TD Ameritrade waives fees on ETFs held for a month

NEW YORK (Reuters) - TD Ameritrade Holding Corp is offering clients about 100 exchange-traded funds commission free as long as they hold the increasingly popular securities for at least a month, the big U.S. online brokerage said on Friday.

The move to open a so-called ETF Market Center, for both individual investors and the registered investment advisers under TD Ameritrade’s umbrella, comes nearly a year after rival Charles Schwab Corp launched eight of its own fee-free ETFs, sparking an industry scramble to follow suit.

TD Ameritrade, which runs the largest discount trading platform, stopped short of offering its own new line of ETFs. Instead, clients enrolled in its program will have access to ETFs from “a variety of well-known providers” selected by consultants at a unit of Morningstar Inc.

Clients must buy and hold the ETFs for at least 30 days, or pay the usual $19.99 trading fee. The ETFs include iShares and Vanguard products based on the S&P, Russell and other indexes.

Fidelity Investments and Vanguard Group Inc earlier this year waived fees on separate lines of ETFs, products whose prices are based on baskets of underlying securities such as stocks or indexes.

Brokers and fund managers are increasingly turning to ETFs for new revenue, seizing on their explosive popularity among nonprofessional, or retail, investors in recent years.

TD Ameritrade Chief Executive Fred Tomczyk said the early ETF providers, such as State Street Corp and Vanguard, have a significant “first mover” advantage, which influenced TD Ameritrade’s decision not to launch its own line.

“We just couldn’t see how we could break in and get any scale,” Tomczyk said in an interview.

“But it became clear to us that we’re very well positioned to bring ETFs to the long-term investor,” he said. “This is the right approach.”

The ETF industry has more than doubled since 2005. Omaha, Nebraska-based TD Ameritrade said the number of its long-term investors who hold the securities has jumped 44 percent since 2007.

The industry’s focus on ETFs this year coincides with more widespread price-cutting at Schwab, Fidelity, E*Trade Financial Corp, and others.

TD Ameritrade shares slipped 0.4 percent to $16.35 in early Nasdaq trading.

Reporting by Jonathan Spicer; editing by Derek Caney and John Wallace