E-Trade Group threw down the gauntlet to other discount brokers Wednesday by unveiling a new low commission rate of $4.95 per trade.
The rate targets so-called active investors who trade 75 times or more a quarter and was unveiled one day after the Menlo Park, Calif., brokerage reached an agreement with Instinet Corp. to offer after-hours trading to retail customers.
E-Trade now offers the lowest commission rate in the business, said Michael Gazala, research director with Forrester Research, a Cambridge, Mass., consulting firm.
"This is an incredibly competitive price," said Mr. Gazala, who said other firms might slash prices to compete.
E-Trade is probably going after active traders at other discount brokerages, he said. Active traders, who in E-Trade's definition trade at least once a day, should not be confused with day traders, who trade in and out of stocks many times in a day, Mr. Gazala said. E-Trade now undercuts Brown & Co., a Chase Manhattan unit that charges $5 a trade.
-- Niamh Ring