Business Transformation | 02.03.26

Brokers May Charge Fee From ETF Managers as Commission-Free Trading Takes a Toll

by: Reuters

U.S. brokerage firms and custodians may begin charging distribution fees to exchange-traded fund (ETF) managers as commission-free trading erodes traditional revenue streams, according to J.P. Morgan. Zero-commission platforms like Robinhood forced legacy brokers such as Fidelity and Charles Schwab to eliminate ETF trading fees, while investors have steadily shifted assets from mutual funds to lower-fee ETFs. J.P. Morgan estimates the U.S. ETF fee pool at $21 billion and suggests brokers could seek 10–20% of expense ratios, creating $2–$4 billion in new annual costs for fund managers. Large firms like BlackRock and Vanguard may negotiate better terms, while mid-sized managers could face greater pressure, especially if regulatory changes accelerate the ETF transition.

Read the full article on Reuters