Charles Schwab says it will cut online stock and ETF fees to zero - and all the major brokers are getting clobbered

• Charles Schwab announced Tuesday that it will lower fees to zero for stock, exchange-traded fund, and options trades made on US and Canadian exchanges.
• The firm's shares fell as much as 10% on the news.
• Competing brokerages TD Ameritrade and E*Trade saw even deeper losses, each plunging roughly 20% at their intraday lows.
• Watch Charles Schwab trade live on Markets Insider.

Charles Schwab announced Tuesday that it will eliminated online fees for stock, exchange-traded fund, and options trades made on US and Canadian exchanges.

The change will go into effect on October 7, when online clients will see equity and ETF commissions that formerly sat at $4.95 lowered to zero. The fee on options trades will be lowered to 65 cents per contract.

Shares of Charles Schwab fell as much as 10% on the move. Competiting brokerage stocks also took significant hits, with TD Ameritrade tumbling 23% at its low - its biggest intraday loss since 2006 - and E*Trade plunging more than 19%, putting it on pace for its worst day since 2009.

Charles Schwab's decision is the latest move in an ongoing price war being waged across the entire exchange industry. As the rise of passive investing has suppressed the cost of trading industry-wide, traditional brokerages have scrambled to stay ahead of the curve. Just last week Interactive Brokers said it would offer free trades.

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"From day one, my passion has been to make investing easier and more affordable for everyone," Charles Schwab, the firm's founder and chairman, said in a press release. "Eliminating commissions ensures my ultimate vision is realized - making investing accessible to all."

The change will take place across all mobile and web trading channels, the company said. Every client that uses those channels will automatically qualify for the new Schwab free trades.

The brokerage has long been committed to providing low-cost trading to its customers- Schwab also requires no minimum balance to open a domestic retail brokerage account. In a separate press release, CFO Peter Crawford called the move both the "right thing to do for clients" and "the right move from a competitive standpoint."

Charles Schwab currently oversees 12.1 million active brokerage accounts, 1.7 million corporate retirement plans, 1.4 million banking accounts for a combined $3.72 trillion in client assets.

Charles Schwab is down 9% year to date.

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