Will lower trading commissions become the norm in 2014?

Big news yesterday: RBC announced that all DIY investors will now pay a flat commission of  $9.95 per equity trade through RBC Direct Investing online and mobile channels. This commission applies regardless of the size of investors’ trading accounts or how often they trade. (For RBC Directing Investing clients who are active traders—those making 150 trades or more per quarter—RBC Direct Investing continues to offer a lower $6.95 flat fee commission.)

Without question it’s a significant development that could influence other financial institutions, given that an increasing number of Canadians are investing on their own with smaller amounts of money. “I think fee sensitivity plays a big part in investing and even moreso as awareness of investment costs is building,” says Jason Heath, a fee-only certified financial planner at Objective Financial Partners  in Toronto. “I could see other online brokerages making a similar move if RBC does in fact hold pat at that price.”

Prior to January 14, RBC Direct investors with less than $50,000 in assets or who traded less than 30 times per quarter paid a minimum of $28.95 CDN or US per equity trade when traded online or through the mobile application. That former fee structure was on par with most banking institutions’ current online brokerage commissions, which range between $25 to $30 per equity trade when minimum account balance and quarterly trading requirements aren’t met.