Scrapping complex fees
For now, the new service will only be available to UK and European residents that are clients of eToro’s UK or Cypriot-regulated entities.
Investment fees for retail traders have been something of a controversial issue in the past twelve months, particularly in the UK.
In February, the Financial Conduct Authority released a statement saying many investment platforms obfuscate their fee structures, making it difficult for consumers to compare services.
A month later, the British regulator issued another statement, saying that it was mulling a ban on exit fees charged by retail investment platforms.
Brokerages like eToro have been trying to take advantage of this state of affairs by offering commission-free trading services.
But regulatory changes in Europe, which restrict leverage on foreign exchange and CFDs trading, have also pushed retail brokers to broaden their service offering by providing their clients with multi-asset trading abilities.
Commission-free equities trading has, however, also found itself mired in some controversy.
Robinhood, a US-based firm and arguably the most successful company to offer stocks trading with no fees, makes the bulk of its money selling order flow to high-frequency traders – something critics have claimed creates conflicts of interest.