| NEW YORK
NEW YORK Feb 7 Discount brokerage E*Trade
does not plan to follow its competitor Charles Schwab's
price cuts, the online trading platform's chief
financial officer said on Tuesday at Credit Suisse's Financial
Schwab announced last Thursday that it would reduce its
online equity and ETF trade commissions to $6.95 from $8.95.
Shares in Schwab, TD Ameritrade and E*Trade sank on the
news as investors bet it was the start of a new price war.
E*Trade shares closed down 8.9 percent on Thursday. E*Trade
CFO Michael Pizzi's comments reassured investors somewhat, but
the stock was still trading 5.6 percent lower on Tuesday from
where it closed the day before Schwab's announcement.
Pizzi said he did not want to downplay his competitor's
price cuts because Schwab is the country's biggest online
brokerage. "But we're not going to make a knee-jerk reaction and
move" our commissions, he said.
Derivatives traders are one of E*Trade's core groups of
clients, and the firm's surveys find they like the firm's
platform, service and trade execution, Pizzi said.
"I really don't see today's active derivative trader moving
to a platform that's less good to save a couple bucks," Pizzi
TD Ameritrade Chief Executive Tim Hockey told CNBC last week
that he would evaluate what his company could do in response to
the Schwab move, but has not announced specific plans.
Morningstar analyst Michael Wong wrote that the competitive
implications of Schwab's price move hit TD Ameritrade the
hardest because 40 percent of the firm's revenue comes from
"Peers must now decide whether they want to match Schwab's
price cut," Wong wrote. For TD, "It's a much weightier decision
(Reporting by Elizabeth Dilts; Additional reporting by Sinead
Carew; Editing by Dan Grebler)