Keeping up with its competitors, Vanguard Group announced Tuesday that it has reduced commissions associated with its exchange-traded funds and stock trades.

Vanguard, of Valley Forge, Pa., said it would offer commission-free trading to its brokerage clients that use its 46 proprietary exchange-traded funds.

It also will offer its customers $7 trades on stocks and $2 trades on nonproprietary ETFs.

A few months ago, Charles Schwab Corp. reduced commissions on online equity and non-Schwab ETF trades to $8.95. Schwab offered commission-free trading when it rolled out its proprietary ETF family last year.

However, Vanguard spokesman John Woerth said the decision to lower costs was not an effort to chase the competition. Growth within its ETF families and the ability to self-clear enabled the company to cut commissions, he said.

Vanguard said the same commissions apply to online transactions and those executed with a Vanguard brokerage representative.

"To be clear, our commission-free offer is not intended to encourage the active trading of ETFs, which we believe is counterproductive and rarely successful," Bill McNabb, the company's chief executive, said in a press release. "Rather, it enables investors to construct a balanced, long-term portfolio of low-cost Vanguard ETFs and add to the portfolio regularly."

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