Back In The Day, Brokers Got Away With Murder In Trading Commissions
Turnkey desktop trading programs have lowered fees to as little as $7 a trade, and there's never been more cheap or free information available to anyone interested in markets.It didn't used to be that way.
"The biggest firms got away with murder in these commissions," he said. "They could hire analysts to kowtow to brokers for commissions, and the commissions would go to pay the research department."Now, he said, those research departments have been wiped out.
"With E-Trade or Scottrade, it's very difficult to hire anybody to do research coverage - there's no profits coming in," he said.His remarks are backed up by historical data compiled in 2002 by Columbia Business School's Charles Jones. Back then, the market was regraded as much more specialized, hence the higher costs. But those costs, as measured by the percentage of the value of the trade, have only been tumbling.
Deutsche Bank's David Bianco recently published this chart showing average commissions per share.
This doesn't mean it's gotten easier to trade stocks. As BI's Henry Blodget explained today, there has probably never been a level playing field in the market.
But it does show that certain barriers to entry have been lowered.
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