- JPMorgan Chase, the largest bank in the U.S., announced it is releasing a new trading service.
- You Invest offers customers who use Chase’s online banking service 100 free trades.
- Shares of brokerage firms, such as TD Ameritrade, dropped upon the announcement.
JPMorgan Chase is scheduled to roll out a new investing service next week, positioning itself as a rival to free trading service Robinhood. The service, named You Invest, will be compatible with Chase’s mobile banking app and is said to require no minimum balance.
Chase is one of the biggest banks in the U.S., and its offering of free or discounted trades is already having ramifications for brokerages: Shares of Charles Schwab, TD Ameritrade and E-Trade all fell more than 2 percent upon the revelation. Meanwhile, Chase shares rose 1.1 percent in afternoon trade today, Investor’s Business Daily reported.
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One of the highlights of You Invest is its incentive: Those who use the app or website can receive 100 free stock or ETF trades in the first year and will be charged $2.95 per trade for any trades made over that amount. MarketWatch reported that eligible customers with deposits of at least $15,000 can get 100 free trades every year. Chase Private Client customers, however, will receive unlimited free trades. To become a Chase Private Client, you must maintain an average daily balance of $250,000 or more.
Although free trading sounds like it would cut into the bank’s profits, Chase believes it will benefit from the trading service’s low-cost capabilities. The bank already has around 47 million customers who use its mobile or online banking services, so optimizing that service should produce positive results. “We think most of our customers have multiple financial relationships,” Jed Laskowitz, who runs You Invest, said according to CNN Money. “We’re very focused on delivering more service. All our analysis shows that those customers who do more than one thing with Chase will stay with us longer.” You Invest is inspired in part by Amazon Prime and its bevy of free services.
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The move benefits pre-existing Chase customers, but it’s also meant to pull in millennials, who form a powerful market demographic but, nonetheless, are not known for their trading expertise. By presenting free trade options, Chase hopes to encourage millennials to invest. Chase already offers brokerage options, but their current costs are a far cry from free: Customers can expect to pay, at a minimum, $24.95 for a trade.
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